TTEG Editorial
By Craig Marschall, TTEG's Managing Director
The energy market continues to change!
What has become increasingly clear is that businesses need a well-defined Energy Procurement Strategy (EPS) in place, one that considers all pricing components, not just headline rates.
Importantly, given the inherent volatility and unpredictability of the energy market, your EPS should look up to 24 months ahead and be reviewed regularly to remain aligned with changing conditions.
Why? Because energy markets can shift rapidly and without warning. Pricing is influenced by a range of external factors including global fuel costs, weather patterns, supply disruptions, and geopolitical events which can materially impact forward curves in a short period of time. As a result, pricing that appears competitive today can quickly move out of reach.
The good news is that there are proven strategies available to proactively manage this uncertainty and mitigate pricing risk.
TIP: Your Energy Procurement Strategy is ultimately about managing timing, type of product and contract length to deliver value at acceptable risk.
New / Upgraded Network connections
Over the years we have seen many instances where manufacturing businesses have been hammered with high network connection set-up costs and/or ongoing demand charges simply because they did not understand the connection process and how the costs are determined.
When connecting a new larger site to the grid you will need to establish the demand requirement for the site and its impact your initial outlay and the ongoing network demand (typically $/kVA/month) and consumption (/kWh) charges.
Critically:
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Demand SHOULD represent the maximum coincident peak demand plus a safety margin.
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Demand SHOULD NOT represent the total of the individual demand for each piece of equipment
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Does High or low voltage make better economic sense?
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You MUST consider how the site will start using power eg 100% from the start, or future expansion projects to contribute to the connection size?
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If future expansion projects are a factor you SHOULD consider a staged connection project and assess the economics.
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You MUST recognise that distributors use projected demand in setting your connection charge, plus network planning.
Why? Numerous times I have seen a sparkling new connection installed, but only to see the end user pay tens, even hundreds of thousands of “wasted” dollars because their advisors had not considered the above points.
As a rule, engineering firms do no necessarily consider the points either.
The Solution?
If you are considering a new or upgraded connection, then please contact TTEG or engage someone with an expert understanding of the above points.
National energy market
Dynamic Markets & Global Pressures
As we move through March, the National Energy Market (NEM) continues to show how dynamic and unpredictable it can be. Global fuel market volatility and ongoing geopolitical pressures are influencing electricity costs, even as strong renewable generation keeps daytime prices relatively low in many regions.
Key Trends
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Daytime renewable output remains high, particularly solar, keeping prices down during daylight hours.
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Evening peaks remain volatile as the system transitions from solar to thermal and gas generation.
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Grid-scale batteries and storage are playing an increasingly important role in managing these swings, with over 15GW currently committed nationally, enough to power millions of homes and businesses for short periods and help manage sudden price swings.
Across the eastern and southern states, sufficient baseload, strong rooftop solar, and solid interconnector performance have maintained broadly balanced supply-demand conditions. Yet, the shift from solar-driven oversupply to post-sunset demand, the “duck curve”, continues to challenge operators and drive sharp evening price spikes.
Wholesale Spot Market Overview
Wholesale pricing through late summer and into March has continued to show significant price fluctuations during the day, particularly during warmer weather and periods of grid stress. Global fuel market uncertainty and geopolitical pressures continue to influence local electricity costs.
Several planned transmission and network outages in March have also shaped market dynamics:
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Heywood interconnector (VIC–SA): 9–10 March - temporary restrictions affected South Australia’s market balance.
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Moorabool–Sydenham 500 kV line (VIC): 11 March - maintenance reduced transmission flexibility, influencing evening pricing.
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South Pine–Tarong 275 kV line (QLD): 14 March - potential short-term supply constraints during high demand periods.
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Armidale–Dumaresq 330 kV line (NSW): 17–28 March - planned maintenance increased the need to manage evening supply.
