NEM wholesale prices crater 47% as supply growth outruns demand
East coast Australian wholesale electricity prices have halved year-on-year, with battery storage and record wind now compressing the spot market.
Wholesale electricity prices across Australia's east coast averaged A$74/MWh in the June quarter, down A$66/MWh from the same period last year, a 47% collapse that AEMO data shows reflects a market being reshaped by supply growth rather than demand destruction.6
That matters for anyone trading the NEM because the price slide is not a one-off. Grid-scale battery storage is increasingly shifting energy into high-demand periods and flattening the daily price curve, while Queensland wind generation hit a new all-time high averaging 842 MW, up 80% year-on-year. The combination is compressing both intra-day spreads and the scarcity pricing events that generators and retailers rely on for margin.6
The supply side keeps building. AEMO now reports 2.8 GW of behind-the-meter batteries responding to price signals but not centrally dispatched, a fleet equivalent to the capacity of Eraring Power Station, the country's largest coal plant. That is a lot of flexible capacity sitting outside the operator's direct control, and it is increasingly setting the marginal price in the middle of the day.2
South Australia was the only NEM region to record any material price volatility during the quarter, according to AEMO. Everywhere else, the pattern was the same: strong renewables output during daylight hours pushing spot prices toward zero, storage absorbing the surplus, and evening peaks being shaved by battery discharge that did not exist at this scale two years ago.6
The bearish pressure is showing up in forward-looking modelling as well. AEMO's medium-term projected assessment of system adequacy, published on Tuesday (2026-08-04), flagged shortfalls forecast for Victoria and South Australia, but the details matter more than the headline. Those shortfalls are concentrated in tight windows, not sustained periods, and the modelling assumptions around storage behaviour and demand response do most of the work in determining how severe they actually are.4
East coast gas prices have fallen alongside electricity, averaging A$9.08/GJ in the June quarter, their lowest level since Q2 2021. Lower domestic demand is the driver, and that feeds straight back into power prices because gas-fired generation sets the price in the NEM during peak periods. Cheaper gas means a lower ceiling on those peaks.6
The structural question for the market is how far this can go. One modelling run from industry analysts sees the NEM fleet ending up with 50 GW of wind, 49 GW of solar and 45 GW of batteries plus around 10 GW of gas, and even in that base case, the authors note there is plenty of building to do yet. A high-cost-of-capital sensitivity builds 62 GW of batteries and only 7 GW of gas, which suggests the market itself is pricing in continued storage growth regardless of the financing environment.1
The quarterly numbers only capture part of the shift. WattClarity analysts note that intra-day volatility appears to be compressing in some periods while inter-day and event-driven volatility is becoming more important. That means the old playbook of selling daytime solar and buying evening peaks is being replaced by a market where the big moves come from weather systems, outages and demand events rather than the daily solar cycle.2
The 2022 crisis feels distant in this context. When AEMO suspended the spot market on Wednesday (2022-06-15) across the eastern states, it was responding to generators withholding capacity and prices spiking to caps. Four years later, the problem has inverted: supply is abundant, prices are falling, and the operator's challenge is managing a fleet where more and more capacity sits behind the meter.3,5
What to watch now is the 2026 ESOO, expected in August, which will set out AEMO's official view of resource adequacy for the coming years. The MT PASA shortfalls for Victoria and South Australia will be tested against that document, and the gap between the two reports will show how much of the forecast tightness is real versus a function of conservative modelling assumptions.4
For traders, the signal is in the flatness. With South Australia the only region showing volatility worth trading, and wholesale prices down 47% year-on-year, the NEM is becoming a market where basis and volatility trades matter more than outright directional calls. The battery fleet is doing what it was built to do, and that is precisely what is squeezing the spot market.6
The unresolved risk is what happens when the weather turns. A hot summer or a coal outage in the tight 2026-27 window would test whether the battery fleet can actually deliver its 2.8 GW of behind-the-meter capacity when the grid needs it most. That is the moment the flat market will either hold or break.2,4