sa MARKET UPDATE
Electricity Prices
South Australia’s electricity market continues to be one of the most dynamic and renewables-led in the National Electricity Market (NEM), with ongoing structural changes in generation, pricing, and system operation shaping both short-term volatility and longer-term cost outcomes.
Market conditions: softer averages, ongoing volatility
Wholesale electricity prices remained relatively subdued through July, supported by strong renewable generation during favourable weather conditions and continued periods of high rooftop solar output, which frequently pushed daytime prices to very low or negative levels.
However, June's prolonged wind drought demonstrated that South Australia's market remains highly sensitive to changes in renewable output. During several consecutive days of very low wind generation, batteries were rapidly depleted, gas-fired generators operated extensively, and imports from Victoria became increasingly important in maintaining system reliability. Wholesale prices rose sharply during evening peak periods despite lower average prices across the month.
The event reinforced that while renewable penetration continues to increase, firming capacity—including batteries, flexible gas generation, demand response and interconnector support—remains critical during extended periods of low wind and solar availability.
Futures Pricing Outlook
Forward electricity prices remain relatively soft compared with historical levels, although the market continues to price in periods of elevated winter volatility.
Looking ahead:
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Peak winter demand is expected to keep evening pricing elevated.
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Daytime solar generation will continue to produce frequent low and negative wholesale prices.
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Gas-fired generation will remain the primary marginal generator during low renewable periods.
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Extended wind droughts remain the largest driver of short-term wholesale price spikes.
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Increasing battery capacity and future transmission upgrades are expected to progressively reduce volatility over the medium term.
Supply Outlook – Generation & Infrastructure
Electricity supply conditions in South Australia during June were characterised by several short-term operational events impacting availability and price outcomes.
Key events:
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South Australia experienced its worst renewable energy drought in more than two years during 21–22 June, with wind generation falling to extremely low levels across parts of the state
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Multiple periods of low wind output across the state during evening peak windows, reducing renewable contribution to system demand
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Several instances of Heywood interconnector import constraints, limiting flows from Victoria during peak demand periods
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Recurring reliance on gas-fired generation to meet evening peak demand, particularly during low wind intervals
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Periodic high rooftop solar output during daytime, contributing to low and negative pricing conditions
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Short-duration tight supply events during cold morning and evening peaks, where demand increased sharply relative to available wind generation
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Occasional export-limited periods when Victorian system demand reduced available import capacity into SA
What it means for your business
With forward prices still relatively soft and network tariff changes now in effect, South Australian businesses are in a strong position to review their energy arrangements.
While wholesale pricing remains important, network charges and tariff alignment are increasingly critical in determining overall electricity costs.
A review of both contract position and network tariff structure can help identify savings opportunities and ensure arrangements remain suitable ahead of peak winter volatility and upcoming contract cycles.
For businesses without an active energy strategy, now is a practical time to reassess positioning before tighter seasonal conditions place further pressure on the market.
SA ELECTRICITY FUTURE PRICING CHARt
SA Wind Drought Highlights Transition Challenges
South Australia's severe four-day wind drought in June 2026 provided a real-world stress test for Australia's most advanced renewable electricity system. After wind generation supplied more than 87% of the state's electricity on 18 June, output fell to just a few percent days later, forcing the system to rely heavily on gas generation, battery storage and electricity imports from Victoria.
Rather than highlighting a failure of renewable energy, the event demonstrated that the next phase of the energy transition is less about building more wind and solar generation and more about ensuring sufficient firming capacity is available when renewable output is low.
Key takeaways:
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Renewables continue to perform strongly over the long term, with wind providing an increasing share of annual electricity generation despite short-term weather-driven fluctuations.
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Extended periods of low wind remain a major system challenge, requiring alternative sources of supply for several consecutive days.
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Gas generation remains essential during prolonged renewable shortfalls, highlighting its continuing role as firming capacity during the transition.
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Battery storage proved valuable but duration-limited. Batteries responded quickly to support the grid but could not sustain supply throughout the multi-day event without recharging.
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Interconnectors are important but not a complete solution, as neighbouring states may experience similar weather conditions or have limited spare capacity available.
What this means
For energy users, the wind drought reinforces that wholesale electricity prices are likely to remain volatile as renewable penetration increases. Businesses should expect occasional periods of elevated prices during prolonged low renewable output and consider strategies such as demand flexibility, battery storage, on-site generation and well-timed energy procurement to reduce exposure.
Over the longer term, continued investment in storage, transmission and firming infrastructure is expected to improve reliability while supporting Australia's transition to a lower-cost, lower-emissions electricity system.
Major SA Battery Sits Idle
One of South Australia's largest grid-scale batteries has been out of service since early July after its part-owner, renewable energy retailer Zen Energy, entered voluntary administration. The 111 MW / 285 MWh Templers Battery, owned by the Zebre joint venture between Zen Energy and Taiwan's HD Renewable Energy, was forced offline after the Australian Energy Market Operator (AEMO) suspended Zen's participation in the National Electricity Market (NEM).
The temporary outage has removed an important source of dispatchable storage from the South Australian grid, reducing the system's ability to absorb excess renewable generation, support reliability during peak demand periods and help moderate wholesale price volatility. The battery's owners are working with administrators and regulators to restore market participation and return the facility to service as soon as possible.
What this means
The event highlights that battery storage projects remain exposed to commercial and regulatory risks, not just technical performance. While South Australia's battery fleet continues to expand rapidly, the temporary loss of a major storage asset demonstrates the importance of financially resilient market participants and diversified energy infrastructure to maintain reliability and moderate wholesale price volatility