March 2025 Electricity Market Review

Market Commentary

Tropical cyclone Alfred had a significant impact on Queensland’s energy market pricing, generation capacity, and infrastructure during the month of March. This was compounded by the impact of President Trump’s trade tariffs, which affected Australian energy stocks. 

New South Wales futures prices also experienced upward movement while South Australia and Victoria’s price differences over the previous month were negligible. 

Spot pricing in South Australia dropped substantially by 31 percent, while Victoria’s spot prices experienced a 9 percent drop over the previous month. The price difference in New South Wales was negligible. 

US President Donald Trump’s “Liberation Day” tariffs have also caused havoc with energy stocks in Australia, plummeting 8 percent as the price of oil slumped, as Trump’s tariff could mean less world growth and less demand for the commodity. 

What happened in Queensland? 

• Widespread Power Outages: The cyclone’s strong winds and heavy rainfall led to extensive damage to the electricity distribution network. Approximately 300,000 homes and businesses experienced power outages, marking one of the largest disruptions in Queensland’s history.  

• Grid Vulnerability Exposed: The severity of the outages highlighted the vulnerabilities in the region’s power grid, particularly its susceptibility to extreme weather events. Energy providers faced challenges in rapidly restoring power due to the widespread nature of the damage.   

• Solar Energy Disruptions: The extensive cloud cover and heavy rains associated with Cyclone Alfred significantly reduced solar irradiance, leading to a marked decrease in solar power generation. This reduction affected the overall energy mix, increasing reliance on alternative power sources during and immediately after the cyclone. ​  

• Telecommunications Disruptions: The cyclone caused substantial damage to telecommunications infrastructure, leading to widespread service outages. The loss of communication services further complicated coordination efforts for energy restoration and emergency responses.   

• Altered Energy Consumption Patterns: With many businesses closed and residents evacuating or sheltering, there was a temporary shift in energy consumption patterns. While some areas saw decreased demand due to evacuations, others experienced spikes as households increased usage for heating, cooking, and emergency preparations.​ 

• Financial Costs: The economic impact of Cyclone Alfred was substantial, with estimates suggesting costs of up to $1 billion per day due to disruptions in various sectors, including energy. The financial strain encompassed repair costs for damaged infrastructure and economic losses from halted business operations.   

• Inflationary Pressures: The cyclone’s impact on agriculture and supply chains contributed to inflationary pressures, particularly affecting energy prices and related commodities. ​ 

• Calls for Enhanced Infrastructure: In the aftermath of Cyclone Alfred, there were increased calls for investments in more resilient energy infrastructure capable of withstanding extreme weather events. Discussions emphasised the need for modernizing the grid and incorporating more robust renewable energy systems.   

• Government Initiatives: The federal government announced financial assistance and support services for affected communities, aiming to expedite recovery and bolster future resilience against similar events. ​ 

What effect did US tariffs have on the Australian energy sector?

US imposed tariffs included a 10 percent levy on Australian exports to the US with even higher rates for other nations, such as a 34 percent tariff on Chinese goods. 

• Stock Market Decline: The Australian Securities Exchange (ASX) experienced a significant downturn, with energy stocks being among the hardest hit. Companies like Woodside Energy and Santos saw substantial declines in their stock prices, reflecting investor concerns about the potential for reduced profitability due to increased export costs.  
  
• Investor Sentiment: The unpredictability of the tariffs led to panic selling, particularly in the energy sector. This reaction was driven by fears of escalating trade tensions and the potential for retaliatory measures from affected countries.  

Potential Long-Term Implications: 

• Export Challenges: The tariffs have made Australian energy exports to the U.S. more expensive, potentially reducing their competitiveness in the American market. This situation could lead to decreased export volumes and revenue for Australian energy companies.​ 
  
• Global Trade Dynamics: The broader trade tensions initiated by these tariffs may disrupt global supply chains, affecting not only direct exports but also the overall demand for Australian energy resources, especially if major trading partners like China and Japan experience economic slowdowns as a result. ​  
  
• Policy Responses: The Australian government has expressed strong opposition to the tariffs, labelling them as “totally unwarranted” and “not the act of a friend.” Efforts are underway to negotiate exemptions and mitigate the adverse effects on the Australian economy.  

The tariffs have introduced significant challenges for the Australian energy market, affecting stock valuations, export competitiveness, and prompting governmental interventions to address the evolving trade landscape. 

Australian Energy Market Operator winds back on gas shortage warnings

Australia’s gas consumption is dropping faster than expected, easing concerns about seasonal shortages in the coming years, according to industry analysts. 

