Energy Replay Q3 2026: Spot prices fell, but 2027 contract prices climbed.

In our Q2 report, batteries and renewables pulled wholesale prices down across the board. In Q3 the spot market kept falling. The futures market went the other way.

Between July and September, the average wholesale spot price across the National Electricity Market (NEM) fell to $63/MWh, the lowest September quarter average since 2021. Over the same three months, futures prices for calendar year 2027 rose in every mainland state except South Australia, and most of that rise landed in September.

Here's what happened, why, and what it means if your contract is up for renewal in the next 12 months.

Q3 at a glance

1. Spot prices fell. The NEM average was $63/MWh, down 15% on Q2 and 27% on a year earlier.

2. 2027 contract prices rose. CAL27 futures climbed 13.3% in NSW, 12.9% in Queensland and 9.5% in Victoria over the quarter. South Australia eased 2.7%.

3. NSW is the one to watch. CAL27 reached $103.16/MWh on 16 October, and a heatwave on 12 October sent the NSW spot price to $23,107/MWh.

4. Batteries set the spot price in 48% of intervals, up from 36% in Q2.

5. Renewables supplied a record 44.3% of NEM generation for a September quarter.

6. Gas averaged $10.77/GJ, up on Q2 but down on Q3 2025. WA power prices hit another record at $120.72/MWh.

7. What to do: if your contract ends in the next 12 months, review your timing and contract length now rather than at renewal.

Source: AEMO QED Q3 2026; Shell Energy September 2026 report; ASX Energy; ABC News

The price story: Two markets, two directions

The spot price is the wholesale price set every five minutes on the NEM. It's what retailers pay for power on the day. According to AEMO's Quarterly Energy Dynamics Q3 2026, it averaged $63/MWh across the NEM, down 15% on Q2 and 27% on Q3 2025. Spot prices fell or held steady in every region.

Futures are contracts that lock in a wholesale price for a future period. Retailers rely on them when they price fixed-rate business contracts, so they matter more to your next renewal than this quarter's spot price does. Calendar year 2027 (CAL27) futures drifted through July and August, then jumped in September. NSW added $10.38/MWh in September alone, according to Shell Energy's September market report.

The short version: power was cheap during the quarter, but the market now expects 2027 to cost more than it did at the end of June.

Average wholesale spot prices by region ($/MWh)

Source: AEMO Quarterly Energy Dynamics Q2 2026; AEMO Quarterly Energy Dynamics Q3 2026

ASX Energy futures: Calendar year 2027 base load contracts ($/MWh)

Source: ASX closing prices as reported in Shell Energy's July 2026 report (end June); Shell Energy September 2026 report (end September); ASX Energy weekly market wrap, week ending 16 October 2026

Last quarter we tracked 2026 contracts. With 2026 nearly done, CAL27 is the contract that now drives most renewal pricing, so that's what we follow from here.

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State-by-state: Where the forward curve moved most

New South Wales: Cheaper spot, sharpest futures rise

What happened in Q3

NSW CAL27 futures rose from $84.24/MWh at the end of June to $95.48/MWh at the end of September, up 13.3%. Almost all of that came in September. The rally didn't stop at quarter end: CAL27 closed at $103.16/MWh on 16 October, according to ASX Energy.

On the spot market, NSW averaged $74/MWh, about level with Q2 and 17% lower than a year earlier. It was still the most expensive region in the NEM this quarter.

What drove the move

• Spot prices: AEMO puts the year-on-year fall down to lower operational demand and more grid-scale battery discharge during peak periods.

• Futures: Shell Energy says the September rally accelerated late in the month on concerns about summer reliability and renewable project delivery. Its report also points to planned and unplanned coal outages, data centre demand growth and delays commissioning firming assets, with thin trading amplifying the moves.

• An early test of summer: On 12 October, a spring heatwave arrived while about 2,400 MW of NSW coal capacity was unavailable. The ABC reported the NSW spot price peaked at $23,107/MWh, just under the market price cap.

What it means for businesses

If your NSW contract ends in the next 12 months, the pricing that was available at the end of June has gone for now. Futures can fall as quickly as they rise, so this isn't a reason to panic-sign. It is a reason to have a view on timing, rather than accepting whatever renewal rate lands in your inbox.

Source: AEMO QED Q3 2026; Shell Energy September 2026 report; ABC News, 17 October 2026

Queensland: Lower spot, steady climb in futures

What happened in Q3

Queensland CAL27 futures rose from $73.50/MWh to $82.97/MWh over the quarter, up 12.9%, with $7.53 of that in September. They closed at $83.62/MWh on 16 October.

