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Market update: Winter market volatility can open long-term opportunities
After a turbulent end to Q2 2025, short-term wholesale energy prices remain elevated. But beneath the surface, long-term opportunities are emerging for businesses looking to stabilise costs and strengthen their net zero strategies.
What’s driving the volatility?
Spot market conditions across the National Electricity Market (NEM) were volatile in June, triggered by a combination of factors:
- Baseload generator outages, low wind output and strong winter demand caused coincident price volatility across all NEM states.
- Q2 2025 ASX futures contract prices settling significantly higher than earlier market expectations—for example, NSW Q2 2025 baseload futures closed at around $160/MWh and Victoria at $138.50/MWh.
- Forward prices have largely stabilised since June, with only slight upward movement in Victorian contracts.
Environmental market trends
There’s been a steep decline in Large-scale Generation Certificate (LGC) prices.
- LGC spot prices dropped from over $20/certificate to around $15 in June—the lowest level since 2020.
- New renewable energy projects beginning operations have increased supply, putting downward pressure on LGC prices.
- Long-term LGC contracts are currently available at sub-$15 pricing out to 2030.
Opportunities for businesses
While short-term volatility continues to make headlines, longer-term market trends are starting to signal a shift in dynamics.
- Forward prices for Calendar Year 2027 and 2028 contracts are currently lower than those for 2026.
- This pricing structure is particularly noticeable in Queensland.
- In parallel, Large-scale Generation Certificate (LGC) prices have reached their lowest levels since 2020.
These developments may be of interest to businesses reviewing their energy procurement strategies or exploring pathways to progress net zero goals. As always, we recommend seeking independent advice before making commercial decisions.
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Disclaimer: The information enclosed is general information only, it cannot be relied upon as legal or financial advice. No consideration has been given or will be given to the individual investment objectives, financial situation or needs of any particular person or entity. Photo by José Alejandro Cuffia on Unsplash.