Western Australia's electricity market is undergoing a pronounced shift as additional solar and battery capacity connects to the South West Interconnected System. The daily price profile is changing noticeably — midday rates are being compressed by abundant solar, while batteries are increasingly shouldering the evening peak that used to belong to gas.

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Through September, the contract pricing we're securing for WA businesses sits well below the peaks seen earlier in the year, though the market remains more volatile than the eastern states. Wholesale rates in Q2 2026 hit a record level, up 30% year-on-year, before easing back in recent months. Timing and contract structure matter more than ever: the price you can lock in now depends heavily on both current market conditions and how the market expects supply to look over the coming capacity years.

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What we are seeing in Western Australia right now:

• Wholesale rates volatile but moderating: After reaching record levels in Q2 2026, average prices fell 11% in August as wind output improved and battery discharge increased.

• Renewables and storage scaling: Battery output reached 20–30% of generation during evening peak intervals in August, up from negligible levels just two years ago, displacing gas at the margin.

• Capacity costs climbing: The Reserve Capacity Mechanism remains one of the largest cost components, with normalised reserve capacity costs continuing to rise through 2025–26.

• Network and system services rising: Non-Co-optimised Essential System Services (NCESS) costs jumped 94% year-on-year in Q2 2026, from ~$31.7 million to ~$65.5 million.

• System dynamics shifting: WA is managing a complex transition — renewables supplied more than 52% of total generation for the first time in Q4 2025, but lower wind availability in Q2 2026 drove renewed reliance on gas and pushed prices to record highs.

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Two businesses using the same total electricity can face very different costs depending on when they use it and when they secure their contract. An average wholesale price alone doesn't capture the full cost stack anymore — capacity payments, system services and market fees are now equally important.

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Future pricing

From the pricing we're obtaining for WA customers, capacity costs are playing a much larger role in the overall price signal than in the NEM. 

 

The Benchmark Reserve Capacity Price (BRCP) — a key input into capacity payments — escalated from the 2025/26 capacity year, driven by three main factors:

• The reference technology shifted to a larger 6-hour battery system (from 4 hours), increasing capital costs by ~82%

• Material increases in labour, materials and freight costs

• Introduction of a new Fixed Capital Charge of $100,000 per MW to cover shared transmission assets

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Energy Policy WA is now proposing to remove the emission threshold that currently favours batteries, which could cause the reference technology to switch to a gas peaker and put downward pressure on the BRCP in the next cycle. That's a potential win for consumers who ultimately pay this cost, but it also creates mixed signals for investors being encouraged to commit capital while facing a declining BRCP.

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Wholesale energy prices are only one piece of the affordability puzzle in WA. Capacity payments, essential system services, market fees and interim reliability measures are becoming increasingly important components of the overall cost stack — and all of these flow through to end consumers.

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Network tariff

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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From the bills we're reviewing, Western Australian businesses are seeing moderate increases in network charges this year. Western Power's distribution charges were approved with increases in the 2026–27 round, adding to the broader upward pressure on network costs we're seeing across the SWIS.

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Main drivers behind the increases:

• Transmission network investments to support renewable connections

• General inflation pressures

• Revenue adjustments by the distributor

• Capital spending to maintain system security as coal exits

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Network charges now make up a larger slice of the total bill in many cases. So even when wholesale energy prices moderate, some businesses are still seeing their overall electricity costs rise — especially where tariff structures or distributor charges have changed.​

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Supply Outlook – Generation & Infrastructure

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

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Key developments we're tracking:

• Renewables hitting milestones: Renewables supplied more than 52% of total generation for the first time in Q4 2025, though Q2 2026 saw lower wind availability drive prices higher.

• Demand continuing to grow: Peak operational demand rose 8% in August 2026, reflecting ongoing electrification and economic activity.

• Batteries scaling fast: Battery output reached 20–30% of generation during evening peak intervals in August, up from negligible levels two years prior.

• Gas being squeezed (but still critical): Gas generation declined as batteries took over more evening peaks, but lower wind periods in Q2 2026 showed how quickly the market can swing back to thermal when renewable output falls.

• More renewable capacity in the pipeline: The federal government launched CIS Tender 11 in August 2026, seeking 1.8 GW of new solar and wind capacity in WA — likely the final CIS tender for the WEM if generation and dispatchable capacity targets are met.

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What it means for your business

From the pricing we're currently obtaining for WA, contract rates are more attractive than the Q2 2026 peaks, but the market remains volatile — wholesale prices swung from a record low in Q4 2025 to a record high in Q2 2026 (up 30% year-on-year) within just two quarters. Battery revenues rose 24% in August, with merchant returns turning positive for the first time since May, signalling that storage is becoming a more mature revenue earner in the WEM.

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For businesses, current WA contract pricing presents an opportunity to secure more favourable rates, but the market remains volatile, making timing and contract strategy important when reviewing or renewing an energy contract.

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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.