Record Renewables Cut Australia's NEM Wholesale Power Prices Nearly in Half
AEMO's June quarter report shows a 47% year-on-year price decline as gas-fired generation fell to its lowest June-quarter output since 2003 and grid-scale battery capacity doubled.
Australia's National Electricity Market averaged $74 per megawatt hour in the June quarter, down 47% year-on-year, as renewables set a generation record and expanding battery storage eroded demand for gas and coal peakers, AEMO's Quarterly Energy Dynamics report showed on Thursday (2026-07-30).3
The price move follows a sharply altered generation mix. Renewables supplied 42.1% of total NEM generation in the April-to-June 2026 quarter, up from 37.1% a year earlier. Wind rose 20%, grid-scale solar increased 12% and rooftop solar grew 6.9% year-on-year. Gas-fired generation fell 30% to its lowest second-quarter output since 2003. Coal declined 5%.3
Victoria recorded the steepest wholesale price fall at 60% year-on-year, followed by New South Wales at 53%, Queensland at 44%, Tasmania at 39% and South Australia at 38%. The breadth of the decline across all five jurisdictions reflects a supply-driven shift rather than a localised transmission or demand event.3
Battery storage is carrying substantially more of the system's balancing role than twelve months ago. Grid-scale battery capacity more than doubled over the past year nationally to exceed 9 GW. Household battery capacity increased 41% to 3,283 MWh. In Western Australia, not part of the NEM, more than 1 GW of grid-scale battery capacity was added over the same period. That doubling of dispatchable storage reduces the evening windows when gas peakers would otherwise clear the NEM price.3
The Q2 2026 figure continues a run that accelerated in late 2025, when renewables exceeded 50% of NEM supply for the first time across a full quarter, driven by rooftop solar, wind and early battery deployments, as reported on Friday (2026-07-24).2 Renewables then reached 46.5% of NEM generation in Q1 2026, the highest first-quarter share on record, before the June quarter extended that mark.1
Australia's project pipeline is expanding fast. Following government tenders for nearly 10 GW of new capacity, the stock of probable clean energy projects jumped approximately 30% to 32.3 GW, with total accredited, committed and probable projects approaching 70 GW, Bloomberg reported.1 In the latest round, the federal government awarded 19 projects under Tender 7 of the Capacity Investment Scheme, set to deliver 7.8 GW of renewable generation and 7.9 GWh of additional battery storage.1
Yet financial commitments for actual new build slumped 46% in 2025, with only 2.3 GW reaching final investment decision.1 A large announced pipeline and a thin FID rate are two different things. The gap between them is the constraint most likely to slow progress toward Australia's 82% renewable electricity target by 2030.2
A separate demand pressure is forming on the load side. By the end of June 2026, 17 proposed data centre projects with a combined maximum connection capacity of 9 GW were moving through NEM transmission connection processes, AEMO data show.3 If a meaningful share materialises over the next several years, the additional load could arrest some of the wholesale price compression that has squeezed merchant generator margins.
Transmission bottlenecks remain the constraint that headline penetration rates obscure. John Rae, Pacific Renewable Energy Leader at Willis Natural Resources, noted on Friday (2026-07-24) that limitations in transmission infrastructure, supply chains and planning approvals are slowing integration of variable renewable energy even as quarterly penetration figures rise.2 The 82% target by 2030 depends on a pace of network investment the market has not yet demonstrated.
The 47% wholesale price fall squeezes margins for gas and coal generators with unhedged back-month exposure. The near-term floor for NEM prices will be shaped by two moving parts: how quickly the 46% slump in new-capacity financial commitments in 2025 reverses, and how much of the 9 GW of data centre connection capacity queued at June's end actually reaches commercial operation.3,1,2