Coal cap, record solar stabilise wholesale power prices

The regulator expects no repeat of last year's wholesale energy price spike as record solar generation and controls on coal stabilise prices.

But the closure of AGL Energy's Liddell coal-fired power plant station will remove significant dispatchable capacity from the national electricity market, the Australian Energy Regulator (AER) warned.

AGL has begun the shutdown of Liddell's three remaining generation units - one this week, with the others scheduled for next week.

"This will tighten the supply-demand balance, especially in evening periods when solar output is low," the AER said in a quarterly report.

The Liddell power station site in the NSW Upper Hunter will become an industrial hub, including a commercial-scale battery to be built on the site, after more than 50 years of generating electricity into the national grid.

The AER report released on Thursday showed wholesale energy prices stabilised and solar power generation set another record during the January to March period.

But heatwave conditions resulted in average prices being higher than they otherwise would have been.

Across the market, grid-scale solar output achieved a quarterly record and accounted for nine per cent of the total generation mix.

Large-scale solar output increased 11 per cent from its record high at the end of 2022, reflecting strong investment in solar generation. 

Rooftop solar output also hit a record, as households cut bills and emissions, and contributed to downward pressure on daytime prices.

"Forward base futures prices for electricity initially stabilised during the early part of 2023, and despite an increase in March they remain well below levels observed in 2022," AER chair Clare Savage said.

"It also appears that the coal price cap interventions continue to place downward pressure on electricity prices, together with strong renewable output."

Helping to ease an anticipated tight gas supply this winter, southern gas storage refilled to its highest end-of-March-quarter level since reporting began.

East coast gas spot market prices continued a downward trend, after a brief increase in February, and averaged less than $12 per gigajoule as international prices ease.

Asian liquefied natural gas prices more than halved compared with the December quarter, to less than $20/GJ.

While gas generation increased during the quarter, it has remained at overall lower levels than in recent years, the report said.

Coal generators in NSW and Queensland offered more total capacity, most of which was offered at lower prices, as coal output rose.

The regulator's Default Market Offer for 2023/24, which controls what energy companies can charge customers, will be released by May 26.