July Market Report

July 2026 was a quiet month. Spot prices across the NEM were their softest for several years, the wide VIC–TAS price gap narrowed sharply, wind and solar bundled prices kept falling, and the Q3-26 forward curve gave up ground through the month in a market still firmly biased toward sellers.

Executive Summary

• July spot prices were the softest in years, continuing an established pattern: NSW ($81.52/MWh) and QLD ($65.43/MWh) recorded their lowest July average spot price in at least six years; SA ($95.87), TAS ($71.02) and VIC ($70.33) recorded their second- or third-lowest. Against the full ~25-year NEM history the picture is more moderate — July 2026 sits around the 60th–80th percentile, not a record low — but it extends a run of comparatively soft prices dating back to September 2025.
• The VIC–TAS price gap has narrowed sharply since Basslink was returned to regulated status: the average absolute VIC–TAS spot price spread fell from $41.85/MWh in July 2025 to $11.46/MWh in July 2026 — less than a third of last year's gap — consistent with more predictable, regulated interconnector flows replacing the wide, volatile spreads of the outage period.
• Two short clusters of higher prices, but nothing extreme: SA, TAS and VIC all traded above $300/MWh on 8 July and again around 30–31 July, but — consistent with our separate deep-dive on the 29 July predispatch signal — no region came close to the Maximum Price Cap during the month.
• Every region's evening peak was less stressful than in prior years: the normalised half-hourly price premium at 18:00 was roughly half its 2023–25 average in every region, and the daytime 'duck curve' dip deepened further, particularly in NSW and QLD.
• Wind and solar bundled prices both kept falling: rolling 12-month wind bundled prices fell 28–35% year-on-year across all five regions, and solar bundled prices fell 26–44% across the four mainland regions with material utility solar.
• The financial market stayed a seller's market: Q3-26 quarterly base futures decayed 11–17% across the four mainland regions through July, even as traded volumes remained elevated by recent standards.
• Gas held its usual winter pattern, then broke it late in the month: Sydney, Brisbane and Adelaide daily gas prices were calm through most of July before surging 11–37% into month-end, echoing a similar late-month lift in electricity spot prices.

1.0 Spot Market

July 2026 continued the pattern of comparatively soft NEM spot prices that has now held since September 2025. Average spot prices ranged from $65.43/MWh (QLD) to $95.87/MWh (SA), with all five regions below their 25-year average outside of the SA/TAS/VIC cluster's slightly-above-average result.

1.1 July Spot Prices in Historical Context

NSW and QLD recorded their lowest July average spot price in at least six years; SA, TAS and VIC recorded their second- or third-lowest. Measured against the full ~25-year NEM history, the picture is more moderate — July 2026 sits in the 60th–80th percentile range rather than at an extreme, since prices across the whole market were structurally much lower in some earlier years than the current cost environment allows.

This is also not a one-off month: on a rolling monthly view, NSW's average spot price has sat in a $60–84/MWh band every month since September 2025, a marked step down from the $71–256/MWh range that prevailed through the first half of 2025, including the extreme June 2025 average of $256.20/MWh. The same regime shift is visible across all five regions.

1.2 The Basslink Effect: VIC–TAS Spread Narrows Sharply

With Basslink now operating under regulated status rather than the de-regulated regime of the last financial year, the price relationship between Victoria and Tasmania has changed noticeably. The table below compares the daily VIC–TAS spot price spread in July 2026 against the same month a year earlier.

The average absolute daily spread has fallen to less than a third of last July's level, and the average signed spread has moved from a persistent $35.72/MWh VIC discount to something close to parity. This is consistent with a more predictable, regulated interconnector replacing the volatile flows of the Basslink outage period covered in our Basslink Puzzle report — though the extremes at either end of the range (both years saw a day where TAS traded roughly $100/MWh above VIC) show the interconnector can still bind hard on individual days.

1.3 Gas Spot Prices Stayed Soft

Gas spot prices were soft across all three east-coast hubs in July, sitting close to the year-to-date average and below the Cal-25 average that prevailed through most of 2025.

