Australian Spot Power Price Jumps on Still and Cloudy Weather

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(Bloomberg) — A key spot price in Australia’s electricity market jumped as calm conditions curbed wind turbine output, highlighting weather’s growing role as a driver of power market volatility.

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The 5-minute ahead price in the National Electricity Market neared A$450 ($315) per megawatt hour for the state of Victoria on Monday, the highest intraday price since January, as wind energy slumped to 3% of total power generation. It typically averages around 24%. 

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Australia has long been one of the most volatile energy markets globally. A record renewables build-out is now helping put it on track to meet emissions reduction targets, but also making the national grid more exposed to weather volatility. 

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“The energy price is becoming so correlated to wind,” said Maya Muthuswamy, Melbourne-based weather derivatives broker for TP ICAP Group Plc. “At times it feels like pricing is quite binary; if there’s a lot of wind versus if there’s none.” 

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Renewables supplied 46.5% of total energy generation to Australia’s main grid in the first quarter of 2026, the highest share on record for the period, according to the Australian Energy Market Operator. That means weather is increasingly driving both demand and supply of electricity, and the grid’s unique five-minute settlement window allows traders to react quickly to intraday price swings.

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A high-pressure system over southeastern Australia is driving the low-wind conditions, with Victoria feeling it most acutely because cloud cover is also limiting solar output, compounding the impact on energy prices, according to Tim Constable, consultant meteorologist at MetraWeather Australia. 

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Christian Werner, managing director of Queensland-based consultancy Global Weather Climate Analytics, said low to very low wind generation was likely for at least the next two weeks as the southern polar vortex — a girdle of winds that keeps frigid air bottled up over Antarctica — is displaced far to the south.

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However, as in the Northern Hemisphere, a polar vortex can at times weaken in an extreme weather event known as sudden stratospheric warming, causing cold air to spill out and boost wind generation. 

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“It’s not a question of if, but when we can expect that sudden stratospheric warming event to eventuate, and when it does, show its impact in Australia,” he said.  

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—With assistance from Keira Wright.

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