Spot prices remain low while future uncertainty increases
Lower levels of volatility and plenty of renewable generation resulted in average spot prices during February 2026 being lower than they were a year ago across the National Electricity Market (NEM). Prices in South Australia fell compared January this year, with the average price down 64%.
Queensland, New South Wales, and Victoria saw increases in average price month-on-month, however prices are still low compared to expectations prior to the start of the quarter. Compared to whole of quarter (Q1) average price expectations at the end of 2025, current prices for Queensland are down 20%, New South Wales down 24% and Victoria down 27%.
The conflict in the Middle East (which started at the end of February) has disrupted global oil and gas supplies and led to a sharp rise in the price of these commodities. While oil has a limited direct impact on electricity prices in Australia, its indirect impact on gas prices and the disruption of gas supplies are of more direct importance. Qatar is a leading exporter of liquified natural gas (LNG) with approximately 20% of the world’s LNG trade shipping through the Strait of Hormuz prior to the conflict. Many gas contracts are priced in relation to the price of oil, so the rise in the Brent oil price from $68 USD/barrel at the start of February to over $100 USD in March will likely have a direct impact on many gas contracts.
Electricity futures prices have mirrored the volatile oil price, although the magnitude of change is smaller. Futures prices fell for three consecutive months from late 2025 on the back of low spot prices and have now regained most of this fall on the back of recent global uncertainty, despite spot prices remaining relatively low. Should conflict expand or extend there may be ongoing global energy disruption and further upward impact on Australian energy prices.
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