2026 is shaping up to be a defining year for Australia’s energy markets.
The transition from legacy thermal generation to a renewables-led system is no longer theoretical — it is now the dominant operational reality. For businesses, governments, and large energy users, the challenge in 2026 is not whether the market will change, but how well procurement, risk management, and contract structures keep pace with that change.
Below, Austech Power & Gas outlines the key areas of focus and high-interest topics shaping the Australian energy market this year.
1. Renewables Are Now the System Backbone — But Not the Whole Story
By 2026, renewable generation (wind, solar and hydro) consistently supplies around half or more of NEM energy in many months. This marks a structural shift in how electricity markets operate.
However, higher renewable penetration has also introduced:
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Increased intra-day price volatility
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More frequent negative pricing periods
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Greater reliance on storage, firming and transmission availability
The market is increasingly defined by when energy is available, not just how much. For large users, this has material implications for load shape risk, hedging effectiveness, and contract design.
2. Batteries and Storage Move From “Support” to “Essential Infrastructure”
2026 is the year storage moves from optional to essential.
Large-scale batteries are now:
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Playing a critical role in evening peak management
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Reducing the severity (but not eliminating) price spikes
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Increasing competition with gas peaking plant
For energy buyers, this shift is changing how retailers price:
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Peak exposure
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Cap products
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Firming premiums
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Load-following vs shaped contracts
Storage has reduced average prices, but event risk remains — making contract structure and risk tolerance more important than ever.
3. Coal Closures and Thermal Reliability Remain a Market Sensitivity
Despite strong renewable growth, ageing coal-fired assets remain system-critical during extreme conditions. Outages, deratings, and heat-related failures continue to drive short-term volatility.
In 2026, markets remain sensitive to:
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Unplanned outages at major coal units
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Maintenance timing during high-demand periods
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Reduced system resilience during heatwaves
This has reinforced the importance of forward planning, particularly for large C&I customers with exposure to peak pricing or poorly structured caps.
4. Transmission Constraints and REZ Congestion Shape Regional Risk
Transmission is now one of the most important — and least understood — drivers of pricing outcomes.
In 2026:
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Renewable Energy Zone (REZ) congestion continues to limit usable supply
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Curtailment risk affects generator behaviour and pricing signals
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Regional basis risk is increasingly relevant for large customers
This makes location-specific analysis essential. Two sites in the same state can experience very different cost drivers depending on network constraints and interconnector flows.
5. Gas Remains Structurally Tight — and Strategically Important
Despite declining average usage, gas remains essential for:
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System firming
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Industrial processes
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Reliability during renewable shortfalls
In 2026, east coast gas markets continue to reflect:
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Limited new supply investment
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LNG-linked pricing influences
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Policy uncertainty around domestic reservation and intervention
For industrial users, this reinforces the importance of:
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Early contract engagement
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Portfolio diversification
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Evaluating electrification or fuel-switching pathways where viable
6. Summer and Extreme Weather Risk Is Now Central to Market Outcomes
2026 has reinforced a key lesson: average prices matter less than extreme events.
Heatwaves, bushfire risk, and storm-related outages increasingly define:
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Spot price spikes
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Retailer risk premiums
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Contract negotiation leverage
This has elevated interest in:
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Demand response capability
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Load flexibility
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More sophisticated risk products
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Regular contract and bill validation
7. Procurement Strategy Is Becoming a Board-Level Issue
Energy procurement is no longer a routine operational decision. In 2026, it is increasingly:
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A financial risk management exercise
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A sustainability and reporting consideration
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A governance and compliance issue
Large organisations are paying closer attention to:
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Transparency of broker and retailer fees
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Accuracy of network and pass-through charges
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Alignment between procurement strategy and internal risk appetite
What This Means for Energy Buyers in 2026
The defining feature of the 2026 energy market is complexity.
Opportunities exist — but so do hidden risks. Price alone is no longer a sufficient decision metric. Successful energy strategies in 2026 are characterised by:
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Early engagement with the market
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Clear understanding of load and risk profile
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Contract structures aligned to operational reality
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Ongoing invoice and pass-through validation
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Independent market insight, not just retailer narratives
How Austech Power & Gas Supports Clients in 2026
Austech Power & Gas works with commercial, industrial and government clients to navigate this evolving landscape through:
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Competitive multi-retailer tenders
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Bespoke contract structuring
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Wholesale market insight
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Network and bill validation
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Risk and portfolio optimisation
We focus on clarity, transparency, and outcomes — helping clients understand not just what they pay, but why.
If you would like to discuss how these market developments may affect your organisation’s energy costs or risk exposure in 2026, Austech Power & Gas welcomes a conversation.