April to June 2026 – Review of Market Events
By Aaron Bool
The electricity market entered April under relatively benign conditions. Demand remained subdued across most regions as mild autumn temperatures reduced both heating and cooling requirements, while strong solar generation continued to provide significant daytime supply. Wind generation was generally more variable throughout the period, although overall renewable availability remained sufficient to maintain low average spot prices across most regions. These favourable conditions contributed to continued softening in forward electricity markets, with CAL27 and CAL28 contracts declining across New South Wales, Queensland and Victoria during the first half of the reporting period.
Broader industry discussions focused on the growing role of large loads and data centres. New material released by regulatory and industry bodies highlighted the unique challenges posed by these facilities, particularly around system disturbances, ramping behaviour and network stability. Unlike conventional loads, large, concentrated energy users may increasingly be required to actively manage demand changes, ride through network disturbances and potentially provide curtailment capabilities to support system security. These discussions reflect the changing nature of both electricity demand and network planning as electrification and digital infrastructure continue to expand. Further discussion during Australian Energy Week reinforced these challenges, highlighting the rapid growth of electricity demand from emerging industries, the need for significant transmission investment and the delays affecting many large-scale energy infrastructure projects.
Beyond electricity generation itself, April highlighted broader energy security considerations. A fire at Victoria’s Geelong Oil Refinery temporarily disrupted operations at one of Australia’s two remaining refineries, while separate reporting revealed that a government-backed diesel storage program had delivered less than half of its intended capacity. Although neither event materially impacted electricity prices during the reporting period, both reinforced concerns regarding fuel supply resilience and Australia’s wider energy infrastructure as global geopolitical risks remain elevated. Similarly, a fire at the Bairnsdale Power Station temporarily removed a gas-fired peaking asset from service during maintenance activities. However, the broader market remained well supplied and wholesale price impacts were limited.
The month of May continued under similarly favourable market conditions. Renewable generation remained generally beneficial, particularly during the first half of the month, while demand conditions continued to suppress average wholesale pricing outcomes. Numerous planned maintenance outages were underway across the thermal fleet, including units at Callide, Gladstone, Mount Piper, Stanwell and Tarong North, alongside brief unplanned outages at Bayswater. Despite the reduction in available thermal generation, renewable supply and mild weather conditions largely offset the impact on market pricing. Forward markets continued to weaken, with CAL27 and CAL28 contracts in New South Wales and Queensland reaching some of the lowest levels observed in recent years. Victoria and South Australia similarly traded near multi-year lows across several forward contract years during the reporting period.
June marked the beginning of winter and provided the first meaningful test of seasonal market conditions. South Australia experienced its first Lack of Reserve (LOR2) notices of the season and several days of exceptionally low wind generation, resulting in elevated spot prices and a greater reliance on gas-fired generation. Despite these operational challenges, broader market conditions remained relatively stable, supported by improved thermal generation availability, growing battery participation and generally favourable system conditions. The Waratah Super Battery reached 700 MW of operational capacity during June, representing a significant commissioning milestone that further strengthened system security in New South Wales, while ongoing delays and significant cost overruns affecting the Kurri Kurri Power Station highlighted the continuing challenges associated with delivering new dispatchable generation. Separately, Basslink remained on track to transition from a merchant-operated interconnector to a regulated transmission asset from 1 July 2026, supporting improved electricity flows between Victoria and Tasmania. Although periods of reduced wind generation introduced short-term volatility, particularly in South Australia, forward market sentiment remained comparatively subdued, with prices largely stabilising after several months of sustained declines.
By the end of the reporting period, forward electricity pricing had undergone a substantial repricing across much of the National Electricity Market before largely stabilising during June. CAL27 contracts declined across all mainland regions, with New South Wales closing at $84.38 (-22.52), Queensland at $73.50 (-15.38), Victoria at $64.60 (-11.65) and South Australia at $83.00 (-5.00). CAL28 contracts also softened, with New South Wales finishing at $87.75 (-17.00), Queensland at $72.93 (-12.87), Victoria at $75.81 (-2.44) and South Australia at $90.00 (-0.25)*. These movements reflect a significant improvement in confidence around near-term supply adequacy, with forward markets largely absorbing the first operational challenges of winter without materially reversing the broader downward trend established over the preceding months.
Looking ahead, the market enters the remainder of winter with forward electricity prices continuing to trade near multi-year lows across much of the National Electricity Market. While the first month of winter introduced periods of reduced renewable output, elevated spot prices and emerging reliability concerns, the broader market demonstrated resilience through improved thermal generation availability, growing battery participation and generally favourable supply-demand conditions. Renewable variability, generator reliability, gas market dynamics and broader energy security considerations remain important risk factors. However, current forward pricing suggests market participants remain relatively confident in near-term supply adequacy. Attention will now turn to whether this confidence can be maintained through the remainder of winter as weather conditions become increasingly influential and operational risks typically intensify.
* All pricing references are quoted /MWh.
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