VIC MARKET UPDATE
Electricity Prices
In August 2025, wholesale electricity prices in Victoria increased by approximately 5% compared to July. Prices were influenced by higher evening demand in Melbourne, lower wind output in the western and southern regions, and scheduled maintenance at major coal-fired generators in the Latrobe Valley.
Generation Mix
Victoria continues to transition its generation profile with several key developments:
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Renewables share: Around 30–33% of electricity now comes from solar, wind, and hydro, while coal remains the largest contributor. The state aims to reach 50% renewables by 2030.
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Infrastructure developments: Transmission upgrades in the Latrobe Valley and expansion of Renewable Energy Zones (REZs) are ongoing, but network constraints can limit the flow of renewable energy to Melbourne and other major load centres.
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Operational impact: August saw planned coal maintenance and low wind output, particularly during cooler evenings, contributing to short-term price volatility.
Futures Pricing
Forward electricity prices for Victoria in August 2025 showed moderate volatility:
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Base month futures fluctuated by roughly ±8–10%, following the average price trend.
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Evening peak prices spiked up to 120% above average, reflecting periods of reduced wind output and coal generator maintenance.
What This Means for Your Business
In Victoria, energy costs remain particularly sensitive to market volatility, driven by factors such as evening demand peaks in Melbourne, variable wind generation across the west and south, and maintenance outages at Latrobe Valley coal plants. This combination can lead to rapid fluctuations in wholesale prices, creating uncertainty for budgeting, cash flow, and long-term operational planning. For businesses, this means that even short-term market swings can directly affect operating margins, making proactive energy procurement strategies more important than ever.
If your business does not yet have a strategy in place, we are here to help. Contact us for a free bill check or to discuss a tailored energy procurement plan.
ELECTRICITY FUTURE PRICING CHARt
2025 Victorian Transmission Plan
VicGrid has released the first long-term strategic transmission plan for Victoria, setting out how the state will develop renewable energy zones (REZs) and upgrade transmission infrastructure as coal-fired power stations progressively close. The plan outlines energy needs over the next 15 years and aims to balance affordability, reliability, and environmental and community considerations.
Key features include:
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Six new Renewable Energy Zones (REZs): Priority areas identified to host new wind and solar projects.
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Gippsland Shoreline REZ: A dedicated zone for offshore wind connections, focused on cabling and grid integration rather than onshore generation.
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Transmission upgrades (2025–2040): Ranging from terminal station upgrades to four major new transmission projects and the reconstruction of existing infrastructure.
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Community-first planning: A new approach that integrates environmental, agricultural, and Traditional Owner concerns from the outset, reflecting feedback gathered through statewide engagement.
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Agriculture compatibility study: Research into how renewable projects can coexist with farming, with findings to guide future project siting and development.
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Guidelines and consultation: The plan was shaped by extensive public consultation (July–August 2024), with clear rules on how energy demand, transmission needs, and potential project sites are determined.
Overall, the 2025 Victorian Transmission Plan provides certainty for industry investment, outlines a clear roadmap for integrating renewables, and commits to minimising impacts on landholders, agriculture, and communities, while supporting Victoria’s long-term energy security.
Gas Reform and Electrification Strategy
As part of its transition strategy, Victoria will require all new residential and commercial buildings to use electric heating and hot water from 2027. Additionally, existing systems must switch to electric as they reach end-of-life, except for agricultural, manufacturing, or industrial facilities.
The overarching policy framework also aims to reserve limited gas supplies for essential industrial uses, while promoting electrification and energy efficiency in rental and residential sectors.