nsw MARKET UPDATE
Electricity Prices
In September 2025, we observed that New South Wales’ electricity market continued to navigate a dynamic mix of factors affecting supply and prices. Wholesale electricity costs remained elevated due to local network constraints, ongoing transmission infrastructure investments, and periods of lower renewable generation. Coal and gas-fired power plants provided reliable base-load electricity, while wind and solar output fluctuated across the month, occasionally contributing to short-term price spikes.
Generation Mix
In September 2025, New South Wales’ electricity generation came from a mix of coal, gas, wind, solar, and hydro. Around 35–40% of supply came from renewable sources, supporting a cleaner energy mix.
New South Wales experienced several factors that affected electricity supply and prices:
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Several major coal-fired power stations, including Eraring, Bayswater, Vales Point, and Yallourn, experienced maintenance or operational constraints.
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Yallourn’s extended outage, expected to continue until December, reduced available generation and contributed to short-term price spikes.
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Local network constraints added pressure on supply.
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High evening demand in areas such as Sydney and Newcastle further increased stress on the grid.
Wind and solar output varied across the month, occasionally affecting total generation and influencing prices. The Waratah Super Battery helped provide stability by storing and discharging renewable energy to offset these fluctuations, supporting the grid during periods of lower renewable output or higher demand.
Futures Pricing outlook
Forward electricity prices for New South Wales in September 2025 showed elevated volatility:
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Base month futures moved by roughly ±11–14%, reflecting general market trends.
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Evening peak prices spiked, driven by high evening demand in Sydney and Newcastle, local network constraints, and variable wind generation across the Central-West and Hunter regions.
What it means for your business
We observed that energy costs in New South Wales remained particularly sensitive to market volatility. Evening demand peaks in Sydney and Newcastle continued to put pressure on the grid, while variable wind generation across the Central-West and Hunter regions affected the consistency of renewable energy supply.
In addition, maintenance outages at major coal-fired generators reduced available generation capacity and influenced wholesale prices. These factors combined to create rapid fluctuations in electricity costs, adding uncertainty for budgeting, cash flow, and long-term operational planning.
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.
nsw ELECTRICITY FUTURE PRICING CHARt
On 12 September 2025, the NSW Government implemented significant updates to the Energy Savings Scheme (ESS), aiming to enhance its effectiveness in reducing energy consumption and supporting the transition to a low-emissions economy. Key changes include:
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Introduction of New Activities: New activity definitions have been added, focusing on emerging technologies and practices that contribute to energy savings.
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Revised Calculation Methods: Updates to calculation methodologies ensure that energy savings are accurately measured and reflect current technologies and market conditions.
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Enhanced Reporting Requirements: Accredited Certificate Providers (ACPs) are now required to provide more detailed and frequent reporting, improving transparency and accountability within the scheme.
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Streamlined Accreditation Process: The accreditation process for new activities has been simplified, encouraging innovation and participation from a broader range of stakeholders.
WHAT ARE THE IMPACTS
These amendments are part of the ongoing efforts to align the ESS with NSW's net-zero emissions goals and to ensure that the scheme remains responsive to technological advancements and market dynamics, such as:
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Reduced operational energy expenses: Businesses implementing eligible energy-saving activities can earn Energy Savings Certificates (ESCs), effectively lowering electricity costs.
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Incentives for efficiency investments: Streamlined accreditation and new activity definitions make it easier for companies to adopt cost-saving technologies, reducing energy consumption and bills over time.
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More predictable savings: Revised calculation methods ensure energy reductions are accurately measured, helping businesses forecast energy cost reductions with greater confidence.
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Long-term cost stability: By promoting the adoption of energy-efficient technologies, the ESS supports businesses in mitigating exposure to rising energy prices, particularly during peak demand periods.
On September 19, 2025, the NSW Government introduced reforms under the Energy Security Safeguard (ESSafeguard) to strengthen the state’s electricity storage and grid reliability. These reforms are designed to support a more stable, sustainable, and affordable energy system, particularly as NSW continues its transition to higher levels of renewable generation.
Key aspects include:
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Enhanced Storage Integration: The reforms provide clearer rules and incentives for battery storage and other dispatchable technologies, helping to smooth out supply fluctuations from variable wind and solar generation.
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Grid Reliability Improvements: By encouraging flexible energy storage, the reforms aim to reduce the risk of blackouts during peak demand periods and ensure a more consistent power supply for households and businesses.
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Support for Renewable Transition: The changes complement NSW’s renewable energy targets by ensuring that storage solutions can effectively balance intermittent renewable output, allowing more solar and wind generation to be reliably used on the grid.
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Market Signals for Investment: The reforms create stronger signals for investors, providing certainty around the role of storage in meeting both reliability and sustainability goals, which should encourage private investment in large-scale storage projects.
These reforms mean a more reliable and predictable electricity supply, especially during periods of high demand or low renewable generation. By supporting battery storage and other flexible energy solutions, NSW is reducing the risk of blackouts and sudden price spikes.
Narrabri Gas Project
On September 25, 2025, NSW Premier Chris Minns emphasised the importance of starting Santos’ Narrabri Gas Project, which could supply up to 50% of the state’s domestic gas needs. The project, valued at $3.6 billion, has faced delays due to legal challenges, regulatory hurdles, and native title appeals, but is nearing final approval.
Key points:
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Final Investment Decision expected later in 2025, with construction possibly starting in early 2026 and first gas by 2027–28.
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MOUs signed with entities including Orica and Narrabri Shire Council to secure long-term gas supply.
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Political support from the NSW Premier highlights its importance for energy security and domestic supply.
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Legal challenges remain, particularly from Indigenous groups regarding land and environmental concerns.
If approved, the Narrabri Gas Project will play a key role in NSW’s energy security and the transition to a low-emissions future.