Spot prices averaged $61/MWh, down from $67/MWh in Q2 and 15% lower than Q3 2025. One caveat: Shell Energy notes that in September on its own, Queensland was the only region where average spot prices were higher than a year earlier.

What drove the move

• Batteries at peak times: AEMO credits more grid-scale battery discharge and lower operational demand during peak periods for most of the year-on-year price fall.

• Fewer negative prices: Negative or zero prices occurred in 13.8% of Queensland's five-minute intervals, down 12.1 percentage points on a year earlier.

• Gas pulled north: Queensland LNG exports hit a record for a September quarter, and gas flowed north from Moomba into Queensland for the first Q3 since 2016.

What it means for businesses

Queensland's 2027 futures rose almost as much in percentage terms as NSW's. Businesses that held off renewing over winter in the hope of further falls are now looking at a higher starting point. If your contract expires in 2027, get pricing on the table early so you can see where retailers sit.

Source: AEMO QED Q3 2026; Shell Energy September 2026 report; ASX Energy

South Australia: The only state where futures fell

What happened in Q3

South Australian CAL27 futures eased from $83.37/MWh to $81.09/MWh over the quarter, down 2.7%. SA did rise in September, but by $2.88, well short of the eastern states. By 16 October CAL27 had moved up to $84.65/MWh.

Spot prices averaged $69/MWh, down from $86/MWh in Q2 and 34% lower than a year earlier. In our Q2 report, SA had just hit the market price cap in June. This quarter its main shock came on 8 July (see Victoria below).

What drove the move

• Lower demand: AEMO says SA prices fell in both peak and overnight hours, driven by a notable reduction in operational demand.

• Despite less wind: Average wind speeds in SA fell 17% on a year earlier, the biggest drop of any region. Prices still fell.

• Futures: Shell Energy says SA diverged from the eastern states because improved renewable and battery supply adequacy tempered expectations.

What it means for businesses

SA was the outlier this quarter. Its CAL27 price finished September about $14/MWh below NSW. Volatility hasn't gone away, though. The 8 July event showed that a coal problem in Victoria can push SA prices to extreme levels within minutes, so businesses with any spot exposure in SA need a plan for those intervals.

Source: AEMO QED Q3 2026; Shell Energy September 2026 report; ASX Energy

Victoria: Still the cheapest, but the curve turned

What happened in Q3

Victorian CAL27 futures sold off through July and August to $63.01/MWh, then rose $7.67 in September to close the quarter at $70.68/MWh. That's 9.5% above the end of June. They closed at $72.73/MWh on 16 October.

Spot prices averaged $56/MWh, unchanged on Q2 and 27% lower than a year earlier. Victoria and Tasmania shared the lowest average price in the NEM.

What drove the move

• The 8 July spike: Brown coal output in Victoria dropped by more than 1,000 MW when Loy Yang A and B reduced output. At 7:40pm, prices went above $16,000/MWh across Victoria, South Australia and Tasmania.

• Data centres: AEMO says Victorian data centre demand rose from 136 MW in Q3 2025 to 225 MW this quarter.

• The July sell-off: Shell Energy linked Victoria's July futures fall to its higher renewable exposure. September's rally then pulled Victoria up with the rest of the east coast.

What it means for businesses

Victoria still has the lowest 2027 futures price on the mainland. Look closely at 2028, though. At the end of September, Victorian CAL28 sat at $79.79/MWh, about $9 above CAL27. Shell Energy links the 2028 premium to the planned closure of Yallourn Power Station in the second half of 2028. Contract length is now a real pricing decision for Victorian sites.

Source: AEMO QED Q3 2026; Shell Energy July 2026 report; Shell Energy September 2026 report

Renewables hit a Q3 record

Renewables supplied 44.3% of NEM generation in Q3, up from 41.8% a year earlier and a record for a September quarter. On Saturday 19 September they supplied 80.4% of NEM generation over a half-hour period, beating the previous record of 78.6% set in Q4 2025.

Grid-scale solar output rose 30% on a year earlier and hydro rose 15%. Rooftop solar output rose 13%, and the number of rooftop solar systems grew from 3.7 million to 3.9 million over the year. Wind went backwards, down 6%, as average wind speeds fell across most regions.

Operational demand, the power the grid supplies after rooftop solar, set a new all-time NEM low of 9,422 MW on 20 September.

Source: AEMO QED Q3 2026

Batteries now set the price almost half the time

Last quarter we reported that batteries set the spot price in 36% of five-minute intervals. In Q3, battery charging or discharging set the price in 48% of intervals, up from 18% a year earlier.

