The latest edition of our monthly Australian Energy & Environmental Market Update is now available. Keep reading for energy and carbon pricing movements, policy updates and other news.
This month we cover energy and environmental market movements, AEMC’s updated NEM’s market price cap for 2025-2026, Rio Tinto’s major solar and battery deal and more.
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Each month we feature a different asset type - rotating between coverage of solar, wind and BESS projects.
This month's focus is solar.
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In 2023, the AEMC announced that the base rates for the market price cap (MPC) and cumulative price threshold (CPT) will progressively increase from July 1st 2025, through to July 1st 2027. On February 27th, the AEMC updated the NEM's MPC and CPT to align with the consumer price index (CPI) for the 2025-26 period.
The MPC represents the maximum price that can be reached in the spot market during any trading interval, while the CPT is the accumulated limit of prices over a 7-day period.
The values for 2024-25, the new base values, and the CPI-adjusted amounts for 2025-26 are as follows:
Rio Tinto has partnered with Edify Energy in a major renewable energy deal. This includes 540 MW of solar power and a 600 MW / 2,400 MWh BESS, the largest DC-coupled battery in Australia. Rio Tinto will purchase 90% of the power and battery storage from the Smoky Creek & Guthrie’s Gap Solar Power Stations for 20 years.
Rio Tinto Chief Executive, Australia, Kellie Parker referred to integrating battery storage as crucial to “our efforts to make the Boyne aluminium smelter globally cost-competitive, as traditional energy sources become more expensive”.
When combined with the 2.2 GW of renewable wind and solar PPAs Rio Tinto announced for its Gladstone operations in 2024, the four contracted projects are expected to supply 80% of Boyne smelter’s annual average electricity demand, reducing the smelter’s scope 1 and 2 emissions by 70%, or 5.6Mt of carbon dioxide equivalent per year.
The 2025 Federal Budget has allocated $3.2b over 19 years to expand Australia’s green metals industry and support sustainable mining, particularly in steel and aluminium.
The funding also supports domestic green hydrogen projects, which will be crucial in lowering emissions in heavy industries.
Additionally, the government announced a $1.8b in funding to extend the life of the Energy Bill Relief Fund by 6 months. This means that eligible Australian households and small businesses can expect $75 off their electricity bills per quarter until December 2025.
The Australian federal and state governments have identified 56 priority renewable energy projects. These include wind, solar, battery, pumped hydro, hybrid, and transmission projects, aimed at meeting renewable energy targets. The list features 24 transmission projects and 32 generation and storage projects, totalling 16 GW of wind and solar capacity and 6 GW of storage capacity.
Priority projects will receive coordinated support for regulatory, planning, and environmental approvals to expedite the process. Notable projects include the Liverpool Range and Spicers Creek wind projects, as well as the Valley of the Winds and Solar River solar and BESS projects.
These initiatives are expected to enhance the stability and resilience of the energy grid, reduce reliance on coal, and make energy more affordable, addressing the grid's exposure to international price spikes and reliance on expensive coal.
This month, the energy market experienced subdued spot pricing across most NEM regions. However, NSW still saw some periods of volatility, with trading intervals just below the market cap. Subdued prices, and lower solar DWAPs means entities interested in using solar to reduce their scope 2 emissions continue to have significant buying power.
To appropriately hedge against market price risks and volatility, strategic planning remains key for both demand and supply side market participants.
The CORE Markets team works with renewable energy developers and corporate buyers to manage market risks. Get in touch to explore how we can support your energy market approach.
LGC prices declined this month, as ongoing oversupply from strong certificate creation continues to force sellers to compete in a crowded market. STC submission volumes remained strong, while VEEC and ESC creation continued their upward trend.
The continued decline in LGC prices presents an opportunity for Australian businesses looking to create and/or deliver on sustainability objectives to do so for a lower cost than ever before. The CORE Markets team works with demand and supply side market participants to help navigate environmental market complexities. Get in touch to see how we can help with your strategic and transactional needs.
The events outlined in this month's update highlight the evolving nature of energy and environemental markets and the complexity of the net zero transition.
To discuss your unique requirements, get in touch with our team today to see how we can help.
Australian Energy & Environmental Market Update - March 2025
As the Australian federal election approaches in May 2025, carbon market participants are facing an exciting yet uncertain phase. We explore four potential election scenarios and key upcoming milestones for Australian carbon market fundamentals.
