June 2025 delivered a masterclass in energy market volatility that left traders, businesses, and grid operators scrambling to respond. What unfolded was nothing short of a perfect storm which tested the resilience of Australia’s electricity network and exposed the ongoing challenges in our energy transition journey.
The month began with renewable generation capacity falling dramatically across multiple states. In one particularly striking example, wind capacity plummeted from 8GW to under 1GW in just 24 hours. This system-wide event sent shockwaves through the entire National Electricity Market (NEM).
Add to this mix the onset of cold weather driving up heating demand, plus several major coal plants out of action for maintenance, and you have the recipe for the price volatility that defined June 2025. Traditional generators found themselves scrambling to fill the gap left by renewable shortfalls, creating supply shortages that rippled through the entire network.
The impact wasn’t felt equally across all states. Victoria bore the brunt of the extreme conditions, with spot pricing averaging $264.60/MWh, making it the highest-priced state for the month. The state experienced 161 high-price intervals, with one particularly dramatic spike reaching the market ceiling of $17,500.00/MWh.
New South Wales wasn’t far behind, with average pricing hitting $256.20/MWh, more than doubling from the previous month’s levels. The state endured 146 separate instances of pricing above $1,000/MWh, with the peak reaching $17,026.18/MWh during the most constrained periods.
Queensland emerged as the relative winner among mainland states, with spot pricing averaging $169.34/MWh. Despite experiencing 78 high-price events with a maximum of $16,567.63/MWh, Queensland benefited from 1,036 intervals of zero or negative pricing, the highest count among all states, reflecting strong solar penetration during optimal conditions.
South Australia demonstrated its characteristic volatility, with average pricing reaching $250.40/MWh. The state recorded 147 high-price intervals with a peak of $16,983.46/MWh, while also experiencing 1,301 intervals at or below zero pricing, showcasing the extreme swings between oversupply and shortage that characterise high-renewable grids.
What made June 2025 particularly interesting was how the market responded differently to these challenging conditions. Rather than the immediate price explosions we’ve become accustomed to, there was a more measured approach to pricing. This was largely due to battery storage systems having to carefully manage their limited duration capacity.
The financial markets certainly took notice, with forward contract prices initially jumping as participants braced for ongoing winter challenges. However, as the month progressed and the severity of expected disruptions didn’t fully materialise, some of these premiums unwound, creating quite a roller-coaster for anyone trying to hedge their exposure.
June 2025 served as a stark reminder of the challenges facing Australia’s energy transition. Coal-fired generation maintained its dominant position at 62% of total NEM output through the quarter, with wind contributing 16%, while solar, hydro, and gas each provided 7%, 7%, and 6% respectively. These proportions underscore the continued importance of traditional baseload capacity during challenging periods.
The month also highlighted positive developments in the sector. AEMO’s expansion of planning to include distribution networks, as outlined in the Draft 2025 Electricity Network Options Report, promises improved coordination between local and network-wide infrastructure. This should reduce connection delays for solar and battery installations for small to medium enterprises and commercial and industrial users.
For businesses managing energy costs, June 2025 delivered several crucial lessons. The speed with which market conditions can change reinforces why having robust risk management strategies remains essential in today’s volatile environment. The extreme price swings – from negative pricing when renewables were abundant to peaks of $17,500/MWh during shortages – demonstrate the importance of flexible energy procurement strategies.
The month also showed that while renewable energy continues to play an increasingly important role in Australia’s energy mix, the transition isn’t without its challenges. Businesses need to be prepared for continued volatility as the grid adapts to higher levels of variable renewable generation.
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