Author - Dave Harvey , Risk Manager at Energy Action

Dave, with over 20 years of expertise in the Australian Energy market, has worked in wholesale trading, in-house energy, and strategic advisory roles. He specializes in portfolio management, employing physical assets and contracts for risk management. His background includes developing procurement strategies such as Progressive Purchasing energy, Power Purchase Agreements, and gas procurement, along with managing LGCs and ACCUs.

May confirmed a softer but still risk-aware market. Futures eased as the March-April fuel-risk premium unwound, while spot electricity prices rose as fewer negative-price intervals lifted daytime price floors. Gas prices softened, easing near-term fuel-cost pressure, but winter demand and LNG netback pricing remain key risks. Environmental markets stayed mixed, with weak LGC pricing, stable STCs and PRCs, and firmer state-based certificates.

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Australian electricity market news, June 2026

Electricity Futures

NSW: Forward pricing softened through May, with CAL 27–29 moving back into the mid-to-high $90/MWh range as the March-April risk premium moderated. Prices remain supported by winter demand, coal reliability, Eraring timing and gas-linked evening pricing during low renewable periods.
VIC: Victoria remained the lowest-priced mainland NEM region on an average CAL 27-29 basis, supported by brown coal availability, softer average spot conditions and a lower volatility premium than NSW and SA. However, the curve still prices medium-term risk from Yallourn’s 2028 closure, winter firming needs and transmission timing.
QLD: Pricing eased and compressed through May, with CAL 27-29 clustered in the high-$70/MWh range. The market signal is that winter and coal availability risks are manageable for now, although lower solar output, planned coal maintenance and gas-backed evening firming remain key watchpoints.
SA: Forward pricing softened through May but remained risk-aware, with CAL 28–29 holding a premium to CAL 27. The market continues to price volatility risk from renewable intermittency, low-wind periods, interconnector constraints and gas or battery firming.
TAS: Tasmania remained stable and hydro-led, with pricing linked to storage levels, Basslink flows and Victorian price signals rather than local fuel scarcity. Prices softened modestly, but contracting risk remains tied to hydro storage depth, interconnector availability and mainland price separation.
WA: Forward pricing remained stable but elevated, with the WEM supported by domestic gas supply, reserve capacity settings, coal availability, and rising battery dispatch. CAL 27 trended slightly lower as renewables and batteries improved intraday flexibility, although thermal generation continues to anchor reliability premiums.
Gas Market
The east-coast gas market softened through May, with spot prices falling materially from April and monthly averages settling around $8.20–$9.21/GJ. This eased near-term electricity fuel-cost pressure, but ACCC LNG netback pricing remained well above domestic spot outcomes, keeping export-parity risk relevant for forward pricing.
Forward contract pricing remains firm despite softer spot conditions. East-coast CAL 27 to CAL 29 pricing sits around $13.00–$14.80/GJ, while WA remains lower at $9.50–$12.00/GJ, reflecting its separate domestic market and reservation policy. The key signal is that suppliers are not treating May spot softness as a structural reset.

Spot Electricity Trends

May reinforced that NEM spot outcomes are being driven by intraday price shape rather than broad structural tightness. Average prices rose across most regions as very low and negative-price intervals reduced, particularly in VIC, while thermal outages, network constraints and lower renewable price suppression kept evening ramp risk in the market.
Softer gas prices helped limit fuel-cost pressure, but did not fully offset tighter operating conditions. VIC and QLD were driven by export regions, while NSW, SA and TAS relied more heavily on imports, highlighting the role of interconnector flows and dispatchable availability in short-duration spot price risk.
Environmental Markets
STCs: Traded in a narrow range, opening at $39.60 and closing at $39.65. Volumes were lighter at 1,221,000 certificates, but pricing remained stable, supported by balanced certificate supply and quarterly compliance demand.
PRCs: Spot prices remained broadly stable, opening at $3.05 and closing slightly higher at $3.07, with 700,000 certificates traded. Forward pricing stayed anchored at $3.05, indicating a stable market with limited pricing pressure.
LGCs: Spot prices firmed from $2.10 to $2.60, although the market remains well supplied. Forward pricing stayed weak, with CAL 26 closing around $2.50 and longer-dated contracts softening toward $2.10, reflecting oversupply, thin liquidity and limited forward demand.
VEECs: Spot prices rose from $88.00 to $89.50 before closing at $88.85. Volumes fell to 265,000 certificates, while 2026 forwards continued to trade at a small premium to spot, reflecting active near-term compliance buying.
ESCs: Spot prices strengthened from $27.60 to $29.00, despite volumes easing to 1,033,000 certificates. Forward activity also softened, but CAL 26 traded between $27.70 and $30.00, suggesting buyers remain active across current and future supply.
ACCUs: Standard ACCUs traded between $37.50 and $38.50, closing at $37.60, while HIR ACCUs closed at $37.55. Market activity remained largely spot-led, with no forward trades observed, indicating demand remains focused on immediate compliance requirements.

