Australian households and businesses could see further relief on their energy bills following a significant 47 per cent plunge in average wholesale electricity prices across the National Electricity Market (NEM) during the second quarter of 2026. The Australian Energy Market Operator (AEMO), in its latest Quarterly Energy Dynamics (QED) report released this week, confirmed average NEM wholesale prices fell to AUD$74 per megawatt-hour (MWh) – the lowest June quarter average since 2020.
This dramatic reduction is primarily attributed to a record seasonal share of renewable energy, a substantial increase in battery storage capacity, and gas-powered generation hitting a 23-year low. The report, covering April to June 2026, provides a detailed look at the fundamental shifts reshaping Australia’s energy landscape.
Renewables and Batteries Drive Down Costs
Renewable energy sources achieved a record 42.1 per cent share of generation in the NEM during Q2 2026, up from 37.1 per cent in the same period last year. This surge was propelled by strong year-on-year growth in wind (up 20 per cent), grid-scale solar (up 12 per cent), and rooftop solar (up 6.9 per cent).
Crucially, battery storage played a pivotal role. Grid-scale battery capacity more than doubled over the past year, now exceeding 9 gigawatts (GW). Household battery capacity also saw a substantial 41 per cent increase, adding 3,283 megawatt-hours (MWh) to the system. This growth allowed batteries to set wholesale prices on more occasions, but at a significantly lower average of AUD$107/MWh, a fraction of the AUD$452/MWh recorded in Q2 2025. For households considering energy storage, understanding the market can unlock substantial savings. Our guide on Best Home Batteries in Australia 2026: Models, Costs & Up To $7,500 Rebates offers more insights.
Simultaneously, coal generation fell by 5 per cent, and gas-powered generation plunged by 30 per cent, reaching its lowest June quarter average since 2003. This reduction in reliance on more expensive fossil fuels directly contributed to the lower wholesale prices.
“Record renewable generation, combined with growing battery storage and consumer energy resources, continues to reshape Australia’s energy markets,” said Violette Mouchaileh, AEMO Executive General Manager Policy & Corporate Affairs. “These technologies are changing demand patterns, supporting system reliability and increasing the amount of lower-cost energy available across the market.”
State-by-State Wholesale Price Reductions
The impact of these market dynamics varied across the NEM states:
| State | Q2 2026 Average Price | Year-on-Year Change | Price Drop (AUD/MWh) |
|---|---|---|---|
| Victoria | AUD$56/MWh | -60% | Significant |
| New South Wales | AUD$75/MWh | -53% | Significant |
| Queensland | AUD$67/MWh | -44% | Significant |
| Tasmania | AUD$86/MWh | -39% | Significant |
| South Australia | AUD$86/MWh | -38% | Significant |
Victoria experienced the most significant decline, with wholesale prices falling 60 per cent to AUD$56/MWh. New South Wales saw a 53 per cent reduction to AUD$75/MWh, and Queensland prices dropped 44 per cent to AUD$67/MWh. South Australia and Tasmania also recorded substantial decreases of 38 per cent and 39 per cent respectively, both averaging AUD$86/MWh.
East Coast Gas Prices at Five-Year Low
The QED report also highlighted softer conditions in the east coast gas markets. Average domestic gas prices reached AU$9.08 per gigajoule (GJ) during the June quarter of 2026, representing a 26.5 per cent decline compared to the same period in 2025 (AU$12.36/GJ). This marks the lowest average domestic gas price since Q2 2021.
This domestic price stands at less than 44 per cent of the international LNG netback benchmark of AU$20.84/GJ, indicating a significant divergence. Factors contributing to this include increased domestic supply volumes, reduced industrial gas demand, milder seasonal heating demand, and heightened competition among producers.
Western Australia Diverges
In contrast to the NEM, Western Australia’s wholesale electricity prices increased by 30 per cent year-on-year to AUD$118/MWh. This was attributed to lower wind generation and reduced availability from coal-fired power plants, leading to a greater reliance on gas-fired generation (up 27 per cent).
Implications for Retail Prices
While wholesale price reductions typically flow through to retail consumers, the timing and extent can vary. The Australian Energy Regulator (AER) set the Default Market Offer (DMO) prices for NSW, South East Queensland, and South Australia for 2026-27 earlier this year, effective from July 1. These DMO determinations already factored in some easing of wholesale costs, leading to price falls for most households and small businesses in these regions (except for a modest 1.4% increase for SA residential flat rate customers).
However, the sustained downward pressure on wholesale prices, as confirmed by AEMO’s latest QED, provides a strong foundation for future retail price stability and potentially further reductions. Consumers are always encouraged to compare plans and ensure they are on the most competitive offer. Our guide on Choosing Your Australian Energy Provider in 2026: A Definitive Guide can assist in navigating the market.
Moreover, the introduction of the AER’s ‘Solar Sharer Offer’ from July 1, 2026, provides smart meter households in DMO regions with three hours of free mid-day electricity. This initiative aims to leverage peak solar generation and offers another avenue for bill savings, even for homes without solar panels.