Price volatility in New South Wales and Queensland continued from November into the first half of December. This was driven by the same underlying factors of transmission outages, coal unit unavailability and temperature-driven high demand. Spot prices exceeded $1,000/MWh on 7 of the first 12 days in New South Wales and 6 days in Queensland.

The month could be described as one of two halves. A reprieve from hot weather, generation capacity coming back online, and the expected drop in demand going into the Christmas and New Year period led to a significant drop in spot prices. The average price in the second half of the month decreased by 55% in Queensland, 67% in New South Wales, 75% in Victoria, and 78% in South Australia.

The average price for the month in New South Wales ($134.73/MWh) and Queensland ($134.44/MWh) settled 2.5 times higher than the price in Victoria ($52.25/MWh). This highlights how spot prices between the southern and northern states diverge when the interconnectors between NSW and Victoria reach their limit.

Electricity price insights

In December, 47.2% of all electricity generated across the network came from renewable sources marking the new fourth-highest monthly share on record and just surpassing November 2024.

Three of the four coal generators in New South Wales experienced unplanned outages with one unit offline for unplanned maintenance. In Queensland, the largest coal generating unit, Kogan Creek, went offline for unplanned outage in the middle of the month. The impact of these outages was exacerbated by the coincident timing and nature of some of the outages, as well as transmission maintenance work in New South Wales which limited the ability of other generation to alleviate the impact of the loss of capacity.

With most of the thermal generation capacity returning in January (with just one coal unit offline in New South Wales and Victoria at time of writing), the system’s ability to manage peak demand periods significantly improved. As a result, similar demand peaks in January to those seen in December have led to relatively limited price volatility.

Changes in forward contract prices for CY25

Forward prices for 12-month futures in mainland regions apart from South Australia ended the month higher than they started.

  • New South Wales prices are up 31% from a year ago, and 4% from November 2024
  • Queensland prices are up 35% from a year ago, and 9% from November 2024
  • South Australia prices are up 9% from a year ago, and down 2% from November 2024
  • Victoria prices are up 24% from a year ago, and 6% from November 2024

December 2024 NEM insights by state

New South Wales

  • Average spot price of $135/MWh, with 115 hours of negative prices and 17 hours above $300/MWh
  • $200/MWh difference in average underlying spot prices at the cheapest and most expensive times of day
  • Only one 5-minute time interval with an average negative price over the whole month (12:40 PM)
  • 42% total renewable generation through the month
  • Minimum demand of 4,261 MW
  • Peak demand of 12,742 MW

Queensland

  • Average spot price of $134/MWh, with 112 hours of negative prices and 20 hours above $300/MWh
  • $220/MWh difference between the average underlying prices at the cheapest and most expensive times of day
  • No daily intervals with an average negative price over the whole month
  • 33% total renewable generation through the month
  • Minimum demand of 4,215 MW
  • Peak demand of 9,983 MW

South Australia

  • Average spot price of $61/MWh, with 279 hours of negative prices and 7 hours above $300/MWh
  • $170/MWh difference between the average underlying prices at the cheapest and most expensive times of the day
  • Average prices were negative for almost all periods between 7:30 AM and 4:00 PM during the month
  • 84% total renewable generation through the month
  • Minimum demand of –1 MW, meaning SA rooftop solar was generating more than the region required and exporting the excess
  • Peak demand of 2,718 MW

Tasmania

  • Average spot price of $76/MWh, with 92 hours of negative prices and 2 hours above $300/MWh
  • $100/MWh difference between lowest and highest time-based average underlying spot price
  • No daily intervals with an average negative price over the whole month
  • More than 99% total renewable generation through the month
  • Minimum record of 719 MW
  • Peak demand of 1,313 MW

Victoria

  • Average spot price of $52/MWh, with 253 hours of negative prices and 3 hours above $300/MWh
  • $170/MWh difference between lowest and highest time-based average underlying spot price
  • Average prices were negative for all periods between 8:30 AM and 3:00 PM during the month
  • 47% total renewable generation through the month
  • Minimum demand of 1,656 MW
  • Peak demand of 10,089 MW

December temperatures

December was the third warmest on record for Australia, with Queensland sweltering through its second-highest December minimum temperatures.

The Bureau of Meteorology (BOM) continues to predict a higher-than-average likelihood of peak temperatures across Australia exceeding historic median levels through to the end of April. Unusually high overnight temperatures are expected across the NEM.

Looking ahead to January 2025

Average prices for the first half of January 2025 have been under $100/MWh for all mainland states. However, sustained heat waves are likely to be a key driver of volatility and uplift in prices in the coming months.

Prices in the electricity futures market for 2025 indicate that Queensland is expected to experience the highest spot prices, followed by New South Wales, South Australia, and then Victoria. While extreme summer temperatures have not yet occurred in January, nor are they forecast in the immediate 10-day outlook, the risk of heatwaves persists through to April. This risk is somewhat mitigated by expected high availability of generating plants and limited transmission restrictions, however, Q4 2024 has shown that unplanned outages can significantly impact market pricing expectations.

On the 1st of January, Victoria set a new minimum demand record, driven by holidays and sunny conditions that reduced grid demand in the middle of the day. Negative prices are common during the summer months outside of high temperature days, as high solar output puts downward pressure on spot prices. This ‘duck curve’ effect is particularly pronounced in South Australia and Victoria but is increasingly being seen in New South Wales as rooftop solar installations continue to grow year-on-year. For those with flexible loads and ability to capture price benefits through a retail plan such as Flow Power’s, shifting load to these lower-price solar periods helps to support renewable energy and reduce power bills.

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