nsw MARKET UPDATE
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Electricity Prices
New South Wales has entered 2026 with generally stable supply conditions, supported by solid baseload generation, dependable interconnector flows, and consistent renewable output. Milder summer weather has also helped keep operational demand lower than typically expected during peak heat periods.​
However, NSW continues to operate as one of the more structurally constrained regions within the National Electricity Market (NEM). Network limitations and congestion on key transmission corridors can quickly influence pricing when demand rises, making the state more susceptible to short-lived but sharp wholesale price movements than some neighbouring regions.
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Wholesale Market Conditions
February has again demonstrated the widening intraday spread that now defines NSW pricing behaviour.
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Strong rooftop and utility-scale solar generation has consistently suppressed daytime wholesale prices, creating favourable conditions for businesses able to operate during late morning and early afternoon intervals. Midday pricing has frequently traded at significantly lower levels than evening peaks, reinforcing the structural value of load shifting.
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The more pronounced trend has been the persistence of evening firming. As solar generation exits the system between 5pm and 9pm, the market increasingly relies on dispatchable coal, gas peakers and imports. When this transition coincides with network congestion or elevated air-conditioning demand, prices have escalated quickly. While these events have generally been brief, they remain material for businesses exposed to peak trading intervals.
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Futures Pricing outlook
Forward pricing in NSW has stabilised through February, flattening after the softer trend observed in late 2025. Q3 and Q4 2026 contracts are no longer trending downward, suggesting the market may have reached a seasonal floor.
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Historically, this period often precedes gradual upward pressure into autumn and winter as outage schedules tighten and reliability risk becomes more prominent. For businesses with contracts expiring in 2026, February represents a strategic window to test the market before winter sentiment strengthens.
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Retailers are also demonstrating increased selectivity in tender participation, reflecting a competitive but capacity-conscious contracting environment. Early engagement can improve pricing tension and reduce procurement risk.​
What it means for your business
February’s conditions confirm that the primary cost risk in NSW is not system instability, but peak sensitivity. Transmission constraints mean that when the system tightens — even briefly, wholesale prices can respond rapidly.
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With futures flattening and retailer selectivity increasing, businesses approaching renewal should consider engaging the market sooner rather than later to maintain competitive leverage.
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At the same time, the accelerating rollout of battery storage and large-scale solar across the NEM is reinforcing a clear structural shift: daytime energy is becoming cheaper, while evening energy carries a growing premium. Businesses that align operations, tariff structures and procurement timing with this intraday dynamic will be best positioned to manage costs in 2026.​​​
nsw ELECTRICITY FUTURE PRICING CHARt​
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Australia’s largest coal-fired power station, Origin Energy’s Eraring in New South Wales, has been extended to operate until April 2029, two years beyond its previously planned closure. The extension aims to support system reliability during the energy transition, as renewable generation and storage capacity are still scaling up and are not yet sufficient to fully replace large, always-on baseload generation.
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WHAT this means for businesses
Eraring’s extension provides a degree of short- to medium-term supply certainty in the NSW market. The continued availability of a major baseload generator reduces the risk of sudden supply shortfalls during periods of low renewable output, particularly during evening peaks and high-demand summer conditions.
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From a pricing perspective, the extension is likely to moderate wholesale volatility compared with a scenario where Eraring exited earlier. While it does not guarantee lower prices, the presence of additional dispatchable capacity can help limit extreme price spikes and reduce the frequency of high-priced scarcity events, which are a key cost driver for large load customers.
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However, this extension should be viewed as a transitional measure, not a long-term solution. Market uncertainty remains beyond 2029, and investment in renewables, storage, and transmission will continue to shape forward pricing and risk profiles. For large energy users, this reinforces the importance of active procurement strategies, including contract timing, load-shaping opportunities, and risk management products, rather than relying on market conditions alone.
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Overall, Eraring’s extension supports near-term reliability and pricing stability, creating a more favourable window for large energy users to review contracts, secure competitive pricing, and plan ahead while the broader transition continues.