Generation Overview
Across all regions, daytime electricity is dominated by solar and wind, keeping midday prices low. Evening peaks are driven by coal and gas, especially when maintenance reduces supply or transmission is constrained. Rooftop solar and batteries help manage price swings, but thermal plants remain critical for reliability.
New South Wales: Strong solar keeps daytime prices low. Evening demand and network limits can cause spikes. Coal remains the backbone of reliability, though maintenance tightens evening supply.
Victoria: Solar and wind lower daytime prices. Thermal maintenance and occasional low wind periods support evening firming. Imports remain important when local supply tightens.
Queensland: High solar penetration often pushes midday prices near zero or negative. Evening air-conditioning demand drives sharp peak prices. Coal outages reduce flexibility during peak ramps.
South Australia: Daytime prices are among the lowest nationally, with frequent negative periods during strong wind and solar output. When wind drops, imports from Victoria are needed, highlighting the value of storage and firming assets.
Western Australia (SWIS): Rooftop solar lowers daytime prices, but after sunset limited renewable output and high cooling demand create noticeable evening peaks. Battery use is increasing but still smaller than in eastern NEM states.
Forward Market & Seasonal Outlook
Forward electricity prices for the second half of 2026 have stabilised after falling in recent months.
As March moves toward cooler months, less sunlight, rising heating demand, and tighter reserve margins could push prices higher. Retailers are also more selective about which tenders they price, sometimes rejecting complex or high-volume requests. This creates a competitive, capacity-limited market. Businesses approaching 2026 contract renewals should treat this as a strategically important period.
TTEG Recommendations
In March 2026, managing energy costs is about when electricity is used, not just how much. Global fuel price changes and international events are creating extra uncertainty in the market.
Daytime prices remain lower thanks to strong solar generation, offering a chance to shift high-energy activities like manufacturing, pumping, refrigeration, or heating into late morning and early afternoon.
Evening prices, between 5pm and 9pm, can rise sharply as solar output falls and the market relies more on gas and thermal generation. Global market pressures can make these peaks more costly, especially for businesses with after-hours or inflexible operations.
With forward prices stabilising but global and local risks still present, March is a key time to review your energy strategy and secure favourable positions before cooler months increase demand and seasonal price pressures.
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
Global Energy Pressures Impacting Australia
Global energy markets have become increasingly unstable through March, driven by ongoing geopolitical tensions and supply chain risks. Conflict in key oil and gas regions, particularly around the Middle East, has heightened concerns over potential disruptions to global fuel supply routes.
One of the most critical risks is any instability affecting major shipping corridors such as the Strait of Hormuz, through which a significant portion of the world’s oil and liquefied natural gas is transported. Even the threat of disruption in these areas has contributed to upward pressure on global fuel prices and increased market volatility.
For Australia, these global conditions are highly relevant. While the electricity system is largely domestically supplied, it remains indirectly exposed to global markets through gas pricing, coal exports, and fuel costs. Gas in particular continues to act as the marginal price setter during peak electricity periods, meaning international price movements can flow through to wholesale electricity prices locally.
In response to these risks, the Federal Government has taken precautionary steps, including releasing fuel from strategic reserves and temporarily easing fuel standards to ensure adequate supply. While these measures provide short-term stability, they also highlight Australia’s reliance on global energy markets.
Electricity Pricing Reform – AER Default Market Offer (DMO)
The Australian Energy Regulator (AER) has progressed its 2026–27 Default Market Offer (DMO) in March, marking an important shift in how electricity pricing is structured for residential and small business customers.
The DMO acts as both:
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A price cap on standing offers (the maximum retailers can charge), and
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A reference price, allowing customers to compare market offers more easily
The March draft (DMO 8) forms part of a broader reform program aimed at improving transparency and adapting pricing to a system increasingly driven by renewables.
