September 2026
Australian electricity, gas, environmental markets and regulatory outlook
| MARKET IN BRIEF |
APG View
The market is not moving in one simple direction. More renewable energy can suppress prices during high-output periods, while retirements, weather, transmission constraints and firming requirements can increase risk at other times. For commercial energy users, timing, location, load shape and contract structure are becoming more important.
01 | National Overview
Australia is not one electricity market
The NEM, WA and the Northern Territory have materially different market structures and generation profiles.
National Electricity Market (NEM)
The NEM links Queensland, New South Wales, the ACT, Victoria, South Australia and Tasmania through an interconnected wholesale electricity market. AEMO's 2026 Electricity Statement of Opportunities reports no forecast reliability gaps before 2030 under its central outlook, supported by a record 9.1 GW of new generation and storage connected in 2025-26 and a pipeline of around 40 GW of committed and anticipated projects expected by the early 2030s.
The challenge is further out. Around 15 GW of coal and gas generation is scheduled to retire over the next decade, while NEM electricity consumption is forecast to rise by more than 40% as electrification and data-centre demand grow. The transition therefore depends on timely delivery of generation, storage, transmission and consumer energy resources.
Western Australia - WEM / SWIS
Western Australia's main grid, the South West Interconnected System (SWIS), operates through the Wholesale Electricity Market rather than the NEM. Its market design includes a Reserve Capacity Mechanism, reflecting WA's isolated system and the need to procure sufficient capacity ahead of time. AEMO's June 2026 WEM outlook found sufficient capacity to meet demand through 2028-29, while also identifying continued investment requirements over the longer term.
Northern Territory
The Northern Territory is not part of the NEM and does not operate as one large interconnected market. It relies on smaller systems, including Darwin-Katherine and Alice Springs, as well as remote and industrial generation. Its electricity mix remains heavily gas-based, with solar increasing from a smaller base.
| WHY THIS MATTERS FOR ENERGY BUYERS |
The national generation shift
Australia generated an estimated 286.8 TWh of electricity in 2025. Renewables supplied 39.5%, led by solar at 19.6% and wind at 14.0%. Fossil fuels still supplied 60.5%, with coal alone contributing 42.7%. The transition is therefore well advanced, but the legacy thermal fleet remains systemically important.
02 | State & Territory Outlook
One country, very different generation systems
2025 fuel mix provides a useful snapshot of the different transition starting points.
| Region | Coal | Gas | Renewables | Market character | APG watch |
| NSW | 55.2% | 3.3% | 40.7%* | Black coal remains dominant; renewable build and storage are expanding. | Eraring retirement and delivery of replacement capacity/transmission. |
| VIC | 50.6% | 3.0% | 46.0%* | Brown coal remains material alongside strong wind/solar growth. | Yallourn July 2028; replacement firming, storage and transmission. |
| QLD | 56.5% | 10.7% | 31.2%* | Coal-heavy system with strong rooftop and large-scale solar. | Summer demand, coal transition and storage build. |
| SA | 0% | 21.3% | 77.0% | High wind/solar system; gas, batteries and interconnection support firming. | Volatility, minimum demand and interconnection. |
| TAS | 0% | 2.3% | 97.5% | Hydro-led system with growing wind. | Rainfall/storage levels and interconnection. |
| WA | 16.4% | 57.8% | 21.5%* | Gas-led system with coal and growing renewables/storage. | Capacity adequacy, coal transition and flexible capacity. |
| NT | 0% | 81.4% | 8.7% | Gas-led smaller systems; solar growing. | Integration of solar/storage in isolated systems. |
*Renewables shown as hydro plus other renewables. Totals may not equal 100% because oil and rounding are excluded from this compact table.
Victoria: Yallourn is becoming a forward-market issue
Victoria's transition deserves particular attention because the state still obtains around half of its electricity from brown coal. Yallourn is scheduled to retire on 1 July 2028. The key issue is not simply the loss of one power station, but whether sufficient replacement generation, storage, transmission, interconnection and firming are available when it exits.
APG will treat the Latrobe Valley separately in a dedicated Market Focus publication. In the regular outlook, Yallourn will remain one of the major Victorian transition milestones to watch.
03 | Electricity Market
Near-term reliability has improved - transition risk has not disappeared
The forward outlook is increasingly shaped by the timing of retirements and replacement investment.
A stronger near-term reliability outlook
AEMO's August 2026 ESOO shows a better NEM reliability outlook than a year earlier, with no forecast reliability gaps before 2030 under the central outlook. This is an important improvement, but it should not be interpreted as the transition being complete. The outlook assumes continued delivery of a substantial project pipeline.
