Victoria's electricity landscape is evolving rapidly as additional solar and battery capacity connects to the grid. The daily supply pattern is shifting noticeably — midday prices are being squeezed by abundant solar, while batteries are stepping in more aggressively as the sun sets.

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Through September, the contract pricing we're securing for Victorian businesses sits well below what we saw at this point last year. Wholesale rates are tracking roughly 35% lower than August 2025 levels. That said, timing matters more than ever: the price you can lock in now depends heavily on both today's market conditions and how the market expects supply to look over the coming years.

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What we are seeing in Victoria:

• Wholesale rates down sharply: Down around 35% year-on-year, putting VIC second only to QLD on price among mainland states.

• Renewables and storage accelerating: Clean energy made up 40.2% of August generation, and battery output more than doubled compared with the same month last year.

• Forward curve tilting upward: Near-term futures nudged higher in August (CY27 +1.6%, CY28 +1.4%), leaving the curve steeply sloped toward the outer years.

• Network charges climbing: The 2026–27 distributor tariffs are now appearing on business bills.

• System dynamics shifting: Victoria is managing a complex mix — coal output actually rose in August, but battery discharge and imports both surged to meet higher demand.

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Futures Pricing Outlook

Forward electricity prices remain relatively stable heading into the second half of 2026.

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Victoria's forward market moved modestly higher in August, with the near-term contracts firming while the outer year softened slightly.

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The contract rates we're seeing for Victorian customers have firmed a touch over the past month, but they're still sitting close to the state's long-term average — and well below the peaks seen a couple of years ago.

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August movements:

• CY27 futures climbed 1.6%.

• CY28 gained 1.4%.

• CY29 slipped 1.4%, showing some softening further out.

• Across the past 12 months, CY27 is still down about 16%.

 

Forward prices have largely stabilised at lower levels through 2026, but the gap between 2027 and 2029 pricing is around 33%, reflecting ongoing market uncertainty around future supply.

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Network & Tariff Considerations

The 2026–27 network tariffs kicked in on 1 July and have now been flowing through bills for almost three months.

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Victorian businesses are seeing moderate increases in network charges this year. Multiple distributors received approval for higher distribution charges in the 2026–27 round, adding to the broader upward pressure on network costs across the NEM.

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Main drivers behind the increases:

• Transmission network investments

• General inflation pressures

• Revenue adjustments by distributors

• Capital spending to support the renewables transition

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Network charges now make up a larger slice of the total bill in many cases. So even with wholesale prices down sharply, some businesses are still seeing their overall electricity costs rise — especially if their tariff structure or distributor charges have changed.

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Supply Outlook – Generation & Infrastructure

Victoria is pressing ahead with the infrastructure needed to support a cleaner grid while managing the gradual exit from coal-fired generation.

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Key developments to watch:

• Renewables remain strong: Renewable energy supplied 40.2% of Victoria’s electricity in August, down only 1.0 percentage point from the same time last year. Solar generation increased 4.8%, while hydro rose 32.1%. Wind generation fell slightly by 1.2%.

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• Electricity demand is growing: Total electricity generation increased 4.9% to 4,921 GWh in August, reflecting growing demand from data centres, electrification and battery storage.

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• Batteries are growing quickly: Battery output more than doubled, increasing 108% year-on-year to 125 GWh. This is helping provide more electricity during periods of higher demand.

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• Gas generation is falling: Gas generation decreased by 56.8% to 60 GWh, with batteries and interstate electricity imports providing more supply during the evening peak.

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• More electricity is coming from interstate: Electricity imports increased 23.9% to 295 GWh, helping Victoria meet higher demand when local generation was not enough.

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The trajectory is unmistakable: more renewables, more storage, more demand. But Victoria's path is messier than some other states — coal output actually increased 8.9% in August, adding complexity to the transition story. For businesses, this means wholesale prices will keep behaving differently at different times of day.

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What it means for your business

The contract pricing we're seeing for Victoria today is still much more attractive than 12 months ago — wholesale rates down ~35%, and 2027 futures down ~16% over the year. But network costs are creeping up, and the forward curve's steep shape suggests the market isn't fully confident about medium-term firming capacity.

 

For businesses, the current market provides an opportunity to review contract pricing, but network costs, usage patterns and contract structure will still play an important role in determining the overall cost of energy.

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If your energy contract is approaching renewal, or you would like to better understand your current position, contact TTEG for a complimentary bill check.