Key proposed changes include:
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Tighter control of tariff structures
Rather than only capping the total annual bill, the AER is proposing limits on individual components such as supply charges and peak rates. This is designed to prevent retailers from shifting costs into less visible parts of the bill. -
Introduction of “solar sharing” style pricing
New opt-in tariffs are being developed to encourage electricity use during peak solar periods (typically midday), including potential free or very low-cost energy windows. -
Greater transparency for consumers and businesses
The AER will publish multiple benchmark prices (e.g. flat vs time-of-use), making it easier to understand how pricing varies depending on when energy is used. -
Stronger alignment with market conditions
The reforms reflect the growing impact of solar generation, changing demand patterns, and increasing volatility between daytime and evening pricing.
The draft determination was released in March 2026, with final prices to be confirmed in May 2026 and implemented from 1 July 2026.
Coal Reliability & Supply Risk
Coal-fired generation remains critical to the system, particularly during peak periods, but reliability across the ageing fleet continues to be a concern.
Over summer and into March, a number of unplanned outages and reduced output from key coal units tightened supply at times, contributing to price volatility, especially in the evening when renewable generation drops away.
This is largely due to the age of the fleet, with many generators experiencing more frequent outages and higher maintenance requirements. As planned maintenance increases heading into winter, available capacity may tighten further.
Why this matters for pricing
Coal generation often sets the marginal price during peak periods. When units are unavailable:
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Higher-cost generation (typically gas) is required
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Price volatility increases, especially in the evening
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Short-term price spikes become more likely
This dynamic reinforces the growing importance of firming capacity such as batteries and demand response.
What this means for businesses
Coal reliability is no longer just a technical issue, it is a direct pricing risk.
Even short-duration outages can materially impact wholesale prices and flow through to contract pricing over time. As the fleet continues to age, this risk is expected to persist, particularly during periods of higher demand or tighter reserve margins.
New Connection Rules for Large Energy Users
New regulatory proposals are being considered to tighten connection requirements for large energy users, typically those with demand above ~30 MW.
These changes are being driven by the increasing impact that large, energy-intensive facilities such as data centres, mining operations and industrial loads have on system stability and network performance.
Under the proposed framework, large users may face:
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More detailed technical assessments before connecting to the grid
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Stricter performance standards, particularly around voltage control, frequency response and system strength
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Additional compliance obligations, including ongoing monitoring and reporting
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Potential requirements to invest in supporting infrastructure, such as on-site generation, storage or demand response capability
The intent is to ensure that new large connections do not place undue stress on the grid, particularly as the system becomes more dynamic with higher levels of renewable generation.
Gas market update
Gas supply continues to be a critical policy focus for Australia in March 2026, with policymakers balancing domestic energy security against the pressures of global markets and LNG exports. Recent developments include:
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Agreements to increase domestic gas supply
Federal and state governments have worked with major gas producers to ensure additional gas volumes are directed to the domestic market. These agreements are designed to stabilise local supply, particularly for industrial and electricity generation users, without reducing Australia’s LNG export commitments.
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East Coast Gas Reservation Scheme (proposed)
The East Coast Gas Reservation Scheme is progressing through consultation and aims to reserve a portion of gas production for domestic use, reducing exposure to volatile international pricing. The scheme targets both gas-fired power generation and industrial users, particularly in NSW, Victoria, and Queensland, where reliance on gas is highest during peak periods.
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Global market influence
Rising international LNG prices, coupled with ongoing geopolitical tensions, have highlighted the risks of over-reliance on exports for domestic energy security. These pressures are creating an environment where domestic supply contracts and regulatory interventions are increasingly important to maintain price stability and reliability.
Implications for Businesses
For energy-intensive businesses and electricity users, gas policy developments are crucial because gas often sets marginal electricity prices during peak periods. Ensuring access to domestic supply can:
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Reduce exposure to international gas price spikes
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Improve certainty for electricity procurement and budgeting
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Support planning for winter reliability as gas-fired generation remains key during evening and cold-weather peaks