Soft underlying prices with hints of volatility
Compared to 2024, average spot prices in December 2025 were significantly weaker across the National Electricity Market (NEM). Prices fell by around 60% in Queensland, 47% in New South Wales and Victoria, and 55% in South Australia.
Similarly, compared to 2025, average spot prices in January 2026 were also weaker in all states except South Australia. Queensland prices were 44% lower, with New South Wales and Victorian prices down 20% on a year earlier. South Australian prices were over 3 times higher in January 2026 as heat-driven volatility on 4 days in January drove the average monthly price to its highest level since 2019.
New South Wales was the highest price state in December, with heat-driven high prices on the 18th and 19th of December adding more than 20% to the average price for the month. Temperatures in Sydney peaked at 42.20C on Friday the 19th, the equal-hottest December day on record. Across the 2 days there was an hour of prices exceeding $1,000/MWh, reaching as high as $14,000/MWh. This volatility was relatively short-lived compared to previous events, helping to suppress overall prices.
Outside of New South Wales, there was very little high price volatility in December with just 2 short spikes in South Australia on the 8th and 29th. Conversely, there were significant periods of low prices across the NEM, with prices being respectively negative 25% in Queensland, negative 21% in New South Wales, negative 39% in Victoria, and negative 47% in South Australia as plentiful daytime solar generation flowed through the system. The ability to move electricity usage into the daytime period to take advantage of this cheaper renewable energy, alongside additional battery storage capacity to shift the energy, will be key to enabling the renewable transition.
January heatwaves drive short-lived excitement
A heat wave moved across the east coast in early January, starting in SA and moving east, driving up demand. Prices spiked unexpectedly in SA late in the evening of 6th January, with 1 hour of high prices around 8pm averaging $12,000/MWh. The high prices coincided with battery output beginning to taper off, indicating that some batteries may have depleted their storage capacity. This demonstrated the value of longer duration storage, which is becoming increasingly common in newer batteries in the NEM.
Despite Melbourne experiencing its hottest day in 6 years on the 7th of January, and beating this level two days later on the 9th of January, good wind output and generator availability helped to keep a lid on high prices in VIC with a peak of $1,392/MWh.
New South Wales experienced significant heat again on the 10th of January, reaching 42.20C – the first time since 2013 that Sydney had 2 days exceeding 42 degrees in a single summer. The heat-driven demand saw prices in New South Wales rise above $10,000/MWh for almost an hour from 7:30pm.
On the 26th of January, hot weather again moved over to South Australia with Adelaide experiencing temperatures around 40oC through much of the afternoon and evening. Prices spiked into the evening and stayed high for over 4 hours, averaging $12,500/MWh between 6:30pm and 11pm as solar ramped off into the evening, demand was high, and batteries ran out of charge. Overnight prices remained elevated, averaging $555/MWh between 11pm and 6:50am as Adelaide endured its hottest night on record with temperatures staying above 34oC, before experiencing another short bout of volatility the following morning with 3 intervals exceeding $14,000/MWh between 6:50am and 9am.
The warm weather moved across to Victoria on the 27th of January, with temperatures in Melbourne exceeding 40oC and driving a new all-time maximum Victorian demand record of 10,567 MW, breaking a previous record which had stood for 17 years. Despite the record demand, Victoria saw very little price volatility with 25 minutes exceeding $1,000/MWh, peaking at $3,026.01 at 6:45pm. Wind generation at the peak price period contributed 13% of Victorian generation, with batteries contributing 7.5% and solar 5%, helping suppress prices and avoid shortfalls.
Generator availability challenges in the hot months
Planned coal generator availability is kept high for the summer months so coal plant operators can be online to generate during any heat driven peak demand. However, summer is also a stressful period for coal generators. Ramping up and down around solar output and hot temperatures causes stress on units. We have seen several unplanned outages occurring at coal plants across Queensland, New South Wales, and Victoria – with half of the generating units in New South Wales and Victoria experiencing an unplanned outage in December and January. Challenges in generator availability continued into February with 1 out of New South Wales’ 4 coal generators (Vales Point) tripping fully offline on 2nd of February ahead of the significant heat moving through New South Wales.
Generators will be working hard to keep these units available, particularly for high-risk periods of heat, and so far, this summer there has not been a severe coincidence of unit outages driving high prices. In January 2019, 5 out of Victoria’s 10 coal units were offline for unplanned maintenance at the same time as a heat wave pushed through the state – driving prices to the cumulative price threshold (CPT) with ~7.5 hours of prices at market price cap. Looking ahead to future summers, the risks of coal plant tripping offline during high temperatures continues to be a key driver for high prices and volatility.
New minimum demand records in the south
On Christmas day, South Australia set a new minimum operational demand record of -263 MW. Operational demand can go negative when rooftop solar output exceeds demand for the state, meaning there is no grid-scale generation required in aggregate (however a minimum level of large-scale generation is required to be kept online for system stability).
The excess rooftop solar generation was able to flow across the Heywood interconnector to Victoria, and charge grid-scale batteries in South Australia. The Australian Energy Market Operator (AEMO) has procedures in place to manage grid security under these unusual conditions, helping South Australia in its quest to exceed 100% net renewable energy by 2027. The completion of Project Energy Connect (PEC), a new interconnector joining South Australia to New South Wales with full capacity expected by early 2027, will help South Australia reach its renewable energy goals.
