As Winter 2025 dawns, Australian businesses face heightened challenges on the energy outlook. Wholesale electricity prices climbed by 45% year‑on‑year in New South Wales, marking the state as Australia’s most expensive energy market. Gas supply constraints, ageing coal‑fired stations, and policy shifts are converging to create a turbulent environment. This outlook equips businesses with insights on market drivers, efficiency strategies, and prudent broker engagement.
“Winter 2025 will test energy resilience across the National Electricity Market. Planning and the right partnerships will be vital,” says Nick Halaris, MD of Electricity Brokers Australia.
Right now In Australian, businesses are navigating one of the most volatile energy markets in recent memory. With a shifting generation mix, increased gas constraints, and evolving government policy, energy procurement is no longer a passive task. Smart businesses are adapting by refining their procurement strategies, embracing renewables, and leaning on expert energy brokers to reduce exposure to risk.
Market Drivers: Why Prices Are Rising – What’s Changed in 2025?
The Australian energy landscape is undergoing structural transformation. Coal-fired power stations are ageing and closing, gas supply is tightening, and renewables are flooding the market during the day. These forces are impacting price patterns and creating new volatility.
Wholesale Prices
In the National Electricity Market (NEM) averaged $123/MWh in Q1 2025, up from $85/MWh in Q1 2024. This 45% increase reflects higher gas‑fired generation costs and reduced coal output.
Eraring and Yallourn Closures
The scheduled closure of AGL’s Liddell Power Station in 2023 was just the beginning. EnergyAustralia’s Yallourn power station will close by 2028, and the fate of Origin’s Eraring station, originally set for 2025, remains uncertain, despite recent government negotiations to keep it online longer.
Source: ABC News
Source: Latrobe City Council
This creates pressure on supply, particularly during peak demand.
Gas Constraints and Market Stability
Australia’s east coast gas market continues to tighten. According to the ACCC, the gas shortfall risk remains present in 2025, especially during Q1 and winter months. Gas-fired peaking stations are crucial for balancing intermittent renewables, but limited domestic supply and export obligations are driving up costs.
Government Policy: A Double-Edged Sword
Government policy is playing a bigger role than ever in shaping energy market outcomes. While carbon reduction goals and clean energy incentives are welcome, policy instability and contradictory approaches have added layers of risk.
Net Zero and Emissions Targets
Australia remains committed to reducing emissions by 43% below 2005 levels by 2030. But there is growing uncertainty around the financial modelling, especially with a potential change in government.
These shifting policies influence the commercial viability of coal and gas, and affect investment confidence. Businesses need to plan for higher price volatility as a result.
Price Caps and Market Interventions
The federal government has introduced price caps on domestic coal and gas sales, attempting to shield consumers from global price spikes. However, these interventions have created tension with energy producers, many of whom argue that profitability is being compromised.
“Short-term price controls create long-term supply issues. Policy interventions must be paired with long‑term market certainty or risk supply shortages.” warns Nick Halaris, Managing Director at Electricity Brokers. “Businesses need to understand how government levers are affecting long-term cost curves.
The Renewables Paradox
Renewables are both a blessing and a challenge. They offer low-cost generation, but their variability requires careful balancing. Renewables supplied 38% of NEM generation in Q1 2025, up from 32% a year earlier. Daytime solar and wind output are lowering off‑peak prices but creating steep price ramps at dusk.
Rooftop Solar and Daytime Price Collapse
Australia leads the world in rooftop solar per capita. This has contributed to sharp reductions in daytime wholesale electricity prices. However, it’s also made grid operation more complex and pushed coal and gas generators into unviable territory.
This “duck curve” is shifting the value of energy procurement strategies. Businesses that can shift usage to mid-day or install batteries will increasingly benefit.
Large-Scale Renewables and Curtailment Risk
AEMO data shows that large-scale solar and wind projects are sometimes being curtailed due to transmission constraints or oversupply. This has implications for both generators and large users considering behind-the-meter solar solutions.
AEMO reports 5% curtailment of large‑scale renewables due to transmission bottlenecks. Businesses with behind‑the‑meter solar may face export limitations on windy or sunny days.
Source: AEMO Quarterly Energy Dynamics Q1 2024
Advanced Procurement and Efficiency Strategies for Winter 2025
The traditional fixed-rate contract no longer provides sufficient cover. Businesses are now exploring more sophisticated energy procurement approaches.
Portfolio Approaches
Many mid-to-large energy users are splitting their usage into portfolio arrangements: part fixed-price, part spot-exposed, part renewables. This diversification helps manage risk while enabling access to lower-cost energy during favourable periods.
Renewable Power Purchase Agreements
Businesses are increasingly entering into Power Purchase Agreements (PPAs) with renewable generators. While complex to structure, these contracts can provide long-term price stability and emissions reduction benefits.
A recent report from the Clean Energy Council highlights that commercial PPAs accounted for over 30% of new renewable capacity additions in 2024.
Demand Flexibility and Load Shifting
Through demand flexibility programs, businesses can adjust energy use in response to price signals. With smart metering and energy management systems, this becomes more practical.
“Businesses that optimise demand during peak periods are seeing 15-25% savings compared to standard rates,” says Nick Halaris. “This isn’t theoretical anymore—it’s happening.”
Why Energy Brokers Are More Important Than Ever
The days of a simple price comparison are over. Navigating contract terms, market trends, and regulatory risks requires deep expertise.
A good broker should:
- Analyse multiple market indicators
- Understand contract intricacies, including pass-through clauses
- Help you benchmark against your industry peers
- Flag upcoming policy risks
- Assist with grant applications for energy efficiency
With so much on the line, brokers act not just as price finders, but as strategic energy advisors.
The Hidden Costs of In-action
Many businesses still approach energy procurement as a once-every-three-years event. In this new environment, that’s a risk.
Failing to act early can lead to:
- Being locked into inflated prices during a market spike
- Missing out on grant funding or subsidies
- Exposure to penalties for peak usage or demand spikes
- Reputational damage from poor emissions transparency
There’s a growing expectation—from boards, customers, and investors—that businesses have a solid energy strategy in place.
A Call to Smarter Energy Management
The 2025 energy market in Australia demands more from businesses. Those who embrace complexity, plan early, and seek the right expertise are positioning themselves for success.
This isn’t about panic, it’s about preparedness. And smart energy procurement is one of the few tools businesses can fully control.
Want helping with your energy? Speak to an experienced energy broker.
