Energy Market Trends – December 2025
Electricity Market
Overview
December 2025 marked a relatively soft finish to the year for the National Electricity Market (NEM), with wholesale prices generally moderating despite the onset of summer conditions. Strong renewable output and rising storage participation helped contain price outcomes across most regions, while short, heat-driven demand events still created pockets of intraday volatility.
AEMO reported that average monthly NEM wholesale prices eased through the quarter, with December averaging ~$48/MWh, compared with ~$52/MWh in October and ~$49/MWh in November.
Market Dynamics
The December quarter was notable for a major structural milestone: renewables (including storage) supplied more than 50% of quarterly NEM energy needs for the first time, reflecting continued commissioning of new wind and large-scale solar, strong weather conditions, and increased contribution from batteries.
Coal output continued its longer-term decline and reached an all-time quarterly low, while gas-fired generation also recorded very low quarterly output, consistent with stronger renewable availability and softer volatility conditions.
At the same time, the market continued to experience operational complexity: record levels of negative pricing and ongoing transmission congestion in renewable-rich corridors reinforced the importance of dispatchability, storage, and curtailment management for large users assessing risk and contract structure.
Spot Price Trends
While average prices were moderate, December still displayed the familiar “solar trough / evening ramp” pattern. Daytime pricing was frequently suppressed by strong solar output, while late afternoon and evening peaks were more sensitive to demand, generator availability, and interconnector constraints. AEMO also noted a heatwave-driven lift in operational demand in mid-December, highlighting how quickly conditions can tighten during extreme weather.
Regional Highlights
Victoria & South Australia: Continued to benefit from strong renewables and increasing storage support, though congestion and curtailment remained relevant during high-output periods.
New South Wales & Queensland: Summer demand variability re-emerged as a key driver, with price outcomes remaining highly sensitive to heat events and dispatchable availability.
Tasmania: Hydro and interconnector dynamics continued to influence volatility relative to mainland regions.
Natural Gas Market
Overview
East coast gas conditions remained tight in late 2025, shaped by structural supply constraints and operational disruptions. AEMO highlighted that gas market outcomes in the quarter were influenced by major outages at the Longford and Otway gas plants, while storage was used to support demand on colder days and ended the quarter at comparatively low levels versus recent years.
Market Drivers
Key factors supporting ongoing gas sensitivity included:
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Reduced supply flexibility during outage periods and maintenance cycles.
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Continued reliance on storage to manage short-term demand and security of supply.
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Ongoing exposure to broader LNG-linked pricing dynamics (particularly relevant for contract negotiations and renewals).
Policy, Infrastructure & Regulatory Trends
December’s market narrative reinforced the central operational themes of the transition: accelerating renewable and storage penetration, ongoing transmission build requirements, and system security settings that increasingly reward flexibility. AEMO’s Q4 reporting highlighted the pace of change in demand shape driven by consumer energy resources (rooftop PV and batteries), with minimum operational demand continuing to set new lows in several regions.
Outlook & Risks
Looking into summer 2025–26, the key risks remain:
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Heat-driven demand spikes and the potential for rapid tightening during extreme weather events.
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Unplanned outages at ageing thermal and gas infrastructure.
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Transmission constraints and curtailment, which can increase basis risk and complicate hedging outcomes for large users.
For large C&I customers, this environment continues to favour proactive procurement planning, clear risk settings (shape, firmness, caps), and regular bill/contract validation to ensure network, metering, and pass-through costs remain correctly applied as market conditions evolve.
Austech Power & Gas supports clients by translating market movements into practical procurement and risk strategies—covering tendering, contract structuring, invoice validation, and portfolio optimisation across electricity and natural gas.