TTEG Editorial
FY27 Procurement Opportunities and Market Outlook
As FY26 draws to a close, June remains one of the key periods for large market electricity customers to review procurement strategy, contract positioning and energy risk management ahead of FY27.
Unlike SME customers who are generally exposed to annual retail tariff resets, large market customers are more directly impacted by movements in wholesale electricity markets, network tariff changes and procurement timing.
Wholesale market conditions remain favourable
Forward electricity pricing across much of the National Electricity Market (NEM) has continued to soften heading into FY27, supported by stronger renewable generation, increased battery participation and improved market conditions compared with recent years.
Network tariffs changes
From 1 July, updated network pricing structures will apply across distribution networks. For large market customers, changes to demand charges, capacity structures and tariff allocation can materially impact delivered energy costs regardless of wholesale outcomes.
Actions before entering FY27
✓ Review upcoming contract expiry dates
✓ Assess current market position versus forward curves
✓ Confirm network tariff impacts from 1 July
Contact your TTEG BDM to discuss the best approach to managing this.
National energy market
Electricity market conditions have remained favourable through June, with forward electricity prices continuing to sit near four-year lows across parts of the National Electricity Market (NEM).
The softer pricing environment has been supported by strong renewable energy generation, increasing battery storage capacity and generally lower wholesale electricity costs compared with recent years.
While current conditions remain positive, winter is beginning to introduce greater short-term volatility. Higher heating demand, lower solar generation and increased reliance on gas-powered generation during peak periods can all contribute to price fluctuations.
What's Driving the Market?
Several factors are influencing electricity prices across the market:
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Strong wind and solar generation are helping keep wholesale prices lower.
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Battery storage is playing a larger role in reducing price spikes during peak demand periods.
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Overall supply conditions have improved compared with previous years.
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Winter demand is increasing, which can lead to greater volatility during morning and evening peaks.
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South Australia experienced its most significant wind and solar drought in more than two years during June, highlighting how periods of low renewable output can quickly increase wholesale price volatility and reliance on gas generation and battery storage.
As a result, businesses are benefiting from a more favourable buying environment than we have seen for some time.
Futures Market Movement
While current conditions remain supportive, the market is entering a period where seasonal risks become more influential.
As winter progresses:
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Peak demand is expected to increase
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Solar contribution will remain lower than summer levels
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Gas generation may play a larger role during evening peaks
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Short-term volatility is likely to increase during periods of low wind and solar output
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Recent market conditions demonstrated this risk, with South Australia experiencing a renewable energy drought in late June that contributed to significant wholesale price spikes and increased reliance on firming generation.
At the same time, continued growth in renewable generation and battery storage is helping offset some of these pressures and supporting longer-term market stability.
Network Tariff Changes from 1 July
Alongside current market conditions, network tariff changes are taking effect across several regions from 1 July.
While energy rates often receive the most attention, network charges can represent a significant portion of an electricity bill. Businesses operating on an unsuitable tariff may be paying more than necessary, even if they have secured competitive energy rates.
Supply Outlook – Generation & Infrastructure
While pricing conditions remain relatively soft, the underlying supply outlook becomes tighter heading into winter as demand increases and system flexibility is tested during peak periods.
Key factors include:
Generator outages (planned maintenance):
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Around 1,000MW offline in Victoria
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Around 700MW offline in New South Wales
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Several thousand megawatts of scheduled maintenance across Queensland during June, contributing to tighter supply conditions at times
Battery storage capacity:
Battery deployment continues to increase across the NEM, with new large-scale batteries progressively entering or moving through commissioning. This is helping to reduce short-term price volatility and support evening peak demand periods by shifting excess daytime solar into the evening peak.
System constraints and delays:
Some transmission and system support projects remain delayed or partially constrained, limiting the full reliability benefit expected from new infrastructure in the short term.
Overall, while current conditions are generally supportive due to strong renewable output and growing storage capacity, the system still has reduced flexibility during peak demand periods, particularly in the evening peak where supply margins remain tight.
What This Means for Businesses
With electricity prices currently at four-year lows and new network tariffs being rolled out, now is an ideal time to review your electricity arrangements to ensure your business is on the most cost-effective tariff and the best available market rates.
While many businesses focus on securing competitive energy rates, network charges can account for a significant portion of an electricity bill. As a result, being on the wrong network tariff can erode savings achieved through energy procurement.
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 winter outlook – stable conditions with increased capacity
The Australian Energy Market Operator (Australian Energy Market Operator) released its winter outlook indicating generally stable system conditions across the NEM, supported by improved generation availability, increased installed capacity, and relatively strong fuel supply positions for both electricity and gas-fired generation.
The outlook signals that, compared to previous winters, the system is better positioned to meet peak demand conditions, with reduced risk of widespread supply shortfalls under expected demand scenarios. However, AEMO continues to note that short-duration tightness may still occur during extreme weather events.
What AEMO highlighted in the June outlook:
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Overall adequate generation capacity across the NEM for winter peak demand
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Improved availability of dispatchable generation (coal, gas, and hydro) compared to prior forecasts
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Stronger fuel supply positions, particularly gas storage and contract availability
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Continued reliance on batteries and interconnectors to manage peak periods
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Reduced likelihood of prolonged system stress events under normal conditions
What it means for businesses
For energy users, the key takeaway is that system reliability risk is lower than in previous winters, but this does not eliminate price volatility during peak demand periods. The outlook points to fewer structural supply concerns, but not a flat pricing environment.
