Australian households and businesses are set to benefit from significantly lower energy costs following a dramatic plunge in wholesale electricity prices across the National Electricity Market (NEM) during the second quarter of 2026. New data from the Australian Energy Market Operator (AEMO) reveals that average wholesale prices in the NEM fell to $74 per megawatt-hour (MWh), marking a 47 per cent reduction from the same period last year and the lowest Q2 average since 2020.
This substantial drop is primarily attributed to a record surge in renewable energy generation and an unprecedented expansion of battery storage capacity, which has increasingly displaced more expensive gas-fired generation.
Batteries Reshape the Market, Push Out Gas
AEMO’s latest Quarterly Energy Dynamics report, released in late July 2026, highlights the pivotal role of grid-scale and home battery storage in driving down prices. The total grid-scale battery capacity has more than doubled over the past year to June 2026, reaching 9 gigawatts (GW). This expansion has allowed batteries to set the wholesale price on more occasions, and crucially, at significantly lower rates than gas.
“Batteries now set the price more than a third of the time compared to just 13% a year ago. And they are setting the price lower than gas would.”
Minister for Climate Change and Energy, Chris Bowen, emphasised that this shift underscores the effectiveness of the energy transition, with renewables and storage delivering lower wholesale prices and reduced reliance on expensive gas.
State-by-State Price Falls
The price reductions were widespread across the NEM, though some states experienced more significant drops than others. Victoria recorded the largest fall, with wholesale electricity prices decreasing by 60 per cent to an average of $56/MWh. New South Wales saw a 53 per cent reduction to $75/MWh, while Queensland’s prices fell by 44 per cent to $67/MWh. Hydro-dominant Tasmania experienced a 39 per cent decrease to $86/MWh.
South Australia, despite being the nation’s most advanced renewable grid, also saw its wholesale prices fall by 38 per cent to $86/MWh. This occurred even with some periods of high demand due to cold weather and transmission constraints.
| State | Q2 2026 Average Wholesale Price (AUD/MWh) | Percentage Decrease (YoY) |
|---|---|---|
| Victoria | $56 | 60% |
| Queensland | $67 | 44% |
| New South Wales | $75 | 53% |
| South Australia | $86 | 38% |
| Tasmania | $86 | 39% |
| NEM Average | $74 | 47% |
Source: AEMO Quarterly Energy Dynamics Q2 2026
Renewables Hit New Records
The record seasonal share of renewables, reaching 42.1 per cent of the NEM’s generation, was a key factor in these price declines. This was achieved despite the June quarter typically experiencing lower wind conditions. Coal generation also fell by 5 per cent, and gas-powered generation plunged by 30 per cent, reaching its lowest June quarter average since 2003.
The International Energy Agency (IEA) recently acknowledged Australia as one of the few countries globally to experience a fall in wholesale energy prices over the past year, directly attributing this to the uptake of renewables and battery storage.
Impact on Consumer Bills and Future Outlook
While wholesale price reductions do not immediately translate dollar-for-dollar into lower consumer bills, they significantly ease pressure on energy retailers, allowing for more competitive market offers. The Australian Energy Regulator’s (AER) Default Market Offer (DMO) and Victoria’s Victorian Default Offer (VDO) for 2026-27, which took effect from July 1, 2026, already reflected some of these easing wholesale costs, with most households and small businesses on standing offers seeing price reductions.
However, consumers are encouraged to actively compare electricity plans to ensure they are on the best available deal, as market offers often provide greater savings than default prices. For more information on navigating energy plans, readers can refer to our guide on Choosing Your Australian Energy Provider in 2026: A Definitive Guide.
The rapid deployment of home battery storage is also playing an increasingly important role, enabling households to store cheap solar power during the day and reduce demand during evening peaks. This trend is expected to further contribute to grid stability and potentially lower future energy costs. Those considering investing in residential storage can explore options in our guide: Best Home Batteries in Australia 2026: Models, Costs & Up To $7,500 Rebates. The ongoing shift towards a renewable-dominated grid, supported by advanced storage solutions, continues to reshape Australia’s energy landscape, offering a more resilient and affordable future for consumers.