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).
May 2025 brought tighter supply conditions across the mainland NEM as thermal generation outages, reduced wind output and increased autumn heating demand converged. Interconnector constraints between QLD-NSW and VIC-NSW limited the usual inter-state flows, amplifying price pressure in NSW. Despite these conditions, average spot price outcomes came in below initial market expectations. NSW experienced the most volatility with 34 intervals above $1,000/MWh, while VIC and SA recorded zero high-price events. FY2026 forward contracts initially surged before retracting as the anticipated widespread price spikes did not fully materialise, ending May notably lower than April levels.
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 | $95.63 | $9,998.73 | 13 | 814 |
| NSW | $123.02 | $17,479.99 | 34 | 669 |
| VIC | $78.05 | $904.09 | 0 | 1,635 |
| SA | $83.31 | $937.37 | 0 | 1,893 |
Source: NEM Spot Market, AEMO (via Shell Energy Market Summary Report, May 2025)
Source: NEM Spot Market, AEMO. Chart Credit: Shell Energy. Historical data prior to Sep 2025 sourced from Shell Energy 3-year charts.
FY2026 forward contracts initially surged in early May as traders anticipated persistent winter volatility, before retracting as the frequency of extreme events fell short of expectations. The contracts ended May lower than April levels, which sent a mixed signal for businesses evaluating their position. For those with renewals approaching in the second half of 2025, the early-May spike represented an unfavourable entry point, while the late-month pullback offered better conditions. Gas forward prices also eased around 10% through May, providing some indirect relief on electricity pricing via lower gas-fired generation costs. Businesses with flexibility on contract timing had reason to hold back from locking in at month-open prices, while those with near-term renewals faced a more constrained window. The forward curve’s sensitivity to short-term supply conditions in May foreshadowed the more extreme movements that followed in June.
Spot price averaged $123.02/MWh in May, up 18.2% from April’s $104.07/MWh. The 34 high-price intervals concentrated the volatility in shorter bursts, with the peak five-minute interval reaching $17,479.99/MWh during the most supply-constrained periods.
Major thermal generation outages combined with interconnector constraints from Victoria created the most volatile conditions on the mainland NEM. The $17,479.99/MWh peak is an AEMO-published market price set through the competitive bidding process during periods of acute supply tightness (it is not a data error). NSW recorded 669 zero or negative pricing intervals as renewable output provided brief supply relief between the peak events.
Source: AEMO (via WEB_AVERAGE_PRICE_DAY_202505)
Spot price averaged $95.63/MWh in May, down 2.9% from April’s $98.50/MWh. Queensland maintained elevated but broadly stable pricing conditions relative to the prior month, with 13 high-price intervals representing lower overall volatility than NSW.
Thermal generation issues and QNI-NSW transmission constraints contributed to 13 intervals above $1,000/MWh, with a maximum of $9,998.73/MWh. These are legitimate AEMO market prices from the bidding process during supply-constrained periods. Queensland recorded 814 zero or negative pricing intervals as solar penetration provided consistent daylight supply, moderating the impact of thermal outages on the daily average.
Source: AEMO (via WEB_AVERAGE_PRICE_DAY_202505)
Spot price averaged $83.31/MWh in May, down 6.2% from April’s $88.82/MWh. SA managed supply constraints well relative to other mainland states, recording zero high-price intervals above $1,000/MWh despite the broader NEM supply tightness.
SA recorded 1,893 intervals at or below zero pricing, the highest count across the mainland NEM for May, as renewable generation created extended oversupply during daylight hours. The absence of high-price events reflects the state’s isolation from the interconnector constraints that drove NSW’s volatility, with SA’s own generation mix providing adequate supply buffer throughout the month.
Source: AEMO (via WEB_AVERAGE_PRICE_DAY_202505)
Spot price averaged $78.05/MWh in May, up 4.4% from April’s $74.76/MWh and the lowest mainland average for the month. Zero high-price intervals above $1,000/MWh were recorded despite the interconnector constraints that affected export flows to NSW.
Strong renewable output created 1,635 intervals at or below zero pricing, offsetting the pricing impact of reduced VIC-NSW interconnector capacity. Victoria’s insulation from NSW’s volatility reflects both the localised nature of the thermal outages and the state’s own generation mix performing adequately during May’s supply-constrained periods.
Source: AEMO (via WEB_AVERAGE_PRICE_DAY_202505)
Source: Shell Energy Market Summary Report, May 2025 (AEMO fuel mix data)
Coal held 62% of NEM output over the 90-day period to May (black coal 45%, brown coal 17%), a slight 1% fall from the prior quarter. Wind rose to 16% and solar held at 7%, with hydro stable at 7% and gas at 6%. The coal-dominant mix reinforces why unplanned outages at coal plants create disproportionate supply pressure, particularly in states such as NSW where interconnector constraints limit the ability to draw on surplus generation elsewhere.
Watt Utilities is pleased to welcome Greg Chirima to our growing energy management team. Greg brings a strong track record managing complex energy challenges for large clients, with an approach built on listening carefully before acting. His addition strengthens our capability to serve C&I clients with high-volume or multi-site energy portfolios.
Our Watts Mine platform, which has incorporated AI-driven analysis for over two years, continues to support our team’s work across contract analysis, portfolio management and market intelligence, with Greg now adding his expertise to that capability for our larger client accounts.
The NSW Government’s Solar for Apartment Residents (SoAR) program continued its rollout in May 2025, with owners corporations able to apply for grants covering 50% of shared solar system costs. Applications must be submitted before 1 December 2025, with projects requiring completion by 31 March 2026. The scheme extends solar access to apartment dwellers who were previously unable to benefit from rooftop solar arrangements.
Source: NSW Government, May 2025
On 8 May 2025, the Australian Energy Market Commission finalised new rules to improve electricity grid resilience to extreme weather events. With climate change expected to increase the frequency and severity of such events, distribution network resilience measures are now being prioritised as part of national grid planning, with direct implications for network investment and long-run reliability standards.
Source: AEMC, May 2025
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