Construction on the EnergyConnect transmission link, connecting New South Wales, Victoria, and South Australia, reached a major milestone with the erection of the final steel tower along the NSW section. This marks a critical step toward completing one of Australia’s largest interconnectors, designed to improve grid reliability, support renewable integration, and increase electricity flows across states.​​
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WHAT this means for businesses
This milestone signals enhanced supply security and market flexibility in the near term. Once operational, the interconnector will allow more electricity to flow between regions, helping reduce price volatility during high-demand periods by providing access to lower-cost generation from neighbouring states.
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Additionally, improved interconnection will support the integration of renewable energy, potentially increasing the share of lower-cost solar and wind in the NSW market. This provides opportunities for better contract pricing, hedging, and procurement strategies, particularly for businesses with significant daytime and evening consumption.
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Overall, the EnergyConnect milestone strengthens the resilience of NSW’s electricity network and represents a positive step for large energy users seeking stable supply and more predictable market conditions.
Photo from Transgrid.
ASL Launches Solar-Battery Hybrid Strategy for NSW Market
ASL (AEMO Services Limited) launched a dual-track Long-Term Energy Service Agreement (LTESA) strategy for solar-battery hybrid projects in New South Wales. This initiative aims to integrate both distributed rooftop solar with behind-the-meter storage and grid-scale hybrid assets into the electricity market more effectively, supporting system reliability and enhancing flexibility for operators and consumers alike.
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The strategy allows hybrid systems to store excess solar generation during the day and discharge it during evening peak periods, helping to smooth price volatility and improve overall grid stability. It represents a significant step in enabling innovative renewable solutions to actively participate in the NSW market.
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WHAT this means for businesses
The ASL solar-battery hybrid strategy presents several advantages:
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Reduced exposure to peak pricing: By smoothing evening demand spikes, hybrid systems help limit extreme price events, reducing costs for large consumers.
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Greater supply flexibility: Hybrid assets improve predictability and availability of electricity during high-demand periods, particularly summer afternoons and evenings.
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New procurement opportunities: Large users can explore contracts or partnerships with hybrid operators, including participation in demand response programs or energy storage arrangements.
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Support for sustainability targets: Increased renewable participation helps businesses achieve corporate emissions reduction goals while maintaining reliable supply.
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Overall, the ASL dual-track hybrid strategy marks a transformative development for NSW, offering large energy users enhanced price stability, supply flexibility, and opportunities to leverage renewable generation in their energy strategies.
NSW Firming Capacity Tender Advances Grid Reliability
ASL (AEMO Services Limited) launched a dual-track Long-Term Energy Service Agreement (LTESA) strategy to integrate solar-battery hybrid projects into the NSW electricity market. This approach enables both distributed rooftop solar with behind-the-meter storage and grid-scale hybrid assets to participate more actively, supporting system reliability, market flexibility, and revenue opportunities.
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The dual-track strategy allows hybrid projects to store excess solar generation during the day and discharge it during evening peaks, helping to smooth price volatility and improve grid stability. ASL has opened a consultation period running through 16 February 2026, inviting feedback from developers and industry participants to ensure the framework meets market and operational needs.
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WHAT this means for businesses
This strategy presents several practical implications:
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Reduced exposure to peak pricing: By shifting stored solar energy into high-demand periods, hybrid systems help limit extreme price spikes, reducing wholesale cost exposure.
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Improved supply flexibility: Hybrid assets enhance reliability and predictability of electricity during evening peaks and other high-demand periods.
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New procurement and contracting opportunities: Large energy consumers may explore partnerships or contractual arrangements with hybrid project operators, including demand response or storage-based programs.
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Support for sustainability goals: Greater integration of renewables allows businesses to increase renewable energy use, helping achieve emissions reduction targets without compromising reliability.
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Overall, ASL’s dual-track hybrid strategy marks a significant development in the NSW market, offering large energy users enhanced price stability, more predictable supply, and new opportunities to leverage renewable generation in their energy strategies.