Australia’s greenhouse gas emissions from its primary electricity grid, the National Electricity Market (NEM), increased for the third consecutive quarter due to a surge in power demand, the Australian Energy Market Operator (AEMO) reported. As the country’s reliance on fossil fuels continues to affect emissions levels, the latest data underscores the tension between rising energy needs and Australia’s clean energy transition goals.
For the September quarter, emissions from the NEM—spanning the eastern states and South Australia—rose by 2% compared to the same period last year. This increase of approximately 700,000 tonnes of carbon dioxide equivalent (MtCO₂-e) pushed total emissions for the quarter to 28.4MtCO₂-e, marking a continuation of the emissions rise seen earlier in the year, with a 2MtCO₂-e increase in the June quarter and a minor uptick in the preceding three months.
The increase in emissions is primarily attributed to heightened output from black coal and gas-fired plants, as power demand climbed alongside a chilly start to the quarter. These plants play a critical role in meeting energy requirements but are also major contributors to greenhouse gas emissions, representing a continuing challenge for Australia’s ambitions to reduce carbon outputs.
AEMO’s report indicated that the average output from gas plants soared by 29% from the previous year, reaching 1,493 megawatts (MW). This rise came despite a 20% increase in fossil fuel prices, highlighting Australia’s current dependence on gas to meet demand, particularly when renewable sources cannot fully compensate for fluctuations in supply.
Black coal-fired power plants also contributed heavily, with an output increase of 1.8% from last year, averaging nearly 10,000MW. Meanwhile, brown coal plants produced slightly less power, averaging 3,703MW, or a 0.7% decrease. Together, coal and gas usage represent a significant reliance on fossil fuels, which underpins much of the emissions increase for the quarter.
Despite the uptick in fossil fuel usage, renewable energy sources continued to expand their contribution to the grid, achieving a record 39.3% share for the September quarter. Rooftop solar in particular has proven effective in helping reduce some of the increased demand for operational power, with supply from rooftop systems rising by 11% over the previous year. This increase in distributed generation—electricity generated by consumers—has been vital in managing Australia’s growing energy demands.
Overall demand for electricity rose by 3.4% from the September quarter in 2023, primarily due to cooler-than-average conditions at the beginning of the period. However, rooftop solar’s contribution helped limit the operational demand increase to 2.6%, showing the positive impact of household-level energy generation on overall grid requirements.
Wind energy also reached record highs, with generation increasing by more than 20% from the previous year, averaging 4,044MW for the quarter. This increase provided a buffer against the decreased output from hydroelectric plants, which faced reduced capacity due to lower water storage levels. The decline in hydro production underscores the challenges faced by some renewable sources, especially those affected by environmental conditions.
The reliance on wind energy as a substitute for hydro demonstrates how renewable sources can complement one another within the grid. Wind, with its seasonal variability, provided critical support during periods when hydro resources were less abundant, reinforcing the importance of a diversified renewable energy mix to maintain consistent power supply.
Increased use of fossil fuels and the higher wholesale costs of gas and coal have driven a significant increase in wholesale electricity prices. According to AEMO, wholesale prices for the September quarter averaged $119 per megawatt-hour, an 88% jump from the same period last year. The Australian Energy Regulator had already noted this trend earlier in October, signaling potential increases in household energy costs in the upcoming financial year as retail contracts adjust to reflect higher wholesale prices.
Wholesale power prices represent roughly one-third of household energy bills, meaning that this surge in costs could translate into higher prices for consumers. However, government rebates, especially those from state programs, have helped offset these price increases for many households, as shown by recent inflation data. Yet, if wholesale costs continue to rise, more Australians may feel the financial impact, prompting further concerns over energy affordability amid ongoing inflationary pressures.
On a positive note, AEMO’s report highlights promising progress in Australia’s renewable energy capacity. Approximately 45.6 gigawatts (GW) of clean energy capacity is currently in the project pipeline—a 36% increase from the previous year. The majority of these new projects include wind, solar, and notably, battery storage, with battery projects alone accounting for 14.6GW, an impressive 87% increase from the same quarter in the previous year.
Battery storage remains critical in Australia’s energy transition strategy, offering potential solutions to the intermittency issues associated with renewables. With battery technology advancing, Australia’s grid stands to benefit from more stable, dispatchable power that can reduce the need for coal and gas-fired generation during peak times.
AEMO executive Violette Mouchaileh emphasized the encouraging pace of renewable integration, stating, “It is promising to see Australia’s energy transition continue with more renewable generation capacity either coming online or progressing.”
In a symbolic milestone for Australia’s clean energy ambitions, renewable generation achieved a record 72.2% share of NEM generation for a half-hour period on 9 September, with rooftop solar contributing more than half of that share. Further, renewables reached a new high on 18 September, where the potential renewable capacity available to the grid exceeded 100% for a brief half-hour period. This “renewables potential” milestone is a testament to the growing strength of renewable sources within the grid and their increasing role in Australia’s energy mix.
However, AEMO reported challenges with “economic offloading,” where grid operators curtail output from renewable sources to avoid exceeding demand. Curtailment of solar power generation has been particularly impactful, with grid-scale solar plants facing an additional 41MW of offloading during the September quarter. This limitation led to a 68MW reduction, or 4.5%, in average solar farm output, reducing their share of NEM supply from 6.4% in the September quarter of 2023 to 5.9% this year.
Australia’s energy sector faces a critical balancing act between meeting immediate power demands and pursuing long-term decarbonization goals. AEMO’s report reflects this complexity, illustrating both the advances in renewable integration and the persistent reliance on fossil fuels during times of high demand.
While Australia’s progress in increasing renewable energy capacity is promising, the recent rise in emissions demonstrates the ongoing challenge of transitioning away from coal and gas. With gas and coal prices rising and demand for electricity continuing to grow, the country faces potential obstacles in achieving its emissions reduction targets. Nevertheless, the steady growth of wind, solar, and battery projects offers hope for a future in which Australia can further reduce its dependence on carbon-intensive energy sources.
The findings in AEMO’s report underscore the need for Australia to implement policies that promote efficient use of renewable resources, reduce reliance on fossil fuels, and support the continued integration of advanced energy storage solutions. Battery storage, for example, can provide essential load balancing and grid stability, helping to limit the role of gas-fired plants in the energy mix.
Investment in grid infrastructure to accommodate higher renewable penetration will also be essential to avoid economic offloading and maximize renewable output. Innovative solutions, such as flexible load management and grid modernization efforts, can further reduce emissions by optimizing energy flows and ensuring that clean power reaches consumers whenever it is available.