Installed grid-scale battery capacity passed 10 GW, with 23 GWh of storage, by the end of September. Average battery discharge rose to 680 MW, more than triple the 215 MW of Q3 2025. In the evening peak, batteries supplied 8.0% of total supply, ahead of gas at 5.1%.

That shows up in prices. Shell Energy says September's price falls were most evident in the evening peak, historically the most expensive part of the day, and that growing battery penetration kept suppressing evening prices. AEMO CEO Daniel Westerman told the ABC: "Batteries, large and small, are fundamentally changing the way energy is produced, consumed and priced."

Source: AEMO QED Q3 2026; Shell Energy September 2026 report; ABC News

Western Australia: Another record high

WA went the other way again. The average real-time price in the Wholesale Electricity Market (WEM), WA's separate grid, was $120.72/MWh in Q3. That's up 19% on a year earlier and the highest quarterly average on record, beating the $117.87/MWh record we reported last quarter.

AEMO points to lower coal and wind availability. Coal-fired generation fell 22% because of outages and wind fell 14%, while gas-fired generation rose 12% to cover the gap. Because WA isn't connected to the east coast grid, it can't import power when local supply is short.

Source: AEMO QED Q3 2026; AEMO QED Q2 2026

Gas: Up on winter, down on last year

East coast wholesale gas averaged $10.77/GJ in Q3. That's up from $9.08/GJ in Q2, but down from $12.62/GJ in Q3 2025.

AEMO says international LNG prices stayed well above east coast prices amid supply risks linked to the Middle East conflict that began in March 2026. Queensland LNG exports rose 16 PJ to a September quarter record. Victoria's Iona gas storage facility ended September at 13.1 PJ.

Gas-fired power generation in the NEM fell 34% on a year earlier to an average of 881 MW, the lowest Q3 average since 2000. Total NEM emissions were close to flat at 28.0 Mt CO2-e, down 0.2%, while brown coal generation rose 8.9%. That's a much smaller fall than the 6.4% drop in emissions we reported for Q2.

Source: AEMO QED Q3 2026

What drove it

Weather played its part again. The Bureau of Meteorology says September was Australia's second-warmest on record, 2.71°C above the 1961 to 1990 average, with the warmest September nights on record. Shell Energy says mild spring conditions and strong renewable output kept prices soft. Winter demand was lower too: NEM maximum operational demand peaked at 31,537 MW on 7 July, 5.2% below last year's peak.

Underlying demand, which includes power from rooftop solar, still reached a Q3 high of 25,471 MW, up 1.3%. Demand is growing, but more of it is being met before it reaches the grid. Data centres are a growing share of that demand. AEMO's 2026 Electricity Statement of Opportunities forecasts data centre consumption rising from about 5 TWh in 2025-26 to 34 TWh by 2035-36.

Source: BOM monthly climate summary, September 2026; AEMO QED Q3 2026; AEMO 2026 ESOO media release, 25 August 2026

Since the quarter ended: A warning shot for summer

The 12 October NSW price spike, covered above, was the first real test of the warmer months. Green Energy Markets' Tristan Edis told the ABC that kind of event "doesn't normally happen in October", and that a potentially record El Niño could strain coal generators again this summer.

The Bureau of Meteorology's 1 October outlook says El Niño is at near-record levels and likely to peak in late spring or summer as a very strong event, with above-average daytime temperatures likely for most of Australia from October to January.

The futures market is pricing that risk unevenly. On 16 October, Q4 2026 base futures closed at $144.40/MWh in NSW, compared with $93.35 in Queensland, $51.50 in South Australia and $50.00 in Victoria.

On the supply side, AEMO's 2026 ESOO found no forecast reliability gaps before 2030, after a record 9.1 GW of new generation and storage connected in 2025-26. AEMO hadn't released its summer readiness update for 2026-27 at the time of writing.

Source: ABC News; BOM climate outlook, 1 October 2026; ASX Energy weekly market wrap; AEMO 2026 ESOO

Policy to watch

• Mid-scale solar support is now live. From 1 October 2026, solar systems between 100 kW and 1 MW can earn small-scale technology certificates (STCs), which cut the upfront cost. The Clean Energy Regulator says applications for these systems are expected to open in mid to late November 2026, with a fixed five-year deeming period. The government estimates installation costs for medium-sized systems fall by about 20% (ESD News).

