SYDNEY - Australia's renewable energy output surged in the quarter ended March, pushing down energy costs, driving carbon emissions to record lows and helping replace power generated from coal and gas, the country's energy market operator said on Friday.

Renewable energy supply to the National Electricity Market (NEM) hit a record of 66% in the first quarter, according to the latest quarterly update from the Australian Energy Market Operator (AEMO).

That was up 4.4 percentage points from the previous high, while contributions from coal and gas fell, with gas-fired power touching its lowest level since 2005. Total NEM emissions slid to the lowest first-quarter levels on record, down 5.1%.

The record comes less than a year since Labor Party came to power, promoting clean energy projects and pledging to invest A$20 billion ($13.3 billion) to rebuild and modernise the national electricity network as part of a drive to cut carbon emissions by 43% by 2030 and reach net zero emissions by 2050.

The AEMO, in its latest quarterly update, said its data also underlined that need for more investment in new transmission lines, connecting more wind and solar farms to the national power grid.

"These insights reinforce that critical transmission investments ... are needed to share low-cost, low emission renewable energy with consumers," AEMO CEO Daniel Westerman said in a statement.

The NEM covers all regions of Australia except the state of Western Australia and the Northern Territory.

Easing La Nina conditions - the weather phenomenon that typically brings more rain - and a relatively mild southern hemisphere summer helped wholesale electricity prices drop back to typical historic levels, the report said.

NEM wholesale spot prices averaged A$83 per megawatt hour (MWh), down from A$93/MWh and A$216/MWh from the quarters through December and September, respectively.

The AEMO report came on the day Australia retired one of its oldest coal-fired power stations.

AGL Energy Ltd, the country's top power producer, shut down the Liddell power station after more than half a century of operations as it looks to convert the site into a renewable energy hub, including plans to build a 500 MW grid-scale battery there.

($1 = 1.5074 Australian dollars)

(Reporting by Renju Jose in Sydney; Editing by Kenneth Maxwell)