March 2025 – Review of Market Events
By Aaron Bool
March’s electricity market opened with significant volatility as Tropical Cyclone Alfred impacted large parts of Queensland and New South Wales. The cyclone initially disrupted supply and left over 70,000 customers without power due to a combination of interconnector issues and Lismore’s static var compensator fault. As the event progressed and further network damage occurred, the overall result was that more than 337,000 customers were left without power across the affected regions. Elevated demand – driven by heat, humidity, and reduced solar generation – further amplified pressure on the market. Solar output was limited due to cloud cover, while high winds curtailed wind generation as turbines were temporarily shut down to avoid damage. These compounding factors drove ASX forward prices higher across all states during the first part of the month.
In the middle of March, conditions remained unstable. NSW and QLD experienced spot price volatility, with NSW entering a Lack of Reserve (LOR1) event. South Australia also experienced significant transmission issues, leaving approximately 26,000 customers without power. ElectraNet, the operator and owner of SA’s transmission network, reported that the dry conditions due to lack of rain, combined with a build-up of dust and salt on insulators, with foggy weather conditions, created a conductive path and led to multiple faults on the insulators, flowing through which created the network issues.
By the latter part of the month, calmer conditions and more consistent generation returned to the market. Dispatch periods stabilised, and although renewable output remained subdued, particularly solar due to ongoing cloud cover, average spot prices remained relatively attractive. The occasional brief spot price spike was observed during the afternoon peak periods, particularly in hot weather, but overall, the market saw reduced volatility. ASX CAL26 pricing, after peaking mid-month, retreated toward the levels recorded at the beginning of March. NSW ended slightly down by $0.26, while QLD, VIC, and SA each recorded slight increases – $0.99, $1.11 and $0.3, respectively – indicating that the market had essentially rebalanced following the cyclone-driven disruption.
With the federal election approaching in May, alongside current market uncertainty and the ongoing energy transition, the electricity market may experience upward pressure with increased gas consumption as the weather cools, leading to elevated prices and increased volatility. On the other hand, concerns surrounding US President Trump’s political trajectory could introduce further economic uncertainty, potentially resulting in a slowdown or even a recession- locally and/or globally. Such conditions typically lead to downward market movements driven by weaker demand across the economy. As the market evolves and winter demand approaches, key influences will include policy developments, infrastructure reliability, and prevailing weather conditions.
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