Zembl's August 2026 Energy Market Wrap

August saw a modest increase in forward electricity pricing across the National Electricity Market (NEM), following a period of generally softer market conditions. The more important factors for energy buyers remain the underlying drivers of forward pricing: generator availability, gas supply, renewable output, storage, demand and the timing of new infrastructure.

What influenced the market in August

Winter demand remained an important influence during August, with colder periods increasing electricity and gas requirements. At the same time, the market continued to reflect the changing generation mix, with growing renewable generation and battery participation supporting the system, while backup power remained important during periods of higher demand or lower renewable output.

For large energy users, this reinforces that short-term weather can influence market conditions, but it should be considered alongside the broader structural factors shaping energy contract pricing over the medium and longer term.

What's happening in the NEM (National Electricity Market)

The NEM (National Electricity Market) continues to transition towards a generation mix with a greater share of renewable energy and storage. AEMO (Australian Energy Market Operator) has reported continued growth in renewable generation and battery participation during 2026, while its latest reliability outlook highlights the importance of replacement generation, storage and transmission being delivered as ageing coal-fired generation retires.

NSW, Queensland and Victoria experienced upward market movements, while South Australia remained relatively flat, reflecting the different supply, demand and generation dynamics across each state

Gas remains an important market driver

Gas continues to play an important role in the electricity market, particularly during periods of peak demand or reduced renewable generation. The ACCC's (Australian Competition & Consumer Commission) June 2026 Gas Inquiry found the east coast is expected to be well supplied in late 2026, while also identifying tighter conditions during winter 2027, particularly in the southern states, and the need for further investment to meet longer-term demand.

This remains relevant for electricity buyers because changes in domestic gas availability, storage and international LNG (liquefied natural gas) markets can influence the cost of gas-fired generation and broader electricity market sentiment.

What we're watching

Generator reliability – The performance of the NEM's ageing coal-fired generation fleet remains a key consideration. Significant planned or unplanned outages can affect current electricity prices and forward market conditions, particularly during periods of high demand.

Renewables and batteries – Continued growth in renewable generation and battery storage is changing electricity prices throughout the day and improving the ability to balance electricity supply and demand. The pace at which new storage, firming and transmission infrastructure is commissioned will remain important as coal generation retires.

Gas supply – East coast gas availability, storage levels and LNG market conditions remain important inputs into electricity pricing, particularly for the southern states and during periods of high gas-powered generation.

Demand growth – Electrification, population growth, industrial activity and increasing data-centre demand are expected to place additional requirements on the power system over time. The timing of this growth relative to new generation and network investment will be important.

Coal retirements and replacement infrastructure – The approaching retirement of major coal-fired generators, including Yallourn in 2028 and Eraring's current extension to 2029, keeps replacement capacity, storage and transmission delivery firmly in focus.

What this means for energy buyers

Electricity prices remain around five-year lows, providing favourable conditions for businesses considering upcoming energy contract renewals.

However, current pricing sits against a backdrop of ageing coal generation, upcoming plant retirements, tightening gas supply and growing electricity demand. These structural pressures create uncertainty around how long current pricing conditions will persist.

For businesses with commercial energy contracts expiring over the next 12–24 months, current market conditions provide an opportunity to review forward pricing and assess procurement options well ahead of contract expiry.

References

• AEMO – Quarterly Energy Dynamics, Q1 2026: renewable generation and increasing battery participation in the NEM.

• AEMO – 2026 Electricity Statement of Opportunities (25 August 2026): reliability outlook, demand forecasts and the delivery of replacement generation, storage and transmission.

• ACCC – Gas Inquiry June 2026 Interim Report (10 July 2026): east coast gas supply outlook, storage and longer-term supply requirements.

• NSW Government / EnergyAustralia – published closure schedules for Eraring and Yallourn.