Australia's NEM Power Prices Drop to Five-Year Low as Gas Dispatch Falls to 2003 Levels
Grid-scale battery capacity exceeded 9 GW after more than doubling in a year, AEMO data show, crushing gas dispatch and dragging average NEM wholesale prices to $74/MWh.
Average wholesale electricity prices across Australia's National Electricity Market fell 47% year-on-year to $74 per megawatt hour in the June quarter, their lowest level since 2020, according to AEMO's Quarterly Energy Dynamics report released on July 30 (2026-07-30).6
For gas generators, the numbers are harder. Gas-fired generation dropped 30% in the quarter to its lowest second-quarter output since 2003, displaced by expanding battery capacity and record renewable generation that together absorbed the flexible balancing role gas had historically held.6
Renewables supplied 42.1% of NEM generation in the June quarter, up from 37.1% a year earlier, AEMO reported. Wind generation rose 20%, grid-scale solar increased 12%, and rooftop solar grew 6.9%. Coal fell 5%. Gas took the sharper cut.6
Grid-scale battery capacity more than doubled over the past year to exceed 9 GW across the NEM. Household battery capacity rose 41% to 3,283 MWh. "Batteries are increasingly usurping gas as the primary balancing technology for intraday variability in renewable generation," said Sahaj Sood, an analyst at BloombergNEF.6,5
Victoria recorded the steepest decline, with wholesale prices falling 60% year-on-year. New South Wales fell 53%, Queensland 44%, Tasmania 39%, and South Australia 38%. Five states with materially different generation mixes all moved in the same direction and by similar magnitudes.6
Retail rates are beginning to follow. Under the final default market offer, which sets maximum retail pricing for households and small businesses across parts of eastern Australia, household standing offer time-of-use prices are set to fall by up to 10.7% in South Australia, New South Wales and south-east Queensland from July 1 (2026-07-01). Small business rates under the same mechanism face reductions of up to 20.9%. Victoria's default offer for 2026/27, released separately, included an average 5% household cut worth around $84 off annual bills.1
But the quarterly average smooths over episodes that were anything but orderly. AEMO CEO Daniel Westerman, speaking at Australian Energy Week 2026 on June 11 (2026-06-11), described one recent period as among the most challenging AEMO had experienced, involving around 500 directions to generators after a cold snap coincided with generator outages. A two-day heatwave earlier in the year nearly doubled quarterly averages when battery storage ran down and expensive gas returned as the price-setter.3,2
South Australia's worst wind drought in more than two years, which struck over the weekend of June 22 (2026-06-22), produced a similar pattern: prices spiked sharply across South Australia and Tasmania as wind output collapsed without adequate backup storage. The quarterly data encompasses those events within a lower average.4
The demand side now adds a variable that could limit how far the price decline extends. AEMO reported that 17 proposed data centre projects with a combined maximum connection capacity of 9 GW were progressing through the NEM's transmission connection process as of end-June. That matches the entire current grid-scale battery fleet in scale. Significant data centre load connecting on schedule could absorb much of the surplus that has been weighing on wholesale prices.6
Wallumbilla gas hub prices stood at A$11.70 per gigajoule as of August 2 (2026-08-02), reflecting thin margins for gas generators in a market where batteries are setting intraday clearing prices on a growing share of trading periods. The December quarter will test whether peak summer cooling demand pulls gas back into regular dispatch, or whether the expanded battery fleet holds the position it built in the June quarter.6,5