In its latest forecast for the east coast gas market, the Australian Energy Market Operator (AEMO) has softened its previous warnings that gas shortfalls could occur as early as this year. 

However, AEMO cautioned that longer-term supply risks remain significant, particularly as production from the Bass Strait — a key source for southern states like Victoria — is projected to decline sharply from 2028. 

This marks a notable change in tone from last year, when AEMO warned that “peak-day shortfalls” could start affecting the market as early as this winter.

Federal Government has unveiled its first National Renewable Energy Priority List

The Australian Federal Government has unveiled its first National Renewable Energy Priority List, created in collaboration with states and territories.  

This list includes key generation, storage, and transmission projects from across the country, featuring five renewable or storage projects per state and one from each territory. In total, 56 projects have been identified – 24 focused on transmission and 32 on generation and storage.  

If all go ahead, these projects could deliver an extra 16GW of generation and around 6GW of storage, supplying enough electricity to power over 9 million Australian homes each year. 

Securing timely environmental and planning approvals is essential to progress large-scale renewable energy projects, as are the transmission networks needed to deliver that power to homes and businesses. These decisions must be well-informed and consistent, ensuring we protect nature while also meeting the growing demand for clean energy and addressing climate change. 

To support this effort, the 2024–25 federal budget allocated $96.6 million over four years to improve the environmental approvals process, including $19.9 million specifically to fast-track assessments for nationally significant renewable projects under the EPBC Act.  

Together with Renewable Energy Transition Agreements signed with the states, these investments aim to simplify and align state and federal approval processes. 

New South Wales

Wholesale Electricity Base Load Futures:

*The ASX has ceased to report on electricity futures prices for the year 2024. As a result, reporting now covers the years 2025, 2026, 2027

Average Movement Summary:

New South Wales electricity futures prices for March 2025 began at $110/MWh climbing inconsistently and experiencing a sharp upward jump to close the month at $120/MWh. 

Prices for 2026/27 followed the same trend but at a costlier price. Prices have dropped significantly since January but are still $9/MWh costlier than the same period last year.  

Start comparing current market offers and make your procurement process a breeze. Take the first step and get started here!  

Commentary:

• New South Wales’ average spot prices dropped marginally by a few cents from $90.33/MWh at the end of February to $89.96/MWh at the ed of March. 
• Electricity spot prices in March 2025 are $19/MWh (29%) costlier than in the same period in 2024. 
• New South Wales registered four near market cap events at $17,480.  
• The bulk of trading took place at around the $70/MWh mark. Incidents of negative pricing numbered around 800, with a maximum low of -$999/MWh.  
• Renewables share in March 2025 dropped significantly from 41.1% to 36.5%. Reliance on gas dropped slightly to 0.9%. Coal contribution climbed substantially  to 62.3%. 
• There was a small 0.2% contribution to the energy mix by large-scale batteries in March, costing an average of $265/MWh. Gas generation costs climbed to $314/MWh. Renewables dropped from $71/MWh to $67/MWh. Coal dropped from $163/MWh to 104/MWh. 

Start comparing current market offers and make your procurement process a breeze. Take the first step and get started here!  

Victoria

Wholesale Electricity Base Load Futures:

*The ASX has ceased to report on electricity futures prices for the year 2024. As a result, reporting now covers the years 2025, 2026, 2027

Average Movement Summary:

Victoria futures prices opened the month at $76/MWh, climbing up to $81/MWh by the middle of the month dropping back to close the month at $77/MWh.  

Prices for 2026 and 2027 followed the same pattern but at a slightly lower cost.  

Electricity prices have fallen significantly since the crisis in October 2022, but they are still $13/MWh higher compared to the same period last year. 

Start comparing current market offers and make your procurement process a breeze. Take the first step and get started here!  

Commentary:

• Victorian average spot prices dropped slightly $68/MWh to $62/MWh at the end of March. 
• Electricity spot prices are 19% costlier than the same period in 2024  ($52/MWh).  
• Victoria’s spot pricing returned to stability after a volatile February with the highest price registered at $525/MWh. 
• The bulk of the trading occurred around the $60/MWh mark.  
• Incidents of negative pricing dropped from around 2,000 to 1500, with a low of -$170/MWh. 
• The share of renewables in generation dropped significantly from 47.5% to 41.5%. Conversely coal contribution increased significantly from 50.4% to 57.1%. Gas dropped marginally to 0.9%.   
• Batteries contributed 0.5% to the Victorian energy mix, costing an average of $135/MWh. The average cost of renewables dropped by around a dollar to $48/MWh. Coal dropped by $3 to $76/MWh, and gas dropped substantially from $251/MWh to $141/MWh.  