Victoria set its own new record minimum demand on the 27th of December of 1,287 MW, 14.5% lower than the record set in January 2025. Rooftop solar at the time provided 66% of the total generation in the state.
Summer heat risk remains
While the first heat of 2026 was well managed by the market, there are still plenty of hot summer days to come. The Bureau of Meteorology (BoM) continues to forecast above average expectations for warmer than usual temperatures for the next three months. Significant heat continues to build across western and central Australia, with the movement of this heat across the capital cities to the east uncertain and expected to drive very high demand when this occurs.
If further unplanned generator outages occur alongside 40+ degree temperatures, market volatility is likely to occur – particularly in the late afternoon and evening window. The risk of heat waves are present until the end of April, and are being closely watched.
Changes in forward contract prices for CY26
Forward contract prices for Calendar Year 2026 declined for a third straight month across all states in January, with the largest falls in New South Wales (–$15.40) and Queensland (–$10.05).
Compared to futures expectations at the end of October 2025, by the end of January 2026 futures for CY26 have declined by 26% in Queensland, 22% in New South Wales, 18% in Victoria, and 9% in South Australia, reflecting the soft spot market conditions and additional battery capacity coming online in the system.
| State | January 2025 | December 2025 | January 2026 |
| NSW | $125.00 | $106.28 | $90.88 |
| QLD | $106.75 | $85.89 | $75.84 |
| SA | $99.92 | $88.22 | $87.31 |
| VIC | $76.64 | $75.60 | $65.85 |
January 2026 NEM insights by state
New South Wales
- Average spot price of $67.22/MWh, with 74 hours of negative prices and 3.6 hours above $300/MWh
- $459/MWh difference in average 30-minute spot prices at the cheapest and most expensive times of day
- No daily intervals with an average negative price over the whole month
- 47% total renewable generation through the month
- Minimum demand of 4,929 MW
- Peak demand of 13,391 MW
Queensland
- Average spot price of $64/MWh, with 89 hours of negative prices and 55 minutes above $300/MWh
- $265/MWh difference in average 30-minute spot prices at the cheapest and most expensive times of day
- No daily intervals with an average negative price over the whole month
- 40% total renewable generation through the month
- Minimum demand of 5,067 MW
- Peak demand of 10,561 MW
South Australia
- Average spot price of $152/MWh, with 254 hours of negative prices and 26.4 hours above $300/MWh
- $1250/MWh difference in average 30-minute spot prices at the cheapest and most expensive times of day
- Average spot price was negative or very close to zero between 9:25 AM and 2:00 PM
- 88% total renewable generation through the month
- Minimum demand of -137 MW
- Peak demand of 3,148 MW
Tasmania
- Average spot price of $100.93/MWh, with 3 hours of negative prices and 4.4 hours above $300/MWh
- $241/MWh difference in average 30-minute spot prices at the cheapest and most expensive times of day
- No daily intervals with an average negative price over the whole month
- 99.99% total renewable generation through the month
- Minimum demand of 741 MW
- Peak demand of 1,270 MW
Victoria
- Average spot price of $38.55/MWh, with 220 hours of negative prices and 6.9 hours above $300/MWh
- $104/MWh difference in average 30-minute spot prices at the cheapest and most expensive times of day
- Average spot price was negative or very close to zero between 10:20 AM and 2:15 PM
- 50% total renewable generation through the month
- Minimum demand of 1,963 MW
- Peak demand of 10,861 MW
December 2025 NEM insights by state
New South Wales
- Average spot price of $71.36/MWh, with 174 hours of negative prices and 5.2 hours above $300/MWh
- $264/MWh difference in average 30-minute spot prices at the cheapest and most expensive times of day
- Average spot price was negative for just two 5-minute intervals
- 47% total renewable generation through the month
- Minimum demand of 3,764 MW
- Peak demand of 13,267 MW
Queensland
- Average spot price of $54/MWh, with 205 hours of negative prices and 10 minutes above $300/MWh
- $110/MWh difference in average 30-minute spot prices at the cheapest and most expensive times of day
- Average spot price was negative for 6 5-minutue intervals in the late morning
- 40% total renewable generation through the month
- Minimum demand of 4,424 MW
- Peak demand of 10,549 MW
South Australia
- Average spot price of $27.92/MWh, with 365 hours of negative prices and 4 hours above $300/MWh
- $245/MWh difference in average 30-minute spot prices at the cheapest and most expensive times of day
- Average spot price was negative or very close to zero between 7:45 AM and 5:40 PM
- 90% total renewable generation through the month
- Minimum demand of -138 MW
- Peak demand of 2,866 MW
Tasmania
- Average spot price of $59.34/MWh, with 25 hours of negative prices and 10 minutes above $300/MWh
- $37/MWh difference in average 30-minute spot prices at the cheapest and most expensive times of day
- No daily intervals with an average negative price over the whole month
- 99.99% total renewable generation through the month
- Minimum demand of 708 MW
- Peak demand of 1,306 MW
Victoria
- Average spot price of $27.51/MWh, with 305 hours of negative prices and 25 minutes above $300/MWh
- $105/MWh difference in average 30-minute spot prices at the cheapest and most expensive times of day
- Average spot price was negative or very close to zero between 9:30 AM and 4:40 PM
- 50% total renewable generation through the month
- Minimum demand of 1,692 MW
- Peak demand of 8,331 MW
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