Australian Energy & Environmental Market Update - April 2025

Australian electricity market

• The NEM-wide volume weighted average spot price increased by 16% this month compared to last, reaching $94.43 /MWh. All regions, except for TAS, experienced an increase in month-to-month spot prices. TAS remained stable this month, while the SA spot market observed the most significant change, with a $22.82 /MWh (34%) increase since March.
• Daily average spot prices remained relatively stable this month in VIC, SA and TAS, while QLD and NSW markets experienced several high trading intervals on the 7th and 9th of April. On the 9th, QLD and NSW markets nearly reached market cap at 5:20 pm, peaking at $15,335 /MWh and 17,498 /MWh, respectively. These price spikes only lasted for 3 trading intervals before softening in the evening, primarily driven by a lull in wind generation coinciding with sunset and reduced solar generation this month.
• Between the 18th and 20th of April, all NEM regions experienced a softening of prices, underpinned by a decline in underlying demand over those days. Daily demand dropped to its lowest for the month on the 20th, 7% below the monthly average, likely due to the Easter holiday period.
• This month, no NEM regions reached market cap price of $17,500 /MWh, however all regions experienced an increase in trading intervals above $300/MWh. Despite this increase, the frequency of high trading intervals remained consistent with that of April last year.
• In the futures market, prices reflected a strong Q2 for CY25 and most CY26 vintages. Prices experienced an uptick at the start of the month before softening slightly towards the end, though still experiencing an increase since last month.
• NSW CY25 futures experienced the largest movement throughout the month, beginning the month at a low of $114.17 /MWh before peaking at $131.12 /MWh on the 7th of April, following similar trends to NSW spot market pricing.

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Renewables & BESS markets

Overall, NEM-wide variable renewable energy (VRE) penetration across all assets decreased by 0.63 percentile points, to land at 33.5% this month, driven by a drop in utility wind generation and lower rooftop solar generation in the southern states.

Monthly rotating focus: Wind asset performance

Each month we feature a different asset type - rotating between coverage of solar, wind and BESS projects.

This month's focus is wind asset performance.

• Aggregate wind generation dropped by 590 GWh since March, primarily driven by a decline in output in NSW (245 GWh) and SA (194 GWh). The NEM-wide monthly wind dispatch weighted average price (DWAP) surged upwards 21% (+$12.34 /MWh) from last month.
• Wind assets in QLD observed higher DWAPs compared to other regions (~$100/MWh), while SA and VIC assets had DWAPs ranging between $40/MWh and 80/MWh. This reflects QLD’s relatively limited wind capacity, which means it as has less influence on spot prices. Whereas high wind farm capacity in SA and VIC resulted in lower prices during periods of high wind generation.
• Wind assets earned on average $15k per MW in merchant revenue (including LGC revenue) in April, which is 13% below the average earned in March.

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Environmental markets

Large-scale Generation Certificates (LGCs)

• The LGC market experienced a notable downward trend with spot prices declining to $19.75/MWh late in April after reaching levels of ~$22.25/MWh   earlier in the month.
• The price decline was driven primarily by a surge in supply with record-high weekly creation figures and softening voluntary demand. This was likely influenced by broader energy transition dynamics and policy incentives.
• Participants exhibited caution, with some buying interest stabilising prices near the $20.00 per certificate mark, but the overall tone remained subdued due to expectations of continued surplus of supply.

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Small-scale Technology Certificates (STCs)

• The clearing house was in deficit for most of April, with the shortfall sitting in excess of 4 million certificates.
• Certificate generation was marginally softer, but participants await further clarification on how the newly-announced battery incentives might interplay with the Scheme. Reported trade activity was bolstered by several strip trades executed early in the month at $39.83/MWh, with tenors stretching out to Mar26.

Victorian Energy Efficiency Certificates (VEECs)

• The VEEC market faced steady downward pressure, with spot prices dropping from around $97.75/certificate to below $96.00/certificate, amid increasing supply from installers, softer demand and less onerous compliance requirements. Submissions for VEECs were lower at just over 53k/day, indicating oversupply and cautious buying. Certificate creations were dominated by HVAC installations (~300k), with heat pumps and lighting upgrades also generating VEECs in large quantities.

Energy Saving Certificates (ESCs)

• The ESC market stayed relatively quiet, with minimal trades, although there was some mild softening in the second week of April, with spot prices at around ~$15.25/MWh. Activity picked up early in April but waned towards the end of the second week . More than 700k certificates were generated in the month, with new registrations dominated by a large quantity of commercial lighting installations in the final days of April.

