Electricity market conditions in Victoria remain generally favourable through June, with forward prices continuing to trade at relatively soft levels across parts of the National Electricity Market (NEM).

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This softer pricing environment is being supported by strong renewable generation across the state, particularly wind and utility-scale solar, alongside broader system-wide improvements in battery storage and lower wholesale price outcomes compared to recent years.

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However, as winter progresses, Victoria is beginning to experience greater short-term price variability, particularly during morning and evening peak periods. Higher heating demand, reduced solar output, and increased reliance on firming generation are all contributing to intermittent volatility.​

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Supply Outlook – Generation & Infrastructure 

Electricity supply conditions in Victoria remain broadly adequate, but system tightness can emerge quickly during peak winter demand periods or when large coal units are on planned or unplanned maintenance.

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Key factors include:

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Generator maintenance and availability

Victoria continues to experience periods of reduced coal availability across its main baseload fleet, particularly at Loy Yang A, Loy Yang B, and Yallourn.

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While capacity remains sufficient under normal conditions, the Victorian system is highly sensitive to the availability of large coal units.

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Coal fleet dependence during peaks

Coal-fired generation remains the dominant source of baseload supply in Victoria, particularly in the Latrobe Valley.​

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Interconnector reliance and flow constraints

Through June, Victoria continued to play a central balancing role in eastern Australian electricity flows, with interconnector activity across both NSW (VNI) and South Australia (Heywood) materially influencing short-term pricing outcomes during winter peak periods.

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Overall, these flow dynamics meant that:

• Victorian prices were generally supported during daytime low-demand periods due to strong renewable output

• However, evening peaks saw sharper price spikes when imports were constrained

• Local coal availability (Loy Yang and Yallourn units) became more influential in setting marginal prices during tight intervals

• Price volatility increased during cold spells when demand and interconnector constraints coincided

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Renewable variability and system shifting

Strong wind generation continues to support lower average prices, particularly during off-peak periods.

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• High wind output can significantly reduce wholesale prices

• However, extended low-wind periods during winter mornings and evenings increase reliance on coal and gas

• This creates sharper intraday swings between low and high price periods

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Storage expansion and system support

Battery storage capacity is expanding across Victoria and the broader NEM, improving system flexibility.

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• Batteries are increasingly supporting evening peak demand

• They help reduce short-lived price spikes by absorbing excess daytime generation

• However, their impact is still developing relative to the scale of coal and peak demand requirements

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Transmission constraints and congestion

Network limitations in parts of the Victorian transmission system continue to influence dispatch outcomes.

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• Congestion in the Latrobe Valley can restrict efficient generation flow

• Constraints can limit renewable dispatch during high output periods

• Localised bottlenecks can contribute to short periods of price separation within the state

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Futures Pricing Outlook

Forward prices remain relatively soft, but market focus is shifting toward seasonal volatility rather than broad directional price movement.

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As winter continues:

• Heating demand is expected to increase across Victoria

• Solar output will remain lower during peak morning and evening trading windows

• Coal-fired generation will continue to play a key baseload role, with gas supporting peak demand

• Low wind periods may lead to short-lived price spikes

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Despite this, ongoing renewable investment and battery expansion continue to support longer-term price stability and reduce reliance on fossil fuel generation over time.

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Network & Tariff Considerations

Victoria’s upcoming network tariff adjustments from 1 July are prompting many businesses to review their current electricity arrangements.

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While wholesale prices often receive the most attention, network charges from distributors such as AusNet, Jemena, and United Energy can make up a significant portion of total electricity costs. Misalignment between tariff structure and load profile can materially impact overall bills.​​

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What it means for your business

With forward prices still relatively soft and network tariff changes approaching, Victorian businesses are well positioned to review their energy arrangements.

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While wholesale pricing remains supportive, network tariffs and load alignment are becoming increasingly important in managing total electricity costs.

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A review of both contract structure and network tariff configuration can help identify savings opportunities and improve exposure management ahead of winter volatility and upcoming contract cycles.
 

For businesses without an active energy strategy, now is a practical time to reassess positioning before seasonal demand pressures increase market sensitivity.