Each month, Watt Utilities publishes this Commercial Energy Market Report to keep our clients informed about wholesale electricity price movements across Australia’s east coast. We cover what happened in the spot market, why prices moved, and what it means for businesses managing energy costs. A new edition is released around the 20th of the following month.
Australia’s electricity grid operates through the National Electricity Market (NEM), which connects Queensland, New South Wales, Victoria and South Australia via a shared transmission network. Wholesale spot prices are set every five minutes through a competitive bidding process managed by AEMO (the Australian Energy Market Operator), the independent body responsible for operating the NEM and ensuring reliable electricity supply. The prices in this report reflect the wholesale spot market and are distinct from the retail rates businesses pay on their energy bills, though sustained movements in the spot market generally feed into retail contract pricing over time.
January 2026 brought a sharp divide across the NEM, with South Australia recording its most extreme pricing since mid-2025. Record heat, persistent wind lulls and limited evening battery capacity pushed SA’s average to $152.25/MWh, up from $27.92 in December, with 75 high-price intervals and a maximum 5-minute interval of $20,300/MWh. Victoria set a new all-time operational demand record of 10.7GW during heatwave conditions, lifting its average to $38.55/MWh. NSW and Queensland recorded moderate movements at $67.22/MWh and $64.03/MWh respectively. FY27 contract markets saw upward pressure in Queensland and Victoria following supply disruptions, while SA forward contracts traded downward despite the severe spot conditions. References to the NEM in this report cover the four mainland states: Queensland, New South Wales, Victoria and South Australia.
Source: Shell Energy / AEMO
| State | Average Spot Price | Max 5 Min Spot Price | 5 Min Intervals at $1,000+ | 5 Min Intervals at $0 or Below |
|---|---|---|---|---|
| QLD | $64.03 | $19,727.85 | 3 | 1,065 |
| NSW | $67.22 | $11,938.05 | 12 | 886 |
| VIC | $38.55 | $3,026.01 | 9 | 2,641 |
| SA | $152.25 | $20,300.00 | 75 | 3,048 |
Source: NEM Spot Market, AEMO (via Shell Energy Market Summary Report, January 2026)
Source: NEM Spot Market, AEMO | Chart Credit: Shell Energy. Historical data prior to Sep 2025 sourced from Shell Energy 3-year charts.
Average pricing fell to $67.22/MWh, a 5.8% decrease from December’s $71.36/MWh, despite 12 high-price intervals and a daily average of $499.74/MWh on 10 January.
NSW recorded 12 intervals above $1,000/MWh as heat-driven demand and interconnector disturbances produced a sharp spike on 10 January. Conditions were moderate across most of the month, with 886 zero or negative intervals recorded as summer demand kept daytime pricing above zero on the majority of days.
Source: AEMO (via WEB_AVERAGE_PRICE_DAY_202601)
Spot pricing averaged $64.03/MWh, up 17.8% from December’s $54.38/MWh, as multiple coal unit trips and constrained QNI flows lifted the monthly average despite contained volatility overall.
Multiple coal unit trips and constrained QNI interconnector flows produced three high-price intervals, amplified at times by limited evening battery capacity. Strong daytime solar output delivered 1,065 zero or negative intervals, absorbing excess supply and preventing thermal disruptions from sustaining price pressure.
Source: AEMO (via WEB_AVERAGE_PRICE_DAY_202601)
Average pricing surged to $152.25/MWh, a 445% increase from December’s $27.92/MWh, reflecting a sustained high-price period from 6 to 9 January and a severe spike on 26 January reaching $20,299.99/MWh.
SA recorded 75 intervals above $1,000/MWh as extreme heat, persistent wind lulls and limited evening battery capacity coincided with restricted Victoria-to-SA interconnector flows during the most acute periods. The 3,048 zero or negative intervals highlight the characteristic price swings in SA’s high-renewables generation mix.
* 5-minute interval peak was $20,299.99/MWh on Jan 26. Chart Y-axis capped at $650 for readability. Source: AEMO (via WEB_AVERAGE_PRICE_DAY_202601)
Spot pricing averaged $38.55/MWh, a 40.1% increase from December’s $27.51/MWh, as the state’s new demand record and low wind periods drove nine high-price intervals through the month.
Victoria recorded its highest-ever operational demand of 10.7GW during the January heatwave (source: Shell Energy/AEMO). Nine high-price intervals resulted from low wind stretches and several coal outages coinciding with peak demand. Strong solar output on cooler days produced 2,641 zero or negative intervals, limiting the monthly average despite the record demand events.
Source: AEMO (via WEB_AVERAGE_PRICE_DAY_202601)
Source: Shell Energy Market Summary Report, January 2026 (AEMO fuel mix data)
The 90-day fuel mix to January 2026 shows coal at 58% of total NEM output, with black coal at 43% and brown coal at 15%. Renewables combined for 29% of supply, with wind at 17% and solar at 12%. Hydro contributed 6%, gas 3%, and battery storage 2%. The January SA pricing events are a timely reminder of how quickly renewable-heavy grids experience supply stress when wind drops during high-demand periods without sufficient dispatchable backup. Battery storage at 2% is growing but has yet to provide the evening capacity buffer needed to prevent acute price spikes under sustained heat conditions.
January 2026 tested the market in ways most participants hadn’t planned for, particularly in South Australia where 75 high-price intervals and an average of $152.25/MWh created real cost exposure for businesses without adequate hedging.
Throughout January our team worked closely with C&I and SME clients across Queensland, New South Wales, Victoria and South Australia to review spot exposure, assess demand management opportunities and position contract renewals ahead of expected February moderation. For clients with upcoming decisions, the current forward market offers an opportunity to secure pricing before further summer events are factored into FY27 and FY28 products.
Our Watts Mine platform has incorporated AI-driven analysis for over two years, with capabilities and accuracy continuously improved over that time. This gives our team access to deeper market intelligence and faster contract analysis, with more time focused on strategic advice for clients.
The federal government announced an increase to the Small-scale Technology Certificate program’s funding envelope from $2.3 billion to approximately $7.2 billion over four years, targeting behind-the-meter battery storage uptake. The scheme aims to support more than two million battery installations by 2030, adding roughly 40GWh of distributed storage. Eligibility continues for systems up to 100kWh with STC creation capped at 50kWh of usable capacity. For commercial property owners and strata bodies, the expanded scheme maintains existing incentives for behind-the-meter battery installations.
Source: DCCEEW / Shell Energy Market Summary, January 2026
The Clean Energy Regulator confirmed that facilities may now register under the Renewable Electricity Guarantee of Origin (REGO) scheme, designed to operate beyond the Renewable Energy Target’s 2030 expiry. The REGO framework broadens eligibility to electricity dispatched from storage and generation currently below RET baseline thresholds. A facility can participate in both schemes, but a single unit of electricity cannot create both an LGC and a REGO. No transparent price discovery for REGOs has yet emerged. Businesses relying on LGCs for renewable energy claims should begin assessing how the transition affects their long-term procurement strategy.
Source: CER / Shell Energy Market Summary, January 2026
AEMO’s Draft 2026 Integrated System Plan projects total NEM generation and storage capacity to triple from 92GW to 297GW by mid-century. Grid-scale solar and wind capacity is forecast to rise from 23GW to 58GW by 2030 and to 120GW by 2050. For C&I businesses, the ISP signals a long-term structural shift toward a market where renewable oversupply and storage dispatch increasingly shape both spot and forward pricing outcomes.
Source: AEMO Draft ISP 2026
Our team works with SME, C&I and Strata clients across Queensland, New South Wales and Victoria. Get in touch for a no-obligation portfolio review.
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