The market is changing shape
The 2026 Integrated System Plan again identifies renewable generation, connected through transmission and distribution, firmed by storage and backed by gas as the least-cost development path through to 2050 as coal retires. This means the electricity system is becoming less dependent on a small number of large thermal generators and more dependent on the interaction between variable generation, storage, networks and flexible demand.
Why price behaviour can become more time-dependent
High solar and wind output can produce periods of abundant low-cost electricity. Several hours later, solar output can fall while evening demand remains high. Batteries can shift energy between these periods, hydro and interconnectors can provide flexibility, and gas can support the system during tighter conditions. The result is not necessarily a permanently high- or low-price market, but one where the timing of consumption and generation matters more.
What APG is watching in forward contracting
| Driver | Commercial relevance |
| Coal retirement dates | Contract years that extend across major closures may carry different risk from near-term years. |
| New generation and storage | Delivery pace affects how comfortably retiring thermal capacity can be replaced. |
| Transmission | Renewable energy only helps where it can reach demand; congestion and project timing matter. |
| Weather | Heat, wind, solar conditions and hydro inflows can change both demand and available supply. |
| Demand growth | Electrification and data centres increase the amount of energy and capacity the system must provide. |
| APG PROCUREMENT LENS |
04 | Transition Fundamentals
Generation, storage, transmission and weather now have to be read together
No single technology replaces the role historically played by coal.
Renewables continue to expand
Renewables supplied 39.5% of total Australian electricity generation in 2025 and 42.0% of on-grid generation. Solar is now Australia's largest renewable source, while wind generation grew strongly during 2025. The national figure, however, masks very different state mixes - from South Australia's predominantly renewable system to coal-heavy NSW, Victoria and Queensland.
Storage is becoming part of normal market operation
Battery storage is increasingly important because it can absorb electricity during periods of abundant supply and return it when the system is tighter. As battery capacity expands, its influence is likely to be seen not only in reliability but also in intraday price formation, peak demand management and the economics of flexible customer load.
Transmission is the connecting infrastructure
New renewable generation is often located away from established load centres. Transmission and interconnection therefore determine how effectively new generation can replace retiring thermal plant. Delays or congestion can create regional differences even when there is ample renewable energy elsewhere in the system.
Weather is now both demand and supply
Weather has always influenced demand through heating and cooling. It increasingly influences supply as well. Temperature affects demand; wind conditions affect wind farms; cloud cover affects solar; rainfall and snow affect hydro inflows. A credible market outlook therefore needs to consider weather alongside generator availability, storage and network conditions.
Transition milestones to watch
| Milestone | Why it matters | APG treatment |
| Yallourn - July 2028 | ~1.45 GW of Victorian dispatchable brown-coal capacity exits. | Regular VIC watch item; separate Latrobe Valley Market Focus. |
| Eraring - 2029 | Large NSW coal retirement affects the post-2028 supply balance. | Track replacement capacity, transmission and forward risk. |
| Broader coal fleet | AEMO expects substantial coal and gas retirement over the next decade. | Focus on delivery of replacement energy, capacity and system services. |
| KEY DISTINCTION |
05 | Gas & Environmental Markets
Two markets that remain central to commercial energy strategy
Gas still matters to electricity reliability; the certificate market is approaching a major 2030 transition point.
Gas: lower energy share, continuing firming value
Gas-fired generation can be displaced during many periods by renewable generation and batteries, yet remain valuable during low-renewable or high-demand conditions. This means gas can have a relatively modest share of annual electricity generation while still influencing prices during tight periods.
The relationship between gas and electricity will become particularly important as coal retires. AEMO's system planning continues to include gas backup as part of the least-cost NEM pathway, alongside renewable generation, storage and transmission.
RET and LGCs: approaching 2030
The Large-scale Renewable Energy Target remains a central part of Australia's renewable certificate framework. The Clean Energy Regulator has set the 2026 Renewable Power Percentage at 16.67%. The statutory annual large-scale target remains 33 million MWh through 2030.
The approach of 2030 should not be interpreted as an end to renewable investment. The more important issue for commercial buyers is how renewable procurement, voluntary claims and certificate demand evolve as the existing RET framework reaches its legislated horizon and other investment mechanisms become more prominent.
What commercial buyers should separate
| Physical electricity transition | Environmental claim / certificate strategy |
| New wind, solar, storage and transmission are physical assets in the power system. | LGCs and other instruments provide a mechanism for renewable procurement and claims. |
| Physical investment can continue beyond the current RET horizon. | Certificate demand and product structures can change as policy evolves. |
| Reliability depends on when and where energy is available. | A renewable claim does not by itself solve a customer's physical price or load-shape exposure. |
| APG WATCH |
Austech Power & Gas
Independent energy procurement and market advisory