A week into the Middle East war, spiking oil and LNG prices have markets and governments spooked.
Capital
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Oil prices reached highs not seen since 2022 and European and Asian LNG prices soared as drone strikes impacted infrastructure in Qatar and Iran closed the Strait of Hormuz, through which 20% of the world’s oil supply passes.
Analysts warned a sustained conflict in the Middle East could push the price of Brent oil to US$185 per barrel and increase Australia’s consumer price index by anywhere from 0.7% to 1.5%, with flow-on effects to consumer energy prices.
Experts played down the likelihood of Australia stepping in to plug any potential gap in LNG shipments facing Europe and Asia given key producers including Woodside and Santos have little spare capacity in their projects that could be quickly mobilised to meet demand from buyers.
The NEM transition is accelerating as the country races towards its 2030 renewables target of 82%, BloombergNEF has observed in is latest Australia Power Market Quarterly report, which found that wind, solar and hydro accounted for 50% of NEM generation during the last quarter of 2025. Fully 29% of power price intervals were below $0 per MWh during the quarter – a sign of NEM oversupply – and a “staggering” 59% of potential generation by South Australia’s solar farms was curtailed.
Renewable energy developers issued a call for better contracts to underwrite project revenue at the Clean Energy Investor Conference. The government’s Electricity Services Entry Mechanism will underwrite revenue for successful contracts from year 8 to 15 of their lifetimes. And this week ASL issued a call out for industry participants to join a reformed contract co-design working group.
Australia lies in the middle of a 42-nation leaderboard when it comes to attracting the foreign investment crucial to fund the energy transition, the Business Council of Australia (BCA) said as it launched a new Global Investment Competitive Index (GICI). With overseas governments “sharpening their settings to attract investment, cutting regulation, streamlining approvals, securing energy systems, reducing company tax rates and backing productivity growth,” the BCA said, “Australia must do better to attract a finite pool of global capital.”
WA’s South West Interconnected System cracked more than 50% renewables in the grid over the full six months comprising spring and summer — but the eastern states’ National Electricity Market missed the mark.
Policy
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For the second time in six months, the Albanese government is reportedly mulling changes to its Cheaper Home Battery subsidy. New options modelled by the government include winding up the program early, lowering the discount level, or further reducing the size of the batteries eligible for the subsidy. (AFR)
Google, Microsoft Meta, Amazon, Oracle, xAI and OpenAI all signed US president Donald Trump’s recently announced Ratepayer Protection Pledge, codifying a non-binding commitment that they will cover the cost of new electricity generation required to support their fast-expanding data centre footprint. The big tech companies will be expected to bring or buy electricity supplies and pay for upgrades to power delivery systems – all part of what has been described as a way of winning support from towns and cities that have pushed back against plans to locate major data centres in their backyards. (Guardian)
Local communities should benefit from large-scale renewable projects, the WA government has emphasised as its Department of Energy and Economic Diversification releases its new Community Benefits Guideline for Large-scale Renewable Energy Projects in the SWIS.
Solar panel subsidies are no longer needed because homeowners benefit from using the electricity they produce, Germany’s economy ministry said in pushing for the end of subsidies for systems with an installed capacity of less than 25kW. The opposition Green party and solar industry warned the proposal could threaten climate targets and tens of thousands of jobs. (Reuters)
Energy systems
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Australia’s energy sector hasn’t worked out whether it’s integrating consumer energy resources or managing them, battery storage and grid integration expert Lachlan Blackhall said, using a panel discussion at the Energy Consumers Australia conference to call time on the virtual power plants (VPP) concept.
 Projects
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The NSW Government endorsed 16 projects through its Investment Delivery Authority (IDA), with the list including 14 energy projects – valued at $34 billion – that will now be given access to “specialist government support from a dedicated concierge service” and other support co-ordinated across a range of government agencies.
Sydney data centre company Cloud Carrier proposed powering the three data centres in its Southern Highland Data Campus (SHDC) with a new 700MW gas-fired power station that would be colocated on its site, which is 6km from Moss Vale in the NSW Southern Highlands. Its choice of gas-fired generation – the power would be generated by 21 reciprocating turbines – has raised concerns about the sourcing of adequate power and water to keep up with exploding data centre demand. (ABC)
The NSW Government declared two major pumped hydro projects by ZEN Energy and ACEN Australia as Critical State Significant Infrastructure, elevating their status and promising to speed approvals.
