Spot prices rose across the NEM
May marked a clear transition away from the heavily solar-suppressed market conditions we saw throughout in April.
Average prices rose across every NEM region, while negative pricing fell substantially. The combination of cooler temperatures, shorter daylight hours and stronger underlying demand reduced renewable oversupply during the middle of the day and lifted prices across the market.
Despite this, the typical evening ramp remained the highest-value period of the day, continuing to support the value of batteries, demand response and flexible generation.
The notable changes:
- NSW average spot prices increased from $59.74/MWh in April to $82.01/MWh in May (+37%)
- VIC increased from $35.68/MWh to $64.76/MWh (+82%)
- QLD increased from $53.31/MWh to $76.34/MWh (+43%)
- SA increased from $56.18/MWh to $77.48/MWh (+38%)
- TAS increased from $85.24/MWh to $96.14/MWh (+13%)
Wind conditions played a large role
The strongest theme throughout May was the impact of changing wind conditions.
The first half of the month experienced exceptionally strong wind output:
- Victoria generated approximately 400 GWh of wind energy, the highest level since September 2025.
- Queensland recorded consecutive wind generation records.
- Sustained wind generation across Victoria and South Australia resulted in widespread negative pricing during early May.
This changed dramatically in the second half of May as low wind generation across the NEM contributed to higher prices in VIC, SA, NSW and QLD.
The progression of weekly average prices tells the story:
| Week | VIC | SA | NSW | QLD |
| Week 1 | $34.56 | $48.47 | $64.89 | $61.61 |
| Week 2 | $62.54 | $80.28 | $71.01 | $69.62 |
| Week 3 | $97.02 | $99.51 | $102.65 | $89.42 |
| Week 4 | $88.78 | $110.08 | $102.96 | $94.97 |
Combined wind generation across Victoria, South Australia and Tasmania fell to just 25 MW at 3:20pm on 21 May, the lowest level recorded since April 2021.
As wind generation declined:
- Negative pricing collapsed
- Daytime price suppression weakened
- Evening prices increased materially
- Average spot prices nearly doubled in VIC and SA
The market effectively transitioned from an oversupplied renewable system in early May to a much tighter system during the second half of the month.
Futures prices softened despite higher spot prices
The weather and operational conditions seen during May help explain why the physical market strengthened significantly through the month.
However, the fact that ASX futures remained relatively subdued suggests traders viewed the May price increases as being driven primarily by temporary low-wind conditions, seasonal demand increases, and short-term outages, rather than a structural change in supply-demand balance
Despite the increase in spot prices, ASX futures remained relatively subdued, suggesting the market viewed May’s volatility as temporary rather than structural.
Climate outlook – emerging El Niño conditions
There was also increasing focus on the development of El Niño conditions across the Pacific Ocean. While some media outlets described the event as a potential “Super El Niño”, official climate agencies including the Bureau of Meteorology continued to monitor the event through standard ENSO indicators and outlook updates.
Throughout May, climate models increasingly pointed towards a strengthening El Niño pattern, which is typically associated with warmer and drier conditions across eastern and southern Australia.
For the National Electricity Market, this is particularly relevant because prolonged dry conditions can reduce hydro inflows, increase bushfire risk and contribute to stronger cooling demand during summer periods.
Although the direct impact on May electricity prices was limited, the prospect of a stronger El Niño later in 2026 became an increasingly important consideration for energy market participants.
A hotter and drier summer could place upward pressure on electricity demand, tighten reserve margins during peak periods and increase the value of dispatchable generation, storage and demand response. As a result, many market participants were closely monitoring climate forecasts as a potential driver of summer 2026/27 market conditions.
At this stage, the influence of El Niño was more evident in forward-looking market sentiment than in May spot market outcomes. Spot prices during May were primarily driven by seasonal cooling temperatures, shorter daylight hours and increasing winter demand, while El Niño remains a developing risk factor for the second half of 2026.
May 2026 NEM insights by state
New South Wales
- Average spot price of $82.01/MWh, with 10.7 hours of negative prices and 13 intervals priced above $300/MWh
- $66.82/MWh difference in average 5-minute spot prices at the cheapest and most expensive times of day
- No five-minute intervals averaged negative prices across the month
- Renewable generation share: 32%
- Minimum demand of 4,737 MW
- Peak demand of 10,131 MW
Queensland
- Average spot price of $76.34/MWh, with 46.4 hours of negative prices and 4 intervals priced above $300/MWh
- $79.84/MWh difference in average 5-minute spot prices at the cheapest and most expensive times of day
- No five-minute intervals averaged negative prices across the month
- Renewable generation share: 31%
- Minimum demand of 3,373 MW
- Peak demand of 8,134 MW
South Australia
- Average spot price of $77.48/MWh, with 96.1 hours of negative prices and 9 intervals priced above $300/MWh
- $56.08/MWh difference in average 5-minute spot prices at the cheapest and most expensive times of day
- No five-minute intervals averaged negative prices across the month
- Renewable generation share: 62%
- Minimum demand of 586 MW
- Peak demand of 2,037 MW
Tasmania
- Average spot price of $96.14/MWh, with no negative prices and 4 intervals priced above $300/MWh
- $18.94/MWh difference in average 5-minute spot prices at the cheapest and most expensive times of day
- No five-minute intervals averaged negative prices across the month
- Renewable generation share: 96%
- Minimum demand of 802 MW
- Peak demand of 1,455 MW
Victoria
- Average spot price of $64.76/MWh, with 113.8 hours of negative prices and no intervals priced above $300/MWh
- $58.59/MWh difference in average 5-minute spot prices at the cheapest and most expensive times of day
- No five-minute intervals averaged negative prices across the month
- Renewable generation share: 37%
- Minimum demand of 3,354 MW
- Peak demand of 7,771 MW
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