Each month, Watt Utilities publishes this Commercial Energy Market Report to keep our clients informed about wholesale electricity price movements across Australia’s east coast. We cover what happened in the spot market, why prices moved, and what it means for businesses managing energy costs. A new edition is released around the 20th of the following month.
Australia’s electricity grid operates through the National Electricity Market (NEM), which connects Queensland, New South Wales, Victoria and South Australia via a shared transmission network. Wholesale spot prices are set every five minutes through a competitive bidding process managed by AEMO (the Australian Energy Market Operator), the independent body responsible for operating the NEM and ensuring reliable electricity supply. The prices in this report reflect the wholesale spot market and are distinct from the retail rates businesses pay on their energy bills, though sustained movements in the spot market generally feed into retail contract pricing over time. This report covers the mainland NEM only (Queensland, New South Wales, Victoria and South Australia).
December 2025 saw spot prices ease across the mainland NEM as mild summer weather and strong renewable generation created favourable supply conditions. Despite price spikes above $1,000/MWh in NSW (12 intervals) and SA (5 intervals), average pricing fell across all four mainland states. NSW recorded the highest average at $71.36/MWh while Victoria delivered the lowest outcome at $27.51/MWh. The Christmas period brought minimum demand challenges, with SA reaching -311MW and VIC hitting 1,289MW, requiring AEMO minimum system load interventions. Forward contract markets continued to soften as participants priced in structural shifts from battery storage expansion and renewable capacity growth.
Source: Shell Energy / AEMO
| State | Average Spot Price | Max 5 Min Spot Price | 5 Min Intervals at $1,000+ | 5 Min Intervals at $0 or Below |
|---|---|---|---|---|
| QLD | $54.38 | $379.67 | 0 | 2,461 |
| NSW | $71.36 | $14,001.01 | 12 | 2,087 |
| VIC | $27.51 | $324.26 | 0 | 3,654 |
| SA | $27.92 | $20,299.99 | 5 | 4,375 |
Source: NEM Spot Market, AEMO (via Shell Energy Market Summary Report, December 2025)
Source: NEM Spot Market, AEMO. Chart Credit: Shell Energy. Historical data prior to Sep 2025 sourced from Shell Energy 3-year charts.
Calendar Year 2026 contracts saw downward pressure across all mainland regions through December, with market participants pricing in structural changes rather than current spot volatility. Battery storage deployment and new renewable capacity additions are expected to reduce future price spikes, and that expectation is reflected in where forward prices are trading. For businesses with contract renewals approaching in early-to-mid 2026, the current forward curve offers a more competitive reference point than the elevated levels seen during the June 2025 volatility period. Longer-dated positions beyond CY2026 carry uncertainty around how quickly new capacity delivers structural price reductions at scale. Businesses with near-term renewals are positioned reasonably to engage the market. Those with more lead time may find value in monitoring FY27 pricing as the capacity pipeline becomes clearer through 2026.
Average pricing decreased to $71.36/MWh in December, a 7.2% decline from November’s $76.93/MWh. Volatility events during the mid-month heat period drove the maximum five-minute interval to $14,001.01/MWh.
NSW experienced 12 high-price intervals above $1,000/MWh as heat-driven demand coincided with four of twelve coal units offline. Transmission constraints in south-central NSW amplified pricing pressures, with maximum demand exceeding 13GW on December 18 and 19.
Source: AEMO (via WEB_AVERAGE_PRICE_DAY_202512)
Spot pricing averaged $54.38/MWh in December, a 13.8% decrease from November’s $63.05/MWh. Queensland maintained the most stable pricing pattern across the mainland NEM for the month.
Queensland recorded zero high-price events above $1,000/MWh despite notable coal generation outages throughout the month. Strong solar output created consistent supply patterns, with 2,461 intervals at or below zero pricing across December.
Source: AEMO (via WEB_AVERAGE_PRICE_DAY_202512)
Average pricing reached $27.92/MWh in December, a 14.0% decrease from November’s $32.48/MWh. Brief volatility events created a wide price range across the month despite the low overall average.
SA recorded five high-price intervals peaking at $20,299.99/MWh during wind lulls, alongside 4,375 intervals at or below zero pricing (highest mainland count). The $20,299.99/MWh figure is AEMO’s administered price cap, a ceiling applied automatically when cumulative spot prices hit a regulatory threshold (it is not a data error). Operational demand reached -311MW on December 26, requiring AEMO MSL2 intervention.
Source: AEMO (via WEB_AVERAGE_PRICE_DAY_202512)
Spot pricing averaged $27.51/MWh in December, a 13.8% decrease from November’s $31.92/MWh and the lowest mainland outcome for the month.
Victoria experienced zero high-price intervals above $1,000/MWh and recorded 3,654 intervals at or below zero pricing. Wind generation performed strongly and coal plant availability improved. Christmas Day minimum demand of 1,289MW triggered MSL1 conditions, reflecting the state’s growing renewable surplus during low-demand holiday periods.
Source: AEMO (via WEB_AVERAGE_PRICE_DAY_202512)
Source: Shell Energy Market Summary Report, December 2025 (AEMO fuel mix data)
Coal-fired generation held 56% of NEM output over the 90-day period to December, split between black coal (42%) and brown coal (14%). Wind (19%) and solar (13%) combined for 32%, with hydro contributing 6% and gas 3%. The 32% renewable share created extended periods of oversupply during daylight hours, directly driving December’s high zero-pricing interval counts across all mainland states.
After a short Christmas break, the Watt Utilities team returned ready for what shapes up to be a strong year ahead. December marked the start of a planned expansion phase, as the business prepares to meet growing demand for commercial energy management services across our SME, C&I and Strata client base.
New energy managers and analysts are joining the team to strengthen client service depth. Our Watts Mine platform, which has incorporated AI-driven analysis for over two years, continues to be enhanced with expanded contract analysis and portfolio management capabilities, delivering faster turnaround times and more detailed market intelligence for clients.
The expansion positions Watt Utilities to provide expert guidance as market complexity grows, with businesses facing both seasonal demand challenges and new minimum load risks from renewable oversupply entering the picture.
The Australian Energy Market Operator released its Draft 2026 Integrated System Plan in December 2025, providing a comprehensive roadmap for generation, storage and transmission infrastructure in the NEM through to 2050. Total generation and storage capacity would need to grow from the current 92GW to 297GW by mid-century. Grid-scale solar and wind capacity is projected to rise from 23GW to 58GW by 2030, then double to 120GW by 2050.
Source: AEMO, December 2025
Our team works with SME, C&I and Strata clients across Queensland, New South Wales and Victoria. Get in touch for a no-obligation portfolio review.
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