Queensland

Wholesale Electricity Base Load Futures:

*The ASX has ceased to report on electricity futures prices for the year 2024. As a result, reporting now covers the years 2025, 2026, 2027

Average Movement Summary:

Queensland futures electricity prices opened March at $96/MWh climbing significantly to close the month at $104/MWh. Prices for 2026 and 2027 followed the same trend but dropped sharply at the end of the month. 

Electricity prices have come down since the crisis in October 2022 but are $15/MWh costlier than the same period last year.  

Start comparing current market offers and make your procurement process a breeze. Take the first step and get started here!  

Commentary:

• Queensland electricity spot prices increased from $75/MWh at the end of February to $79/MWh. 
• Queensland spot prices are 6.8% costlier than in March 2024, when the average price was $74/MWh.  
•  Queensland’s spot market is known to be volatile, but the effects of cyclone Alfred did not cause the havoc expected. There was one extreme pricing event at $12,554 and a couple of instances with pricing over $1000/MWh.  
• There were around 1,200 instances of negative pricing with lows of -$38/MWh. The bulk of trading occurred at the $70/MWh mark.  
• Renewables in Queensland performed poorly in March due to the cyclone Alfred and the cloud cover he brought with him. The month’s contribution dropped from 31% to 25%. Coal generation climbed from 62% to 69%. Gas dropped from 6.5% to 5.3% 
• Batteries supplied 0.4% of total generation and the average cost dropped from $163/MWh to $156/MWh. Gas prices increased marginally from $112/MWh to $115/Mh. Coal increased slightly from $86/MWh to $89 and renewables increased from $43/MWh to $51/Mwh.   

South Australia

Wholesale Electricity Base Load Futures:

*The ASX has ceased to report on electricity futures prices for the year 2024. As a result, reporting now covers the years 2025, 2026, 2027

Average Movement Summary:

As usual, South Australia’s wholesale electricity futures prices for March displayed a different trend from other states, due to its different energy mix, of which the majority are renewables and the rest gas.  

2025 futures started the month at $89/MWh, climbing by a matter of a few cents to close the month at $89.67. Interestingly, prices for 2026 and 2027 were much more expensive at $97/MWh. 

Prices have come down substantially since the crisis in October 2022 and are $5/MWh costlier than the same period last year.  

Start comparing current market offers and make your procurement process a breeze. Take the first step and get started here!

Commentary:

• South Australia’s average electricity spot prices dropped substantially from $91/MWh at the end of February to $62/MWh end March (31%).  
•  Electricity spot prices in March 2025 are $5/MWh (7%) cheaper than in 2024. 
• Known for its volatility due to its renewable energy and gas generation fleet, South Australia had a rare stable month of pricing in March with only two instances where pricing was over $500/MWh. 
• Around 2,500 negative pricing incidents were recorded during January 2025 with a low of -$853/MWh. 
• Renewables share of the market remained relatively stable at 80%. Gas generation increased by 2% to 18%.  
• Battery contributed 1.6% and averaged a cost of $117/MWh. Gas prices dropped sharply from $379/MWh to $126/MWh, and renewables dropped somewhat from $56/MWh to $44/MWh. 

Take Control of Your Energy Costs 

There is a lot of activity in the wholesale futures market as the new calendar year starts. Many businesses and industrial energy users are going to the market to make forward purchases of wholesale electricity while prices are relatively soft.  

It is worth observing that businesses can go to the market to secure a new contract in advance, even if their current electricity contract is still in effect. 

Depending on your business’s risk appetite, now could be a good time to secure a new energy contract. 

Act now! Reach out to one of our experienced energy consultants today and gain valuable insight into the potential costs that may lie ahead. Don’t wait—take control of your energy expenses now! 

We hope you have found our electricity market update for February 2025 informative and helpful. We understand that these are challenging times, and we are here to support you. If you’d like to delve deeper into the energy market’s previous months, you can find our monthly energy market reviews here.

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Explainer:  Why we focus on Wholesale Futures Prices

Wholesale Futures Price: This reflects what the market expects wholesale electricity spot rates to be in future periods. The offers that commercial and industrial (C&I) customers receive via Leading Edge Energy are closely correlated to wholesale prices on the ASX Energy futures market; this is why we focus on these prices in our commentary.

Spot Price: This represents how much the spot market is charging for electricity currently based on demand and supply. Spot prices go up when demand is high and supply is tight. You can view live Spot Prices here. 

You can learn more about the difference between wholesale electricity futures and spot prices in our blog section.

Disclaimer: The information in this communication is for general information purposes only. It is not intended as financial or investment advice and should not be interpreted or relied upon as such.

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