TTEG Editorial
FY27 Opens: Confirmed Market Data and Early Signals to Watch
With FY27 now underway, July brings the first meaningful market data of the new financial year, confirming many of the trends identified heading into FY27, while also highlighting several emerging signals that large market customers should consider as part of their procurement planning over the coming months.
Wholesale market conditions remain favourable
AEMO's Quarterly Energy Dynamics report for Q2 2026, released on 1 July, reinforced the softer wholesale market conditions observed in recent months. Renewable generation and battery discharge both reached record levels during the quarter, contributing to lower wholesale electricity prices and reducing the frequency of extreme price events. The results highlight the continued structural transformation of the National Electricity Market, with renewable generation and energy storage playing an increasingly important role in meeting demand.
While no one can predict where electricity prices will move next, current forward pricing presents one of the more favourable buying environments seen in recent years. Customers with contracts expiring in 2027 should be assessing the market now. Securing pricing during periods of lower market volatility can help reduce exposure to future uncertainty, particularly as coal retirements, electrification and demand growth begin to influence the future supply-demand balance.
Network tariffs now in effect
Updated network tariffs took effect from 1 July across distribution networks. For large market customers, the practical impact of revised demand charges, capacity structures and tariff allocations is now flowing through to actual invoices rather than forecasts.
The start of the financial year provides an ideal opportunity to review actual network costs, confirm that sites are operating under the most cost-effective tariff for your business.
Actions for early FY27
✓ Reconcile actual network tariff impacts against FY27 budget assumptions
✓ Check if a more cost-effective tariff is available for your business
✓ Consider whether longer-dated contracts should factor in emerging demand-side risk
Contact your TTEG BDM to discuss the best approach to managing this.
National energy market
Electricity market conditions remain favourable through July 2026, with wholesale and forward electricity prices continuing to trade at their lowest levels in several years across much of the National Electricity Market (NEM).
The softer pricing environment has been driven by record renewable energy generation, rapid growth in grid-scale and household battery storage, and significantly lower reliance on gas-fired generation. These factors have reduced wholesale price volatility and improved overall market conditions for energy buyers.
Despite these positive trends, winter conditions continue to introduce periods of short-term volatility. Supply can tighten quickly during morning and evening peaks when:
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heating demand rises;
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solar generation falls;
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renewable output is temporarily constrained, particularly during periods of low wind.
What's Driving the Market?
Several key factors are influencing electricity prices across Australia:
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Record renewable generation continues to put downward pressure on wholesale electricity prices, with prices reaching their lowest June quarter level in six years.
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Grid-scale batteries are increasingly reducing evening peak prices by storing excess daytime solar energy and displacing gas-fired generation.
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Gas-fired generation has fallen to its lowest levels in more than two decades, reflecting the growing role of batteries in providing system firming.
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Transmission upgrades, including EnergyConnect, are improving the flow of renewable energy between states and strengthening grid reliability.
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Despite favourable market conditions, winter demand and periods of low renewable output can still cause short-term wholesale price volatility, highlighting the value of proactive energy procurement
Overall, businesses continue to benefit from one of the most favourable electricity buying environments seen in recent years.
Futures Market Movement
Forward electricity prices remain relatively subdued compared with recent years, reflecting growing confidence in Australia's expanding renewable generation and storage fleet.
However, seasonal risks remain:
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Peak electricity demand is expected to remain elevated throughout winter.
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Solar generation continues to be lower than summer levels.
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Battery storage is providing greater support during evening peaks but cannot fully replace dispatchable generation during extended low renewable periods.
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Gas generation remains an important reliability resource during periods of prolonged low wind and solar output.
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Planned generator outages and transmission constraints continue to create regional price volatility.
Although short-term price spikes are still possible, the market is considerably more resilient than it was several years ago due to increased renewable penetration and rapidly expanding battery capacity.
Network Tariff Changes
Network tariff changes introduced from 1 July continue to affect businesses across many distribution networks.
While wholesale energy prices have fallen significantly, network charges continue to represent a substantial proportion of overall electricity costs. Selecting an inappropriate tariff can offset savings achieved through competitive energy procurement.
Businesses should review their tariff structure to ensure it reflects current operating patterns and demand profiles.
Supply Outlook – Generation & Infrastructure
Australia's electricity supply outlook continues to strengthen as renewable generation; battery storage and transmission infrastructure expand across the NEM.
Key factors include:
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Renewable generation and battery storage continue to expand rapidly, with record renewable output and new large-scale batteries improving reliability, reducing wholesale price volatility and displacing higher-cost coal and gas generation.
