Australia’s energy markets are at a crossroads, balancing record renewables with reliability concerns. While new renewable generation continues to come online at pace, the system is showing signs of strain. Sharp price spikes during low-wind events and increased gas reliance during winter peaks have highlighted underlying vulnerabilities. June brought a clear example of this tension: wind output hit record lows just as cold weather drove up demand, exposing gaps in firming capacity and grid resilience.

Meanwhile, gas and electricity prices edged upward in key states, and neighbouring markets like New Zealand began retreating from 100 percent renewables targets in favour of supply security. For large energy users, the message is clear - volatility is here to stay, and strategic energy planning has never been more important.

Electricity Prices

• Victoria:
  Victoria experienced the most pronounced price movements in June, with electricity futures rising 8% from $75.50 to $81.50/MWh. The state also saw the largest price spread of the month, ranging from $74.00 to a high of $81.80 – an 11% spread. A major driver was the sharp NEM-wide wind generation collapse on 12 June, when output plunged below 1,000MW - just 5% of the ~14,000MW installed capacity. This low wind availability, combined with unplanned coal outages, hit VIC especially hard. With limited renewable output and higher demand, gas-fired generators were called on to fill the gap, pushing spot prices above $16,000/MWh.
  
• New South Wales:
  NSW was also significantly impacted by the 12 June wind generation drop, which extended across the NEM. With wind output at historic lows and demand climbing, NSW was unable to rely on imports from VIC or SA - both facing the same shortfall. Electricity futures in NSW rose 3.6% over the month, closing at $121.07/MWh. Tight supply conditions during the mid-June cold snap and high evening peaks amplified pricing pressure, underscoring NSW’s growing sensitivity to renewable variability and inter-regional constraints.
  
• Queensland:
  QLD’s futures rose from $99.38 to $105/MWh by 24 June. Although the state has less wind reliance than VIC or NSW, the interconnected nature of the NEM meant high spot prices and supply tightness in southern states flowed through. June’s uplift reflects this broader system stress, even if local generation was more stable. Further cold weather or unexpected outages could see the trend continue.
  
• South Australia:
  SA weathered the June volatility better than other states, with futures rising only 2% to $93.27/MWh. While it too was affected by the 12 June wind collapse, SA’s high renewable share and strong interconnection helped restore balance quickly. Consistently high wind generation outside of that event - often exceeding 60% of supply - supported price stability, despite the challenging conditions.
  
• New Zealand:
  NZ spot electricity prices surged above NZ$250/MWh in late June during a cold snap that coincided with low wind generation. While prices were relatively calm earlier in the quarter, the combination of winter peaks and firming constraints exposed reserve shortfalls. The shift away from a 100% renewables target has now been formalised, with new investment focused on gas and storage for reliability.

Gas Prices

• Victoria:
  Gas demand in VIC surged in June, driven by a sharp drop in wind generation across the NEM and unplanned coal outages. This led to increased reliance on gas-fired generation to stabilize the grid. The average spot price for the month rose to approximately $13.66/GJ, up from $6–7/GJ earlier in the year. Notably, spot prices at VicHub peaked at $16.48/GJ on 13 June, nearly doubling from earlier in the week. While storage reserves helped cushion some of the impact, the event underscored the system's vulnerability during supply constraints.
  
• New South Wales:
  NSW also experienced increased gas demand in June, particularly during the mid-month period when wind generation was low. The state relied more heavily on gas-fired peaking plants to meet electricity demand. Spot prices averaged around $13.76/GJ, reflecting the tight market conditions. The AER continues to flag elevated winter risks, especially if similar renewable or generator shortfalls occur again.
  
• Queensland:
  QLD's gas market remained relatively stable in June, with spot prices averaging around $14.71/GJ. The state benefited from its proximity to gas production and LNG export facilities, which provided some insulation from the volatility experienced in southern markets. However, increased demand from southern states did lead to higher pipeline flows from QLD, highlighting the interconnected nature of the national gas market.
  
• South Australia:
  SA's gas prices in June averaged approximately $13.64/GJ. The state faced similar challenges to VIC and NSW, with low wind generation leading to increased reliance on gas-fired power generation. Despite these pressures, SA's strong interconnection with other states and its diversified energy mix helped mitigate some of the price volatility.
  