2.0 Price Dynamics

2.1 A Few Higher-Priced Days, No Extreme Events

Two short clusters of elevated prices punctuated an otherwise quiet month: the week of 7–10 July, and the final two days of the month (30–31 July). SA, TAS and VIC all cleared $300/MWh on 8 July, and SA and VIC did so again on 30 July, but no region approached the Maximum Price Cap — consistent with the detailed predispatch analysis in our separate July Volatility Fades report, which found the loudest predispatch warning of the month (around 29 July) resolved to a maximum of just $299.60/MWh.

Three highest daily average spot prices in July 2026, by region, vs the July monthly average. Bold red figures are at or above $300/MWh.

2.2 The Daily Price Shape: A Deeper Duck Curve, a Quieter Evening

Looking at normalised half-hourly prices — each half-hour's deviation from the daily average — the daytime 'duck curve' dip has deepened further in NSW and QLD, and every region's evening peak was markedly less stressful than in the prior three years.

NSW's duck curve deepens

NSW's daily price trough moved to 14:30 in July 2026, at −1.02 (i.e. a full $1.02/MWh-equivalent-of-normalised-deviation below the daily average at that half-hour) — deeper than any of the prior three Julys (−0.83 in 2023, −0.33 in 2024, −0.75 in 2025). QLD shows the same pattern at its own trough: from 08:00 (+0.03) the normalised price falls steadily to a low of −1.30 at 11:00, only partially recovering to −1.22 by midday — the 'carve-out' through the late morning referenced in our generation coverage.

Normalised price deviation at the 18:00 half-hour, July 2026 vs the July 2023–25 average, by region.

Every region's evening peak is quieter

Every region's evening premium fell — by roughly half in NSW and QLD and by three-quarters or more in the three southern regions — consistent with the batteries-displacing-gas dynamic documented in our generation coverage, and with the specific price collapse examined in our July Volatility Fades report.

Southern states run a flatter day

The total range of the normalised half-hourly profile (the gap between each region's highest and lowest half-hour, relative to its own daily average) is narrower in SA (1.21), TAS (1.16) and VIC (1.42) than in NSW (2.02) or QLD (2.33) — the southern states run a comparatively flat day, without NSW's pronounced duck-curve trough or QLD's late-morning carve-out.

2.3 Risk-of-Change: Low in the North, Elevated in the South

Risk-of-Change — the spread between the lowest and highest forecast revisions recorded for the month — was exceptionally narrow in NSW and QLD in July, and materially wider in the three southern regions.

Risk-of-Change (low/high forecast revision and range), July 2026, by region.

NSW and QLD's ranges (6.27 and 6.03 respectively) were roughly a third to a fifth of the three southern regions, with TAS's 29.22 range the widest of all five — a reminder that forecast confidence, like the price shape itself, is not uniform across the NEM.

3.0 Generation and Renewables

3.1 Wind Generation and Spot Prices Move Together — Except in QLD

Across July 2026, daily wind generation and daily spot prices moved in the expected inverse relationship in every mainland region except QLD, where wind and price showed almost no association at all.

Correlation between daily wind generation (MWh) and daily spot price, July 2026, by region.

VIC and SA — the two regions with the deepest wind penetration — both show a clear negative association between wind output and price, alongside NSW. This relationship should firm further into spring, when NEM-wide wind output typically climbs and the daytime supply surplus widens further. QLD's negligible relationship reflects its much smaller and more geographically concentrated wind fleet relative to its underlying demand.

3.2 Solar and Wind Bundled Prices Kept Falling

The rolling 12-month bundled price (spot capture, GWA, plus the LGC weighted average, LGCWA) for both solar and wind fell again across every region with a material fleet, extending the multi-quarter decline covered in our Challenges facing renewables and Wind price-impact lessens reports.

Solar

Solar rolling-annual spot GWA, LGC weighted average and bundled price by region, to July 2026, vs 12 months earlier.

The spot capture component (GWA) is the more consistent figure across regions — sitting in a comparatively narrow $23–45/MWh band — while the bundled price decline is driven by the same combination of a softening spot benchmark and a falling LGC price documented previously. SA's smaller year-on-year fall (−26.1% vs −40–44% elsewhere) is again a function of its high curtailment rate (40.1%), which mechanically filters out the worst-priced intervals rather than reflecting a healthier underlying market.