Iberdrola’s proposed Bundaberg Regional Battery is in doubt as the Qld planning minister considers using special 'call-in' powers to cancel it. It would be the third battery project to be called in since the start of the year. (AFR)
Two renewable energy projects were granted major project status by the government, joining green metal and rare earth ventures as projects deemed strategic to Australia’s energy supply chain development. Stellar PV’s 2GW Project Clean Wafers will develop a $500 million commercial-scale PV silicon ingot and wafer manufacturing facility in North Queensland over 12 months, while Solquartz’s $4.5 billion Northern Quartz Campus, near Townsville, will be Australia’s “first fully integrated solar and electronic grade silicon supply chain”.
Fortescue (ASX: FMG) halved the size of its proposed Bonney Downs wind farm, cutting the number of wind turbines from 200 to 100 in a move it said would reduce the project’s environmental footprint. Writing in an environmental approval application, Fortescue said it considered converting the Solomon power station to run on green ammonia/hydrogen but ruled it out as it “is not economically viable”. (AFR)
Construction commenced on the 1.8GW Hunter-Central Coast Renewable Energy Zone (REZ), with 590 construction jobs expected to be created as work ramps up to complete 85km of sub-transmission lines, 18km of underground fibre optic communications cable, new energy hubs at Sandy Creek and Antiene, and upgrades to existing substations. The project is the first REZ project to upgrade existing distribution poles and wires instead of building all new transmission lines.
Investment in new renewable energy projects is more than double what's required to meet the targets required for Australia to hit its net zero targets, RenewMap noted in a new analysis showing the gap between ambition and reality. Some 450GW of renewables are currently under development in the NEM but the growing backlog of projects awaiting environmental approval is slowly extending timeframes, with that pipeline growing from around 65 projects in 2024 to around 140 this year.
The Victorian Government is 30 days away from invoking emergency powers to access the land of 27 north central Victorian landholders, who have repeatedly blocked attempts to access their properties to conduct environmental surveys related to the 500km, $7.6 billion VNI West transmission project, which was approved last August. VicGrid has been trying to access some of the properties for years, and wrote the farmers in late February to advise that authorised agents would access the properties by force within weeks if they were not admitted. (ABC)
Regulation
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The AER knocked back an application from Ausgrid for $19.6 million in costs it incurred during “significant restoration activities” to repair damage from the January 2025 storm event. The claim was initially reduced to $16.1 million after a please-explain from the AER, which has subsequently ruled that the storm does not meet the requirements for a positive change event under the National Electricity Rules.
A growing proportion of customers are deciding whether to stay connected to the grid, the Australian Energy Regulator warned in its submission to the AEMC’s draft pricing review. The regulator called for further analysis on higher fixed charges and suggested an alternative approach.
The Clean Energy Regulator (CER) intensified the audit program for the Cheaper Home Batteries Program, with 1,000 inspections completed to date and new photo requirements introduced for solar battery installations as of March 1. Those requirements will require installers to take “clear, geotagged and time stamped photos of critical labelling” in addition to existing installer onsite verification photos.
The NEM’s market price cap and cumulative price threshold will increase to $23,200/MWh and $2,225,900/MWh, respectively, from July 1 after the Australian Energy Market Commission updated the key reliability settings that govern pricing on the NEM. The new rates represent a 12% increase over the base values for both metrics.
Climate
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Carbon emissions from Australia’s biggest data centre operators have more than doubled in the past five years, according to new Clean Energy Regulator figures that show AirTrunk, Amazon Web Services, and CDC marking sharp increases in Scope 2 emissions over the period. The results inform the ongoing debate over what requirements data centre operators should face as they rapidly scale up their infrastructure and power demands to support the growth of AI. (AFR)
Technology
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European energy optimisation platform 1KOMMA5° has launched in Australia, bringing its Heartbeat AI battery and energy management tools to a market where installed battery capacity continues to surge. The technology connects home solar and battery systems, analysing consumption over time and purchasing battery capacity during discount electricity periods in a process that the company says can “accelerate battery payback by up to $1,500 per year compared to a traditional retail energy setup.”
A British firm has developed a closed-loop pumped hydro energy storage system that negates the need for the favourable landforms that traditional pumped hydro requires. RheEnergise has developed an incredibly dense liquid – really a slurry of minerals – that becomes less viscous with movement, making it suitable for pumping but easy to contain in the event of a spill. The company aims to deliver its first fully commercial system by the end of 2028. (IEEE Spectrum)
US wind-power developer Aikido Technologies has announced plans to build data centre capacity into its offshore wind turbines – with a reference design showing how a 4MW liquid-cooled data hall can be built into each of the three ballast tanks anchoring each of its turbines. The company will float a 100kW prototype off the coast of Norway by year’s end, with an up to 18MW project off the UK due in 2028. (IEEE)
Looking ahead to next week, parliament is sitting, and energy minister Chris Bowen will speak at Climate Action Week in Sydney alongside New South Wales energy minister Penny Sharpe.
