Overview

In September 2025, the National Electricity Market (NEM) set a new renewables penetration record of nearly 78%, driven largely by strong rooftop and utility solar generation. Spot prices eased from winter levels, but volatility persisted with sharp spikes that reignited debate about Australia’s high market price cap. The Australian Energy Regulator and analysts highlighted that while averages softened, managing exposure to price shocks remains essential. Batteries continued to expand their role, capturing greater arbitrage revenues even as some ancillary service earnings declined, underscoring their importance in balancing a renewables-heavy grid. At the same time, forward contract prices remained relatively stable compared with the past two winters, supported by falling gas netback prices, healthy Iona gas storage levels, and expectations of strong renewable supply into summer. Still, futures retain risk premiums due to uncertainty around weather, plant outages, and potential reforms flagged in the Wholesale Market Settings Review, which is exploring changes to better support storage, firming capacity, and liquidity in the evolving NEM.

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Overall futures prices eased slightly in New South Wales, Victoria, and South Australia, but remained broadly stable in Queensland. These shifts reflect both ongoing investment in renewable generation and storage, as well as the challenges of managing supply during periods of low wind or solar output.

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Wholesale Spot Market Overview

In September, we saw a clear divergence between base monthly averages and evening peak prices, tightening supply-demand during high-use hours:

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• New South Wales (NSW): Wholesale electricity prices in September remained relatively steady overall, but evening peaks surged to more than twice the monthly average. These spikes were driven by the sharp drop in solar output after sunset combined with ongoing transmission constraints, underscoring the pressure on supply during high-demand periods.

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• Victoria (VIC): Prices were stable across most of the month, supported by strong solar and wind generation. However, cooler evenings and intermittent wind output created short-lived price volatility, highlighting Victoria’s reliance on variable renewable supply.

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• Queensland (QLD): Abundant rooftop and utility solar kept daytime prices subdued, often pushing them towards the floor. In contrast, evening peaks lifted sharply as demand remained high and solar output fell away, reinforcing Queensland’s pronounced “duck curve” effect.

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• South Australia (SA): High renewable penetration frequently drove prices very low or even negative during the day. Nevertheless, evening ramp-up periods saw prices jump significantly when wind generation dipped, demonstrating the importance of storage and interconnector support.

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• Western Australia (WA): In WA, wholesale prices also saw large increases in the evenings. Limited renewable supply after sunset and strong evening demand drove these price surges, reflecting challenges in balancing supply and demand.

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Futures Market Overview

We have been tracking forward electricity contracts and observed the following for the coming quarter:

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• New South Wales: We saw futures prices fall by 3.1%, reflecting slightly lower expected wholesale costs. 

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• Victoria: Futures in Victoria eased by 3.4%, showing a slight softening in the market. 

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• Queensland: We observed futures edge up 0.4%, effectively remaining flat. Electricity costs are expected to stay stable for the next quarter. 

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• South Australia: Futures dropped 4.0%, the largest decline among the states. 

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• Western Australia: We observed that WA futures remained elevated in September, with evening peaks and limited renewable supply continuing to drive volatility. 

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Generation Mix

In September 2025, Australia’s electricity supply was shaped by a mix of planned maintenance, unexpected outages, and fluctuating renewable generation. 

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• New South Wales: The state experienced some local network constraints that caused short-term price spikes. No major unplanned outages were reported for large coal or gas plants, though generation was occasionally affected by lower wind and solar output on certain days. 

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• Victoria: On August 26, 2025, Yallourn Power Station’s Unit 2 experienced an unplanned outage due to a turbine failure, expected to last until December. This reduced electricity availability and contributed to higher prices during peak periods. Renewable generation helped partially offset this, with solar output peaking around September 17–18, supporting daytime supply.

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• Queensland: Wind and solar output varied through September, with periods of strong solar generation helping to stabilise supply in daytime hours. However, Gladstone Power Station’s Unit 4 remained offline, continuing from emergency condenser repairs begun in July, which constrained coal-fired generation and tightened supply.

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• South Australia: Torrens Island Power Station’s Unit 2 was offline for scheduled maintenance in August, reducing capacity during busy demand periods, and there has been no announcement of its return to service. Wind generation remained a key contributor in September, though lower-wind days caused short-term price fluctuations.

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• Western Australia: Collie Power Station’s Unit 3 was temporarily offline in September due to a turbine blade failure, limiting generation. Strong wind generation on September 1–2 helped support supply, while solar output continued to provide daytime relief for peak demand.

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TTEG Recommendations

With wholesale prices ranging widely but averaging around $85 to $130/MWh across most regions, we recommend reviewing existing energy contracts to ensure they align with current market conditions, as even small changes to rates or load profiles can deliver meaningful savings. Businesses with steady or energy intensive evening operations, such as manufacturers, hospitality venues, and food processors, remain the most exposed to higher costs. Large energy users on market linked contracts continued to absorb direct financial impacts, while smaller businesses on regulated offers were largely insulated. Given that spot prices can climb above $300/MWh during peak demand or periods of low renewable output, strategies such as demand management, flexible contracting, and load shifting are increasingly important to reduce exposure. 

 

By regularly monitoring market movements and infrastructure developments, we ensure your energy portfolio stays responsive to changing conditions and potential opportunities.

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If you are unsure of your current position or do 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.