Energy Market Trends for January 2025
Electricity Market: January 2025 opened the year with significant pressure on Australia’s energy systems, as extreme summer temperatures tested grid reliability and reignited political discourse on the nation’s energy mix.
Market Dynamics Record-breaking heatwaves across eastern Australia led to a surge in electricity demand, resulting in strain on the grid and multiple Lack of Reserve (LOR) alerts issued by AEMO. Aging coal-fired generators were called upon to meet peak loads, underscoring delays in firming infrastructure to support renewable energy integration.
Policy Debates The federal government proposed a National Energy Reliability Scheme aimed at penalising jurisdictions that retire dispatchable generation without ensuring sufficient replacement. Critics labelled the move as punitive, while supporters argued it promotes a responsible transition strategy.
Infrastructure Challenges Delays continued across several Renewable Energy Zones (REZs), particularly in NSW and QLD, due to complex grid access approvals. Industry leaders warned that unless streamlined, such delays could undermine investor confidence and stall Australia’s 2030 renewable energy targets.
Natural Gas Market: Australia’s natural gas sector saw renewed attention as gas-fired generation was relied upon to support grid stability during periods of low wind output and high demand.
Policy Changes The ACCC released a quarterly report warning of looming east coast gas shortfalls by late 2025 unless urgent action is taken to bring new supply online. The report called for faster project approvals and a more transparent pricing mechanism.
Market Pressures High temperatures drove up gas demand for electricity generation, lifting spot prices by more than 15% across eastern states. Calls intensified for prioritising domestic gas supply amid continued LNG export obligations.
State-by-State Overview New South Wales (NSW):
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Electricity: Reliability challenges intensified due to REZ connection delays and intermittent renewable performance.
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Natural Gas: Infrastructure constraints and pipeline bottlenecks hampered gas flow flexibility during peak demand.
Victoria:
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Electricity: Retail price increases and blackout warnings reignited debate about the timing of coal retirements.
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Natural Gas: Industry groups continued to oppose high permit fees, warning of long-term supply impacts.
Queensland:
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Electricity: Ongoing policy uncertainty and heatwave-induced demand spikes impacted market stability.
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Natural Gas: Production remained stable, but infrastructure bottlenecks emerged as a key issue.
South Australia:
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Electricity: Elevated reliance on gas peakers during low wind days added to wholesale price volatility.
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Natural Gas: Continued dependence on pipeline supply highlighted regional vulnerability.
Western Australia (WA):
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Electricity: Strong renewable ambitions continued, with project delivery concerns due to supply chain constraints.
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Natural Gas: Export performance remained robust, though policy discussions on domestic reservation intensified.
Policy and Regulatory Updates
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National Energy Reliability Scheme: Proposed to link retirement of dispatchable generation with mandated firming capacity.
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East Coast Gas Supply: ACCC flagged urgent action needed to prevent 2025 shortfalls.
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Infrastructure Planning: Delays in REZ access approvals remained a consistent impediment.
Conclusion January 2025 highlighted the real-time challenges in balancing demand surges with a transitioning energy mix. Policy and regulatory responses will be pivotal in ensuring both reliability and investor confidence in the face of climate extremes and shifting market expectations.
Contact Us Today at Austech Power & Gas, we are committed to supporting Australian businesses in navigating the evolving energy landscape. From procurement strategy to regulatory advisory and renewable integration, our expert team provides tailored solutions to help you stay resilient, compliant, and cost-effective. Reach out today to design a smart energy strategy that aligns with your goals for 2025 and beyond.