• Gas reservation bill tabled. Legislation for an east coast gas reservation scheme was tabled in Parliament on 14 October. As reported by Food & Drink Business and The Nightly, it would require 20% of LNG export volumes to be offered to the domestic market, targeting supply of 110% of projected domestic needs. If it passes, licence applications open on 1 January 2027 and supply obligations start on 1 January 2028.

• Electricity market reform. Energy ministers released draft laws for the Electricity Services Entry Mechanism, which is intended to replace the Capacity Investment Scheme, in September. Consultation closed on 13 October and final decisions are due at the December ministers' meeting, according to Renew Economy.

Zembl’s market outlook: What to watch next

Three things to watch going forward:

1. Renewal timing matters more than it did in June. NSW CAL27 futures were $18.92/MWh higher on 16 October than at the end of June. Queensland was $10.12 higher. A business that went to market in winter and one that goes to market now are looking at different numbers.

2. Contract length is a pricing decision. At the end of September, CAL28 futures sat above CAL27 in every mainland state, with the biggest gaps in South Australia ($12.48) and Victoria ($9.11). A longer contract may lock in a higher average rate, or protect you from a dearer 2028. That depends on your site, which is why it's worth modelling rather than guessing.

3. Volatility is shifting, not disappearing. Batteries are flattening evening peaks, but 8 July and 12 October show that tight supply still produces extreme prices. If you have spot exposure, flexible load or room for on-site solar and batteries, there's value in managing those intervals rather than wearing them.

How Zembl helps

Energy markets move fast, and this quarter showed how quickly the numbers behind your next contract can shift. Our team watches the wholesale and futures markets every day, so you don't have to.

For large businesses, we go to market on your behalf, run the tender and negotiate tailored contracts, timed around what the forward market is doing. For small businesses, we compare offers and handle the switch. We can also assess whether solar, batteries or other efficiency options stack up for your site, including the new mid-scale solar support.

Talk to a Zembl Energy Expert today.

This report is general information only and doesn't take your circumstances into account. Figures are drawn from the sources listed below and were current at 26 October 2026.

References

AEMO. Quarterly Energy Dynamics Q3 2026. October 2026: https://www.aemo.com.au/-/media/files/major-publications/qed/2026/qed-q3-2026.pdf

AEMO. Quarterly Energy Dynamics Q2 2026. July 2026: https://www.aemo.com.au/-/media/files/major-publications/qed/2026/qed-q2-2026.pdf

AEMO. Reliability can be maintained with timely investment as demand grows (2026 ESOO). 25 August 2026: https://www.aemo.com.au/newsroom/media-release/2026-esoo

Clean Energy Regulator. Mid-scale solar. 2026: https://cer.gov.au/schemes/renewable-energy-target/small-scale-renewable-energy-scheme/small-scale-renewable-energy-systems/mid-scale-solar

Bureau of Meteorology. Monthly climate summary for Australia, September 2026: https://www.bom.gov.au/clim_data/IDCKGC1AR0/202609.summary.shtml

Bureau of Meteorology. Climate outlook for October to January. 1 October 2026: https://www.bom.gov.au/climate/ahead/outlooks/archive/20261001-outlook.shtml

ASX Energy. Australian market wrap, week ending 16 October 2026: https://www.asxenergy.com.au/market-wrap/au

Shell Energy. Monthly Market Report, July 2026 (retailer publication, ASX data): https://shellenergy.com.au/wp-content/uploads/2026/08/Monthly-Market-Report_July-2026.pdf

Shell Energy. Monthly Market Report, September 2026 (retailer publication, ASX data): https://shellenergy.com.au/wp-content/uploads/2026/10/Monthly-Market-Report_September-2026.pdf

ABC News. Spring heatwave and coal outages deliver $2m payday for home battery owners. 17 October 2026: https://www.abc.net.au/news/2026-10-17/home-batteries-make-money-in-nsw-power-price-spike/107260880

Renew Economy. Energy ministers fast-track electricity market reforms. 14 September 2026: https://reneweconomy.com.au/incredibly-ambitious-electricity-market-reforms-given-express-track-by-energy-ministers/amp/

Food & Drink Business. Gas reservation bill tabled. 15 October 2026: https://www.foodanddrinkbusiness.com.au/news/gas-reservation-bill-tabled-manufacturers-the-focus

The Nightly. Madeleine King vows east coast gas reserve will push down energy prices. 14 October 2026: https://thenightly.com.au/politics/resources-minister-madeleine-king-vows-east-coast-gas-reserve-will-push-down-energy-prices-c-23017258

ESD News. Businesses score in rooftop solar scheme expansion. 2026: https://esdnews.com.au/?p=50446

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