Peak Reduction Certificates (PRCs)

• PRC prices significantly declined in mid-April, falling from 2.66/certificate to below $2.50/certificate amidst rising certificate issuance, which hit 1.2 million weekly and a sharp increase in daily generation volumes. Battery-installation (BESS1) certificates, which participants initially speculated would only be produced in limited quantities due to onerous reporting requirements, have only grown in their share of generation, with more than 1.1 million BESS1s created in the week from April 14th.

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Market news

Another Outage at Callide 3 Coal-fired Power Station

• On the 4th of April, the Callide C3 coal unit in QLD was taken offline after a large clinker detached from the furnace wall, causing a pressure surge. The unit sustained significant damage and is not expected back online until at least May 30th.
• This marks yet another reliability setback for the plant, which has only been operational around 50% of the time since mid-2022, following the major explosion at the adjacent Callide C4 unit in 2021. The event highlights the growing concerns about the reliability of QLD’s ageing coal fleet, which is increasingly prone to breakdowns and is adding further instability to the grid.
• Just days after the incident, the QLD LNP announced plans to extend the operational life Callide B, beyond Labor’s 2028 deadline.

Clean Energy Regulator Published the 2023-24 Safeguard Mechanism Report

• The Clean Energy Regulator published Safeguard Mechanism data on April 15th.
• A total of 219 safeguard facilities surrendered 7.1 million ACCUs in 2023-24, a significant increase from the 1.2 million ACCUs surrendered in the previous year. Rio Tinto retired the highest volume with a total of 1.17 million ACCUs. BHP followed, retiring 720,070 ACCUs, while Woodside retired 633,924 units.
• 1.4 million SMCs were surrendered to meet compliance obligations, with 62 facilities receiving a total of 8.3 million SMCs for their below baseline emissions. This could indicate that most entities are banking them for later use when emissions baseline declines tighten further.
• Out of the total SMCs issued, Shell's Prelude floating LNG facility (off Australia west coast) received the largest share, at just over 1 million units. Anglo American's Capcoal mine in Queensland followed with 1 million units, while its Grosvenor mine received nearly 623,000 SMCs.

Q1 2025 Quarterly Energy Dynamics Report Released

Highlights from the Q1 2025 QED report on the east coast electricity and gas markets:

• Record high underlying peak demand, up 340 MW from last Q1 record, driven primarily by increased demand in VIC and SA. Despite this increase to underlying demand, operational demand decreased by 0.8%, owing to a significant increase in rooftop solar output (+16%).
• Wholesale spot pricing across the NEM increased since last quarter (+9%), driven by a significant uplift in TAS prices (+67%). This upward pressure was attributed to the increased operational demand in southern mainland regions and higher-priced coal and hydro generation offers. Prices set by coal generators increased from $71/MWh in Q1 2024 to $84/MWh in Q1 2025, and prices set by hydro generators rose from $85/MWh to $123/MWh.
• Utility-scale solar and wind set prices more often this quarter, up from 10% of all intervals in Q1 2024 to 15% in Q1 2025.
• East Coast wholesale gas prices reached a new Q1 record, although still lower than Q4 2024. Gas demand fell by 2% from last quarter, including gas-fired generation, with VIC recording the largest decline.

Source: AEMO | Quarterly Energy Dynamics (QED)

Australian federal election outcome

• The Labor Party secured a historic majority i in the 2025 Australian federal election. This is expected to have a favourable outlook on renewable energy and carbon markets. Increased market activity and optimism were observed as markets opened post-election.
• Labor has a strengthened mandate to implement its policies in the upcoming term, increasing confidence and stability in the direction of carbon and energy market policies.
• The potential increase in Australia's Nationally Determined Contribution to 60-75% reduction by 2035 (on 2005 emission levels) will put the focus on the energy sector to address key renewables bottlenecks through policies and initiatives. Key examples include the expansion of the Rewiring the Nation Fund, the $2.3 billion Cheaper Home Batteries Program set to roll out in July, emerging certification frameworks such as Renewable Energy Guarantees of Origin (REGOs)  and the continuation of the Capacity Investment Scheme (CIS).

Continue reading about the election outcomes: Power shift: What Labor’s election victory means for Australia’s energy and carbon markets

What this month’s developments mean for market participants

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Australian energy market

Increased volatility in the energy market underscores the need for effective hedging against market price risks, with strategic planning remaining essential 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.

Australian environmental markets

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.

Do you need help navigating energy and environmental markets?

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.

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