March 2026 had its lowest electricity spot prices for 5 or so years. Generally, benign outcome across the market. Domestic gas prices remained subdued, while battery storage continued to grow, although not necessarily margins. April is predicted to be warmer than average, is there more to follow?
Highlights
Summer has ended, marking another chapter in the National Electricity Market (NEM) spot market. Historically, summer has been a key quarter that sets the tone for the remainder of the year. The summer of 2026 can best be described as benign.
March, the final month of the quarter, recorded the lowest monthly average since 2021 for Queensland (QLD) and New South Wales (NSW), which narrowly exceeded 2024’s figures. Victoria (VIC) continued its five-year trend of not exceeding $63/MWh, also marking its lowest average since 2021. South Australia (SA) extended its streak to seven years of not exceeding $69/MWh, the lowest since 2020.
Tasmania (TAS) was the exception, finishing just below last year's figures but above the average price since 2016, following the Basslink failure.
Gas spot prices were subdued, monthly averages remaining below $11/GJ throughout March across all hubs. Meanwhile, Iona gas storage levels have recovered to the mid-range of historical levels by the end of March, contrasting with the beginning of the year when they were at the second-lowest point in six years.
Spot Market Drivers
Regarding electricity price drivers, gas spot prices had little impact on the notably low electricity spot prices. Weather patterns indicated typical Cooling Degree Days for QLD, with NSW mirroring the last three years. While VIC and SA experienced milder conditions compared to the last two years, TAS encountered more conventional Cooling and Heating Degree Days levels.
The Risk-of-Change was exceptionally low in QLD, NSW, and VIC throughout the month, while SA exhibited a stronger propensity for change, albeit still relatively low. TAS has maintained subdued conditions since July 2025. Unsurprisingly, the 8:00 am alerts of $300/MWh have continued their low levels since July 2025, with VIC and SA recording no alerts for this month.
The inverse correlation between Variable Renewable Energy output and spot prices persisted, particularly in VIC and SA. The highest average daily price during March was $130/MWh in SA, with the lowest at -$51/MWh, also in SA.
The power rolling annual solar-weighted average price has remained relatively stable throughout the summer, although the cost of maintaining this level continues to rise; curtailment levels are increasing to preserve the weighted average. Conversely, prices for Large-Scale Generation Certificates (LGCs) have continued to fall, leading to a decrease in the bundled rolling annual power and LGC price.
In QLD, the rolling power wind-weighted average price continues to align closely with the time-weighted average, while other Regions maintain consistent participation rates. The energy dispatched from battery storage systems has also been on the rise. However, the gross margin has been in decline since July last year, with March marking the lowest at $63/MWh. NSW followed a similar trend, where the gross margin recorded since mid-last year was less volatile, reaching a historic low of $43/MWh in March. In contrast, VIC's gross margin dropped over the last two months to $76/MWh, aided by lower daytime prices. SA's average arbitrage was noted at $113/MWh, one of its lowest historically.
Baseload outages in NSW were less than in the previous two years, with only one recorded outage. Conversely, Queensland exhibited a more volatile outage profile, while Victoria's outages were slightly lower than previous years. This improved performance played a role in lowering spot prices.
The growth of dispatched battery energy continues to increase from a relatively small base. Queensland's wind generation improved thanks to the ramp-up of the Clarke Creek and MacIntyre wind farms, while more established wind states of NSW, VIC, and SA all had reductions in wind generation. Solar generation increased in QLD but decreased in SA due to curtailment.
Looking Ahead
Looking ahead, the weather forecast for April indicates a high chance of hotter-than-average temperatures across most of Australia, save for Perth. Rainfall forecasts suggest a high probability of below-normal precipitation, which may impact hydro generation and water storage. Notably, the main water storage at Lake Eucumbene for Snowy Hydro is at 41% compared to 43% last year, while HydroTas is at 42%, an improvement from 38% this time last year.
Quarter Results
When incorporating March data into the Q1 average, QLD recorded an average of $62.64/MWh, its lowest since Q1-22. NSW averaged $73.44/MWh, its lowest since Q1-21, while VIC followed suit. Only SA held steady, partially due to an exceptional Australia Day BBQ incident. TAS continues to stand apart, finishing at $94.21/MWh, lower than last year’s figure of $111.46/MWh and becoming the fourth highest since 2017.
Summer Reflections
The notable stories of the quarter were:
1. Australia Day in SA when extreme prices occurred
2. The lack of extreme prices in Victoria despite extreme temperatures
3. Changes in the relationship between price and demand
4. Extreme price forecasts fading
It is fair to conclude that the NEM summers are not feared as they once were in history. The advent of better interconnectors, more renewable generation and more recently battery energy storage, have re-shaped the risk profile and typical price level of the quarter.
In our next report, we will talk about the spot prices and the forward market for the summer, just concluded.
A. Chart Pack
A.1 Summary
A.1.1 Electricity Spot Prices Summary
A.1.2 Gas Spot Prices Summary
A.2 Spot Prices
A.2.1 Comparative Month
A.2.2 Monthly Breakdown
A.2.3 Risk-of-Change
A.2.4 $300/MWh Price Alerts
A.2.5 VRE and Spot Prices
A.2.6 Daily Spot Prices
A.2.7 Price Band Analysis
A.2.8 Comparative Monthly Price Band Contribution
A.2.9 Quarterly Price Band Analysis
A.2.10 Comparative Quarter Price Band Contribution
A.2.11 Daily Price Band Contribution
A.2.12 Negative Spot Prices
A.3 Gas Market
A.3.1 Daily Gas Prices
A.3.2 Iona Gas Storage
A.3.3 LNG Flows
A.3.4 ACCC Netback Prices
A.4 Drivers
A.4.1 Heating and Cooling Degree Days
A.4.2 Baseload Outages
A.5 Generation
A.5.1 Solar Weighted Prices
A.5.2 Wind Weighted Prices
A.5.3 BESS Gross Margin
A.6 Water Storages
A.6.1 Snowy Hydro
A.7 LGC Prices
Disclaimer and Notes
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