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).
February 2025 delivered mixed spot price movements across the mainland NEM. South Australia and Victoria saw sharp increases as heatwaves with temperatures approaching 40°C pushed demand sharply higher, with SA averaging $91.34/MWh (up 89.4% from January) and VIC averaging $68.55/MWh (up 41.8%). New South Wales rose 8.4% as transmission constraints and reduced coal availability contributed to price spikes. Queensland bucked the trend, falling 34.3% as cooler temperatures reduced demand and solar generation provided supply relief. Wholesale futures prices drifted lower across most states except Victoria, where contracts recorded modest gains.
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 | $74.91 | N/A | 0 | N/A |
| NSW | $90.33 | N/A | Multiple | N/A |
| VIC | $68.55 | N/A | Multiple | N/A |
| SA | $91.34 | N/A | Multiple | N/A |
Source: NEM Spot Market, AEMO (via Shell Energy Market Summary Report, February 2025). Note: The February 2025 source report used an earlier format without a complete spot price statistics table. Interval counts are not available from this source.
Source: NEM Spot Market, AEMO. Chart Credit: Shell Energy. Historical data prior to Sep 2025 sourced from Shell Energy 3-year charts.
Wholesale futures drifted lower across most states in February despite the elevated spot conditions in SA and VIC, reflecting the market’s view that heatwave-driven pricing events are weather-related rather than structural. For businesses considering contract renewals, February’s forward market behaviour signalled that retailers and retailers’ hedging books were not reacting to the spot spikes as a reason to lift offer prices materially. Victoria was the exception, with mild forward gains linked to tighter supply conditions. The early-year period of January and February 2025 represented a window where forward prices remained relatively contained before the coal outage and winter supply concerns that would emerge from April onwards began pushing curves higher. Businesses that locked in FY2026 contracts through this period generally entered at more favourable levels than those waiting until the second quarter.
Spot price averaged $90.33/MWh in February, up 8.4% from January’s $83.34/MWh. The February 5 daily average of $270.07/MWh reflects a concentrated supply event as transmission constraints and reduced coal generation coincided with elevated summer demand.
High demand during heatwave conditions, transmission constraints and reduced coal generation availability combined to produce price spikes across the month. Increased renewable generation (particularly solar during daylight hours) helped moderate the broader monthly average, preventing the elevated peak-period prices from pushing the average materially higher.
Source: AEMO (via WEB_AVERAGE_PRICE_DAY_202502)
Spot price averaged $74.91/MWh in February, down 34.3% from January’s $114.01/MWh. Zero high-price intervals above $1,000/MWh were recorded, with QLD delivering the most stable mainland conditions for the month as cooler temperatures eased demand.
Lower peak temperatures (33°C versus 37°C in January) reduced maximum demand, removing the supply tightness that had driven January’s elevated prices. Strong solar generation provided consistent supply relief during daylight hours. Queensland’s contained performance in February contrasts sharply with its elevated January average, illustrating the state’s sensitivity to summer temperature variation.
Source: AEMO (via WEB_AVERAGE_PRICE_DAY_202502)
Spot price averaged $91.34/MWh in February, up 89.4% from January’s $48.22/MWh and the highest mainland average for the month. Two days (February 1 at $480.78/MWh and February 12 at $467.74/MWh) recorded sharply elevated daily averages during the peak heatwave periods.
High temperatures increased demand while wind generation variability increased reliance on gas-fired peakers during periods of low renewable output, driving the heatwave-period price spikes. Negative pricing also occurred during hours of excess solar supply, illustrating the wide intraday price range characteristic of SA’s high-renewable generation mix. The large gap between the peak daily averages and the monthly average reflects how concentrated the heatwave impact was.
Source: AEMO (via WEB_AVERAGE_PRICE_DAY_202502)
Spot price averaged $68.55/MWh in February, up 41.8% from January’s $48.35/MWh. The February 3 daily average of $277.29/MWh represents the heatwave peak, with Victoria’s average settling materially lower once temperatures eased and demand normalised through the remainder of the month.
Peak summer demand and increased reliance on gas peakers during heatwave conditions drove the price increase from January. Maintenance activities affecting generation supply added further pressure during constrained periods. Victorian forward contracts recorded modest gains through February, reflecting the market’s assessment that the state faced slightly tighter supply conditions heading into the cooler months relative to other mainland states.
Source: AEMO (via WEB_AVERAGE_PRICE_DAY_202502)
Source: Shell Energy Market Summary Report, February 2025 (AEMO fuel mix data)
Coal held 62% of NEM output over the 90-day period to February (black coal 46%, brown coal 16%). Solar reached 12%, its highest share across this series of reports, reflecting the peak summer generation period. Wind held 16% and hydro 6%, with gas at 4%. The 12% solar contribution is directly relevant to the February narrative: the same solar capacity that drove negative pricing during daylight hours also reduced average prices materially, preventing the heatwave demand events from pushing the monthly averages higher still.
Watt Utilities expanded its service offering in early 2025, now providing commercial and business LPG gas services. Clients can manage both electricity and gas through a single point of contact, consolidating energy procurement and simplifying billing across both utilities. The addition means clients with multi-energy sites no longer need separate broker relationships for electricity and gas.
Our Watts Mine platform, which has incorporated AI-driven analysis for over two years, supports the broader energy management capability our team delivers to SME, C&I and Strata clients, with the LPG service extending that support to clients’ full energy spend.
EnergyAustralia announced plans to develop a 300 MW / 1,200 MWh battery storage facility in Victoria, with the project expected to be operational by 2026. The development adds to the growing pipeline of utility-scale battery projects in the NEM, providing firming capacity to support grid stability as coal generation retires and renewable penetration increases.
Source: EnergyAustralia, February 2025
AEMO confirmed new transmission capacity upgrades between Victoria and New South Wales to improve energy flows and grid reliability. The upgrades address one of the key constraints that contributed to pricing divergence between the two states during supply-stressed periods, with improved interconnector capacity expected to reduce the frequency and severity of localised price spikes in NSW.
Source: AEMO, February 2025
South Australia recorded 78% renewable energy penetration for the month of February 2025, driven by strong wind and solar output. The milestone reflects the state’s continued position as the NEM’s highest-renewable grid, and directly explains the frequent negative pricing intervals recorded in SA through the month as generation regularly exceeded local demand during optimal renewable output periods.
Source: AEMO, February 2025
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