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Transmission infrastructure is strengthening the grid, with projects such as EnergyConnect improving the transfer of renewable energy between states and supporting greater renewable integration.
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Gas demand continues to decline as electrification and energy efficiency increase, delaying forecast supply shortfalls, although long-term gas supply challenges remain beyond 2028
What This Means for Businesses
Current market conditions present a valuable opportunity for businesses to review their electricity procurement strategy.
Wholesale electricity prices remain near multi-year lows, supported by record renewable generation, increased battery storage and improved market competition. While favourable pricing may not persist indefinitely, current conditions provide an opportunity to secure competitive contracts ahead of future market uncertainty.
A simple review can help identify potential savings opportunities, uncover billing or tariff issues, and ensure your energy strategy is positioned for the year ahead.
If you are unsure of your current position or do not yet have a strategy in place, we are here to help. Contact us for a free bill check or to discuss a tailored energy procurement plan.
ELECTRICITY FUTURE PRICING CHARTS
AEMO Quarterly Energy Dynamics Q2 2026 Report
The Australian Energy Market Operator's (AEMO) Quarterly Energy Dynamics (Q2 2026) report highlights the continued transformation of Australia's electricity market, with renewable energy and battery storage driving lower wholesale electricity prices and improving grid reliability
Record renewable generation, rapid battery growth and reduced reliance on gas contributed to the lowest June quarter wholesale prices since 2020, reinforcing the growing role of storage in supporting the energy transition.
While winter demand is increasing, the report indicates that the market is becoming more resilient, with storage technologies playing a greater role in balancing supply and demand and improving overall system reliability.
What AEMO highlighted in the quarterly report:
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Wholesale electricity prices fell 47% year-on-year to A$74/MWh, the lowest June quarter average since 2020.
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Renewables supplied a record 42.1% of NEM electricity generation, supported by strong wind and solar output.
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Large-scale battery capacity continued to expand, reducing price volatility and increasingly replacing gas-fired generation during peak demand.
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Gas-fired generation fell to its lowest June quarter level since 2003, while coal generation also continued to decline.
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Renewables and storage are reshaping market outcomes by improving reliability, reducing emissions and lowering wholesale electricity costs
What it means for businesses
The report highlights growing opportunities for businesses to benefit from Australia's energy transition. Lower wholesale prices and expanding battery storage are helping reduce price volatility, creating opportunities to secure more competitive electricity contracts.
Businesses can further reduce costs and improve resilience by investing in energy efficiency, on-site solar, battery storage and flexible energy management. Overall, the findings reinforce that renewable energy and storage are becoming increasingly important drivers of both lower energy costs and long-term business sustainability.
CSIRO backs firmed renewables
Australia's national science agency, CSIRO, has found that large-scale battery storage is now cheaper than new gas-fired peaking plants for supplying electricity during periods of high demand. The finding, published in its latest GenCost report, reflects two major global trends: rapidly falling battery prices driven by expanding Chinese manufacturing, and sharply rising gas turbine costs caused by surging demand from AI data centres in the United States.
While gas will continue to play a limited role in supporting the grid, the economics are increasingly favouring batteries as Australia's preferred technology for managing peak electricity demand and supporting the transition to a renewable energy system.
What takeaways from the report:
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Firmed renewables remain Australia's lowest-cost electricity option, with solar and wind continuing to underpin the least-cost energy mix.
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Falling battery costs are improving the reliability and affordability of renewable energy, while increasingly replacing gas for peak demand.
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Even after accounting for transmission and storage, a grid powered by firmed renewables remains the most cost-effective pathway.
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Nuclear remains the highest-cost new-build generation option assessed in the report.
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The findings reinforce the need for continued investment in renewable generation, transmission and energy storage to maintain reliable and affordable electricity.
What it means for businesses
The GenCost report reinforces that firmed renewables are expected to deliver Australia's lowest-cost electricity over the long term. For businesses, this strengthens the case for investing in energy efficiency, on-site solar, battery storage and electrification to reduce energy costs and improve resilience.
While prices may fluctuate during the energy transition, continued growth in renewables and falling battery costs are expected to support lower and more stable electricity prices over time, providing greater confidence for long-term investment and sustainability planning
Data centre growth could raise energy prices
Australia's rapid growth in AI-driven data centres is expected to significantly increase electricity demand over the next decade, potentially putting upward pressure on wholesale power prices if new generation capacity is not built quickly enough.
Experts warn that while data centres can be constructed relatively quickly, renewable energy projects, storage and transmission infrastructure take much longer to develop. Without additional clean energy capacity, data centres are likely to draw power from the existing grid, increasing competition for electricity and raising costs for consumers and businesses.
