Australian Electricity Markets Show Regional Divergence as Winter Pressures Ease

Australian electricity markets are displaying contrasting regional dynamics as the transition from winter to shoulder season progresses. Recent market analysis suggests Victoria and New South Wales are following different trajectories, with broader implications for business energy planning across the National Electricity Market (NEM).

Industry sources indicate Victoria’s forward electricity curves remain elevated without clear signs of near-term softening, while New South Wales has experienced price moderation compared to earlier 2025 levels. This regional divergence reflects the complex interplay of local generation mix, transmission constraints, and demand patterns affecting each state differently.

Victoria’s elevated forward pricing reflects ongoing uncertainty about baseload generation reliability. The state experienced significant supply disruptions in June 2025, with multiple units at Yallourn Power Station offline simultaneously. An air duct collapse during scheduled maintenance at Unit 3 compounded existing operational challenges, removing substantial baseload capacity during peak winter demand.

These infrastructure events, combined with similar issues at AGL’s Loy Yang A power station, created supply tightness that contributed to broader NEM strain. According to Australian Energy Regulator data, there were 66 high price events during the June quarter – the second-highest on record – with Victoria particularly affected by the reduced thermal generation availability.

NSW Market Dynamics

New South Wales experienced dramatic price volatility through June, with spot prices surging from approximately $123/MWh in May to $256/MWh – a 108% month-on-month increase. However, industry observations suggest pricing has moderated from these peaks as immediate supply pressures eased. The state’s diverse generation mix and improved interconnector flows have supported this stabilisation.

Verified market data shows NSW renewable generation decreased to around 30% in June, with coal and gas filling supply gaps during low wind and solar periods. Gas prices reached $776/MWh during peak demand periods, illustrating the premium required to balance the system when renewable output declined.

Shoulder Season Expectations

The transition into shoulder season typically brings improved market conditions as heating demand moderates and renewable generation becomes more consistent. Spring solar output generally increases during shoulder periods, reducing reliance on expensive gas and coal generation. Weather forecasts supporting this transition could reduce pressure on spot markets, with benefits potentially flowing through to forward pricing – particularly beneficial for Victoria’s currently elevated curves.

Scheduled maintenance activities at thermal plants have commenced as operators take advantage of lower demand periods. Market participants report these maintenance programs are proceeding without significant impact on overall generation availability, suggesting supply adequacy remains manageable through the shoulder period.

Coal Fleet Performance and Maintenance

Coal generation availability has shown improvement following the challenging June period, with most maintenance activities now scheduled rather than forced outages. This stability provides important baseload security as the system transitions through seasonal demand patterns.

However, the June events highlighted ongoing reliability risks with ageing thermal infrastructure. Coal reliability concerns are a key factor driving forward price premiums, especially in Victoria where thermal plants face increasing maintenance challenges. As coal plants approach end-of-life timelines, maintenance becomes increasingly complex and costly, creating ongoing uncertainty for long-term market stability.

Implications for Business Energy Strategy

The regional divergence between Victoria and NSW creates different strategic considerations for businesses operating across state boundaries. Victorian businesses may face continued forward price volatility as infrastructure uncertainty persists, while NSW operations could benefit from recent price moderation.

Professional market analysis becomes increasingly valuable as regional differences create complex risk profiles that require location-specific hedging strategies. Businesses with multi-state operations need sophisticated approaches that account for these diverging market dynamics and emerging battery storage trends that are reshaping procurement decisions.

Forward Market Positioning

Current forward curves suggest mixed signals across the NEM. Victoria’s elevated pricing reflects ongoing risk premiums, while other regions show more moderate forward positions. These conditions create both challenges and opportunities for businesses planning energy procurement strategies.

Market participants report that hedging windows remain open for businesses seeking price certainty, though timing and structure require careful consideration given the regional variations and seasonal transitions affecting different states.