July & August 2025 – Review of Market Events
By Aaron Bool
The electricity market across July and August highlighted two distinct phases, with July marked by stability and August defined by renewed volatility. July’s subdued conditions reflected steady renewable generation, limited disruptions, and relatively soft demand, leading to downward pressure on both spot and forward markets. In contrast, August saw a return of system stress, with weak wind output and multiple coal unit outages driving sustained volatility, particularly in New South Wales, Victoria, and South Australia.
During July, the market was comparatively stable, marking a notable shift from the volatility often seen in previous winters and the volatility of last month. The increase in the market price cap from $17,500/MWh to $20,300/MWh had little immediate impact, with only localised storms in South Australia causing brief volatility. Queensland’s persistently low wind output limited price softness, but overall, conditions were supported by strong solar and wind availability. South Australia experienced bursts of FCAS volatility linked to interconnector constraints, while a new NEM-wide wind generation record late in the month helped contain spot prices despite some brief spikes across the mainland.
August reversed much of this calm. South Australia bore the brunt of volatility at the start of the month, with low renewable output triggering a rare spot price spike above $14,000/MWh and subsequent FCAS stress that triggered the ancillary service markets Administered Price Cap. Coal reliability emerged as a central issue, with outages across Bayswater, Eraring, Mt Piper, Vales Point, Gladstone, and Yallourn cutting available capacity and driving elevated prices in New South Wales and Victoria. Yallourn’s ongoing turbine problems deepened concerns, with delays to the return of Unit 2 pushing into October. Towards the end of the month, volatility eased as Queensland recorded its lowest ever operational demand, a milestone underscoring the growing influence of rooftop solar. At the same time, there was growing discussion about the possibility of extending Eraring’s closure out to 2030, with articles highlighting government support options despite the plant’s ongoing profitability.
ASX futures markets reflected the contrasting conditions only gradually. July saw widespread declines in CAL26 pricing, with NSW, VIC, and QLD falling to some of their lowest levels in nearly a year, while SA recorded a modest gain. Across July–August, the movements were mixed: NSW fell by $3.38 to close at $118.02/MWh, VIC dropped $3.72 to $77.92/MWh, QLD eased by $1.54 to $101.50/MWh, while SA rose $1.31 to $95.72/MWh. These results suggest that while July’s calm drove pricing lower, the outages and volatility of August created a delayed tightening effect, with the futures market slow to fully absorb the scale of operational stress. The after-effects of August’s events may yet emerge, with further impacts potentially appearing in September.
Overall, the July–August period illustrated the fragility of the market. Even during extended calm, forward pricing remained sensitive to unplanned outages and reliability concerns. The market will remain highly sensitive to any unplanned outages or prolonged dips in renewable output, particularly as the industry moves into the maintenance season for power stations. If planned outages coincide with unexpected events, especially extended ones such as Yallourn’s ongoing issues, available supply could tighten sharply, creating renewed upward pressure on both spot and forward markets.
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