Wind

Wind rolling-annual spot GWA, LGC weighted average and bundled price by region, to July 2026, vs 12 months earlier.

Unlike solar, wind's decline is remarkably uniform: every region fell 28–35% year-on-year, continuing the trend identified in Wind price-impact lessens — wind is no longer being rescued from cannibalisation by scarcity pricing on low-wind days, now that batteries have defused much of the evening price-spike risk that used to reward wind's absence.

4.0 Financial Markets

4.1 A Seller's Quarter: Q3-26 Futures Decayed Through July

As has been the case for several consecutive quarters, Q3-26 shaped up as a seller's market: the quarterly base futures price gave up ground steadily as the quarter unfolded, rather than firming toward the spot outcome.

Q3-26 quarterly base futures price, 1 July vs 31 July 2026, by region.

All four mainland regions fell 11–17% through the month, with NSW and VIC easing the most in percentage terms. Traded volumes tell a similar 'no fear of missing out' story: the swap market traded 21,297 MW-equivalent in July, down from May's exceptional 36,465 MW and June's 24,177 MW, but still comfortably above most months in the prior two years.

4.2 Options Activity: A More Mixed Picture Than It First Looks

Put and call option volumes have both grown substantially since the start of the year, and July saw puts (16,384 MW-equivalent) out-trade calls (15,324) for only the third time since January — the others being February and April. Calls led in January, March, May and June. On a cumulative basis since March, calls have actually out-traded puts (60,940 vs 53,996 MW-equivalent), so July's tilt toward puts is a genuine but recent development rather than a settled multi-month trend.

4.3 Front Quarters Dominate Trading

As is typically the case, the front quarters attracted the most trading interest: Q3-26 (3,321 MW swap), Q1-27 (2,281 MW) and Q4-26 (1,899 MW) were the three most actively traded quarters in July, well ahead of anything further out the curve.

4.4 Calendar Swap Prices: Cal-27 and Cal-28 Bottom, Then Settle Back Down

Looking at the next three calendar years' base swap prices (NEM average excluding TAS), Cal-27 and Cal-28 both bottomed out in mid-July before a partial bounce that had largely faded by month-end — Cal-27 closed the month only $0.88/MWh above its 20 July low, and Cal-28 closed just $0.39/MWh above its 7 July low. Cal-29 broke that pattern: after touching a similar mid-month low, it recovered further and finished the month above where it started.

4.5 Gas: Storage Still Elevated, Prices Calm Then Surging

The Iona gas storage facility drew down from 24,805 TJ on 1 June to 15,267 TJ by 31 July — a typical winter drawdown — but the 31 July level remains the second-highest of the past six years, above 2021, 2022, 2024 and 2025, and behind only the exceptionally high 2023 level.

Iona gas storage quantity at 31 July, 2021–2025 (2026 level of 15,267 TJ ranks 2nd of the six years shown).

Daily gas prices stayed calm through most of the month before surging into month-end: Adelaide rose from a mid-July average of $10.89/GJ to $14.92/GJ by 31 July (+37%), while Brisbane (+12%) and Sydney (+11%) saw smaller but still notable late-month increases — a pattern that echoes the late-July lift seen in several regions' daily electricity spot prices.

5.0 Looking Ahead

The forward market's own positioning suggests the challenge into Q4-26 and beyond is holding value rather than losing it further: most of the premium that was priced into Q3-26 earlier in the year has already been stripped out by the decay documented in Section 4.1, so a continuation of soft spot outcomes would put further pressure on the quarters still ahead of it.

The bigger swing factor is the developing El Niño pattern. El Niño winters and springs in the NEM's southern and eastern catchments have historically tended to bring above-average wind resource into spring, which — set against the pattern of soft daytime prices and a deepening duck curve already visible in July — would point toward another soft September and October on the daytime price benchmark. Whether the current El Niño signal proves strong enough to meaningfully shift that seasonal pattern is the key open question for the next reporting period, and one we'll be watching closely.

Disclaimer and Notes

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