Key takeaways:
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Electricity demand from data centres is forecast to increase from around 2% to 10% of National Electricity Market demand by 2035.
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AI and cloud computing are the primary drivers of the surge in data centre construction and electricity consumption.
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Without sufficient new renewable generation, storage and transmission, wholesale electricity prices could rise significantly, particularly in NSW (up to 26%) and Victoria (up to 23%) by 2035.
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The Federal Government plans to require new data centres to match their electricity use with renewable energy investments, although details are still being developed.
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Expanding renewable generation alongside data centre growth would substantially reduce price impacts while supporting Australia's clean energy transition.
What it means for businesses
The expected increase in electricity demand reinforces the importance of managing energy costs. Businesses with high electricity consumption should consider investing in energy efficiency, rooftop solar and battery storage to reduce exposure to future wholesale price increases.
Organisations planning major expansions or electrification projects should also monitor energy market developments, as increased competition for electricity could influence long-term operating costs. For businesses in the digital economy, the government's proposed renewable energy requirements for data centres may also shape future investment and procurement decisions.
Gas market update
The Australian east coast gas market remained fundamentally well supplied through July 2026, although winter conditions continue to expose periods of short-term tightness. Cold weather has lifted heating demand and increased reliance on gas-fired generation during periods of lower renewable output, creating greater price volatility despite an overall balanced supply outlook. Recent assessments from both AEMO and the ACCC indicate that while immediate supply risks have eased, the market remains highly sensitive to seasonal demand and storage availability.
Market Conditions
Gas remained a significant contributor to electricity market pricing across the National Electricity Market (NEM) during July. Demand increased during cold mornings and evenings as residential heating and gas-fired electricity generation responded to higher winter loads.
Although wholesale gas prices remained below the extreme levels experienced during the energy crisis of recent years, intraday pricing became increasingly weather dependent. Short-lived price spikes continued to occur during peak demand periods when gas generation was required to support system reliability as renewable output declined.
LNG Export Influence
Australia's domestic gas market continues to be influenced by international LNG markets, with export parity remaining an important benchmark for domestic pricing. Global LNG prices have remained volatile during 2026 due to ongoing geopolitical uncertainty and international supply risks, reinforcing the link between domestic wholesale gas prices and overseas markets.
At the same time, the Federal Government has progressed significant gas market reforms, including a Domestic Gas Reservation Scheme due to commence in July 2027. The proposed reforms aim to increase domestic gas availability over the longer term and reduce Australia's exposure to international LNG pricing, although they are not expected to materially affect market conditions during the current winter.
Storage and System Flexibility
Gas storage continues to play a critical role in maintaining system reliability during winter. Withdrawals increased throughout July as storage facilities helped meet elevated demand during cold weather and periods of increased gas-fired generation.
While storage has provided valuable operational flexibility, inventories are being used primarily to manage short-term demand fluctuations rather than materially increasing overall supply. Southern states remain particularly reliant on storage and pipeline transfers as production from several mature gas fields continues to decline.
Price Behaviour and Volatility
Average wholesale gas prices have remained relatively stable; however, short-term volatility has continued to increase during winter demand peaks. Price movements are increasingly being driven by weather conditions, electricity generation requirements and daily consumption patterns rather than underlying supply shortages.
Periods of high demand continue to produce brief but sharp price increases, particularly during morning and evening peaks when gas-fired generation is needed to complement renewable energy output. This pattern reflects a market that is operationally tight during peak periods while remaining balanced overall.
Supply and Demand Balance
The east coast gas market remains fundamentally well supplied in the near term, supported by ongoing production, storage capacity and pipeline infrastructure. The ACCC continues to forecast adequate supply through late 2026, although tighter conditions are expected to return during future winter periods without additional investment in new supply.
Current market conditions demonstrate that while structural shortages have largely been avoided, seasonal demand, LNG export commitments and gas-fired electricity generation continue to tighten the market at the margin during winter.
Overall Outlook
Looking ahead, Australia's gas market is expected to remain broadly balanced through the remainder of winter, although weather-driven volatility is likely to persist. Gas will continue to provide an important reliability service within the electricity system, particularly during periods of low renewable generation and high demand.
The key theme remains unchanged: Australia has sufficient gas supply to meet current demand, but short-term pricing will continue to be driven by winter weather, peak electricity generation requirements and international LNG market influences rather than structural supply shortages. Longer term, proposed domestic gas market reforms and continued investment in supply will play an increasingly important role in shaping pricing and market stability beyond 2027.