Key implications include:
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Lower risk of extended supply-driven price shocks compared to past winters
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Continued short-term price spikes during evening peak demand windows
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Stronger importance of peak load management rather than average consumption
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More stable conditions may support opportunistic contracting in softer price windows
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Tariff structure and demand profile remain critical cost drivers
The June AEMO outlook is broadly supportive: the system is better supplied and more resilient than in recent years, but businesses should still expect short, sharp peak volatility driven by weather and demand patterns rather than structural shortages.
AEMC Pricing & Market Reforms
The Australian Energy Market Commission (Australian Energy Market Commission) proposed a set of regulatory changes in June aimed at improving payment hardship protections for energy customers and streamlining aspects of network and market operations across the electricity system.
The reforms are part of a broader ongoing effort to balance affordability pressures with the need to maintain system reliability and efficiency as the energy transition continues.
What the proposed reforms include:
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Strengthening protections for customers experiencing payment difficulty or financial hardship
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Improving consistency in how hardship support is applied across retailers
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Streamlining certain network administrative and operational processes
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Enhancing clarity around customer engagement and payment arrangement standards
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Supporting more efficient interaction between retailers, networks, and consumers
What it means for businesses
While these reforms are primarily focused on residential and small customer protections, they can still indirectly influence broader market conditions and cost structures for business users.
Key implications include:
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Potential increases in retail compliance and administrative costs, which may flow through to pricing
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Greater consistency in hardship frameworks, improving customer payment stability across the market
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Longer-term support for more structured and standardised retail market operations
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Limited immediate impact on wholesale prices, but incremental influence on retail cost components over time
The June AEMC proposals are structural and consumer-focused rather than price-shaping in the short term, but they contribute to a broader trend of tighter regulation in retail market operations. For businesses, the main impact is likely to be indirect, through gradual changes in retail cost structures rather than immediate market price movement.
Clean Energy Council report- future electricity supply at risk
A recent Clean Energy Council report highlighted growing concern around proposed state-level planning changes affecting renewable energy development, particularly in Victoria. The report warned that the Victorian Coalition’s proposed 2 km buffer zone for renewable energy projects could significantly constrain project approvals and place substantial regional investment pipelines at risk.
The findings come at a time when renewable energy development is a key driver of new generation capacity across the National Electricity Market, with project certainty and planning frameworks increasingly influencing both investment timing and long-term supply outlooks.
Key points from the report:
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Proposed 2 km buffer zones could materially reduce viable land for wind and solar projects
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Potential for delays or cancellations of projects already in development pipelines
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Risk of billions in regional investment being deferred or redirected to other states
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Increased uncertainty for developers and financiers assessing Victorian project feasibility
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Possible flow-on impact to timing of new generation entering the grid
What it means for businesses
While this is a planning and development issue rather than an immediate market pricing change, it has important longer-term implications for energy users. Slower renewable project development can affect future supply growth, which in turn influences wholesale price expectations over time.
Key implications include:
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Potential delay in new low-cost renewable supply entering the system
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Increased reliance on existing coal, gas, and interconnector flows for longer periods
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Greater medium-term uncertainty around future wholesale price trajectories
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Continued importance of contract timing and procurement strategy as supply build-out risk evolves
The Clean Energy Council warning highlights a broader tension between renewable development pace and planning regulation certainty. While there is no immediate impact on current prices, changes to project approval frameworks could influence the timing of future supply additions, which is a key driver of long-term energy costs.
Gas market update
The Australian gas market remains structurally balanced through June, but continues to show clear signs of short-term tightness driven by winter demand conditions and increased reliance on gas in electricity generation. While there have been no major supply disruptions, market behaviour is increasingly shaped by weather-driven consumption patterns, particularly during cold morning and evening periods.
Market Conditions
Gas markets remained a key influence on electricity pricing across the NEM through June, with winter conditions lifting overall demand and increasing reliance on gas-fired generation during peak periods. While average gas prices were relatively stable compared to earlier volatility, pricing became more responsive to short-term weather changes, particularly during cold morning and evening demand spikes when heating load was highest.
LNG Export Influence
LNG export commitments continue to play a central role in shaping domestic gas pricing expectations. Domestic prices remain closely linked to international LNG netback values, meaning global demand conditions, particularly in Asia, continue to influence forward pricing signals in Australia.
Even during periods of stable domestic demand, export obligations help underpin a longer-term price floor. This structural link remains one of the key reasons domestic gas pricing can remain elevated compared to purely local supply-demand fundamentals.
Storage and System Flexibility
Gas storage has played an important balancing role throughout June, particularly during cold demand periods. Withdrawals from storage increased during peak winter intervals, helping to manage short-term tightness in the system. However, injection activity remains limited during winter, meaning storage is primarily being used as a buffer rather than a replenishing source.
This reinforces the importance of storage in smoothing short-term volatility rather than materially altering the broader supply-demand balance.
Price Behaviour and Volatility
While average prices have remained relatively stable, volatility has increased during peak demand periods. The most notable movements continue to occur during cold mornings and evenings, when demand rises sharply and gas-fired generation is required to balance the system.
These spikes tend to be short in duration but more frequent than in milder months. Overall, pricing is becoming more reactive to weather conditions and intraday demand shifts rather than longer-term supply fundamentals.
Supply and Demand Balance
The market remains fundamentally well supplied, but increasingly sensitive to seasonal conditions. Strong production levels continue to support baseline demand, but winter consumption, LNG export obligations, and peak electricity generation requirements are tightening the system at the margin.
This dynamic is creating a market that is stable on average, but more variable in the short term.
Overall Outlook
Looking ahead, the gas market is expected to remain structurally balanced but highly responsive to weather-driven demand swings. Gas will continue to play a critical role in electricity system reliability, particularly during peak periods when renewable output falls.
The key theme remains consistent: while supply is sufficient, short-term volatility is increasingly driven by demand peaks rather than structural shortages.