• New Zealand:
  NZ continues to face winter gas supply challenges, with tight reserves and aging thermal capacity placing pressure on the system. Concerns over availability have prompted government focus on storage solutions and extending the life of key gas plants to ensure security of supply. Energy firms are also reassessing firming strategies in light of the policy shift away from 100% renewables.
  
• LNG Netback Prices:
  Netback prices rose 16.8% year-on-year, from a 2024 average of $15.09/GJ to a projected $17.63/GJ in 2025. Although they dropped 17% between January and mid-April (from $19.94 to $16.63/GJ) as global supply stabilised, forward expectations remain high — sitting between $19.70 and $20.30/GJ for Q3–Q4. This continues to place upward pressure on east coast contract pricing and adds complexity for large users navigating procurement in a tight domestic market.

LNG Netback Futures

Wind & Reliability

Wind generation was highly variable across June, with a major system-wide drop on 12 June bringing output below 1,000 MW — just 5–7% of installed capacity. These low-wind events, sometimes called “wind droughts,” are more common in winter, typically caused by lingering high-pressure systems that create calm, still conditions across multiple regions. June also saw reduced wind correlation across states, limiting the ability to share excess generation and increasing pressure on gas peakers and interconnectors.

Ongoing transmission constraints in parts of VIC and southern NSW led to curtailment at times, even when wind output recovered. New Zealand experienced similar conditions, with low wind and cold weather tightening reserves and triggering brief price spikes.

What does this mean for you?
Low-wind periods won’t always lead to price spikes, but they do increase the risk. Businesses reliant on fixed renewable supply, or those exposed to spot market volatility, should consider how they’re managing firming and forecasting. Diversifying energy sources and improving demand-side flexibility are key tools in navigating these events.

Gas Supply Risks Loom Despite 2025 Surplus

The Australian Competition and Consumer Commission (ACCC) has warned that, despite a projected east coast gas surplus of 77–112 petajoules (PJ) for 2025, southern states like Victoria and New South Wales may still face winter supply shortfalls. This is due to infrastructure constraints limiting the transport of gas from Queensland and declining production in southern fields. The ACCC suggests that liquefied natural gas (LNG) imports may become necessary to meet demand, potentially leading to higher prices for industrial users.

What does this mean for you?
Businesses with significant gas usage should monitor supply developments closely. Consider evaluating alternative supply arrangements or hedging strategies to mitigate potential price volatility and ensure continuity of operations during peak demand periods.

Falling LGC Prices Could Create Strategic PPA Openings

Large-scale Generation Certificate (LGC) prices fell below $40 in June — their lowest point in over a year. The drop reflects strong renewable output earlier in 2025, weaker voluntary demand, and increasing uncertainty around the role of LGCs in future corporate sustainability strategies. Market participants are also watching developments in the Safeguard Mechanism, which could influence certificate value going forward.

What does this mean for you?
If your business is involved in green procurement or has a Power Purchase Agreement (PPA), this price movement may affect certificate revenues or create more favourable buying conditions. It’s a good time to review whether voluntary LGC purchases or secondary market opportunities could help meet decarbonisation goals at a reduced cost.

Federal Budget Expands Clean Energy Finance Corporation by $2 Billion

In the 2025–26 Federal Budget, the Australian Government announced a $2 billion expansion of the Clean Energy Finance Corporation (CEFC). This initiative aims to unlock an additional $8 billion in private investment for renewable energy and low-emissions technologies, reinforcing the nation's commitment to a sustainable energy future. The expanded funding will support the modernization of Australia's electricity grid, enhance energy efficiency, and accelerate the deployment of clean energy projects. This move aligns with the government's broader "Future Made in Australia" agenda, which focuses on fostering domestic industries and reducing carbon emissions.

What does this mean for you?
For businesses and investors, this expansion presents new opportunities to engage in the growing renewable energy market. The increased funding may lead to more favorable financing options for clean energy projects, improved infrastructure, and a more robust energy sector. Stakeholders should stay informed about upcoming CEFC initiatives and consider how they can participate in or benefit from these developments.

As conditions tighten, a clear-eyed strategy can make all the difference. Whether you’re planning upgrades, reviewing contracts, or exploring renewables, now’s the time to take stock. Reach out for tailored advice on staying ahead in our shifting energy landscape.