Source: Energy Action Analysis

Futures Market

NSW forward prices softened through May, with CAL 27 to CAL 29 averages falling by around $5 to $7/MWh from April. This appears to reflect a moderation of the March-April risk premium rather than a structural reset. Middle East risk and global LNG volatility remained relevant background factors, but May did not produce a fresh shock that materially lifted the NSW curve.
Pricing remains clustered in the mid-$90/MWh range, with CAL 27 averaging $95.04/MWh, CAL 28 at $93.63/MWh and CAL 29 at $95.35/MWh. While near-dated contracts softened, the CAL strips remain firm enough to indicate that buyers and retailers continue to price structural firming risk, particularly around winter demand, coal availability and evening ramp exposure.
CAL 27: Average pricing was $95.04/MWh, down $6.91/MWh from April’s average of $101.95/MWh. The decline reflects a partial unwind of the March – April risk premium, with May prices failing to be influenced by geopolitical shock. Eraring’s continued availability aims to reduce immediate coal-exit risk, easing near-term scarcity pricing. CAL 27 remains supported by winter demand, coal availability and thermal generation evening firming risk.
CAL 28: Traded at $93.63/MWh, down $6.35/MWh from April’s average of $99.98/MWh. CAL 28 traded at a modest discount to CAL 27, reflecting lower delivery risk while Eraring remains available through CY28. Battery participation is also reducing some evening peak pressure, although the contract still carries a mid-curve firming premium.
CAL 29: Settled at $95.35/MWh, down $5.31/MWh from April’s average of $100.66/MWh. It remained above CAL 28 because it sits closer to the post-Eraring risk window, reflecting price uncertainty due to coal reliability, replacement capacity and transmission delivery, keeping longer-dated pricing more supported.

Supply Outlook
NSW’s supply outlook improved in market perception through May, supported by Eraring’s extension to April 2029, which reduces near-term closure risk and supports confidence through CAL 27 and CAL 28. However, this does not remove transition risk. The state still requires replacement generation, new firming capacity and sufficient flexible supply to be delivered on time as the system moves closer to the post-Eraring period. Renewables and batteries are reshaping intraday pricing rather than removing firming risk. Strong solar output continues to suppress daytime prices, while batteries help shift low-priced energy into higher-priced evening periods. However, battery duration remains limited during extended tight periods, meaning coal, hydro and other dispatchable capacity remain important to NSW pricing and reliability.

Renewable energy impact and evening peak reliance across the states.

May prices rose as the daytime price floor lifted
May spot prices increased across every NEM region, but this was not a broad volatility event. The main driver was the removal of April’s very low daytime price conditions. Renewable output was softer, negative-price intervals fell sharply, and thermal availability became more important during evening ramp periods. Average RRPs rose to $78.76/MWh in NSW, $73.59/MWh in QLD, $73.05/MWh in SA, $95.62/MWh in TAS and $61.77/MWh in VIC. The strongest move was in Victoria, where the average price rose from $35.68/MWh in April to $61.77/MWh in May, mainly because negative-price intervals fell from 32.23% to 17.26%.
The key change was not more extreme pricing, but fewer very low or negative intervals. Negative pricing fell from 6.55% to 1.34% in NSW, 13.55% to 6.37% in QLD, 30.11% to 14.49% in SA and 32.23% to 17.26% in VIC. This lifted monthly averages even though May high-price intervals remained limited across the mainland. This is consistent with AEMO’s Q1 observation that batteries and renewable output are reshaping intraday prices, with daytime charging and evening discharge changing when prices are set.
Thermal and network availability kept evening risk in the market
Thermal and network conditions added shape risk, particularly in the second half of May. Queensland showed the clearest tightness signal, with AEMO issuing forecast reserve notices for 17 to 19 May, including a forecast LOR2 period for 18 May. In NSW, the trip of Upper Tumut units 1 to 4 on 17 May temporarily removed flexible hydro capacity, while Victorian and SA transfer conditions were affected by outages and constraints including South Morang, Murraylink, Tailem Bend and Koorangie-Wemen. These events did not create sustained cap pricing, but they reinforced the evening risk premium when renewable output was lower. There has been some reduced generator firming capacity - an early to mid month unit outage in Loy Yang A in VIC and Bayswater in NSW coupled with ongoing scheduled for one Eraring unit for the majority of May. The seasonality of units returning to service after maintenance prior to June’s winter start should offer some additional firming however the beginning of the early seasonal reduction in semi-scheduled renewable output can already be felt moving into pre-winter.
Gas softened, but electricity prices still rose
Spot gas prices eased from late-April levels across the NEM spot gas markets, especially early in May. This helped limit fuel-cost pressure on gas-fired generation. However, gas was not the main driver of the electricity price increase. The stronger impact came from reduced renewable price suppression, fewer negative intervals, coal and hydro availability, and interconnector constraints. In practical terms, May was a higher average-price month, not a gas-led volatility month.

Market Pricing and Outlook

Storage remains the winter swing factor
East-coast gas storage entered winter in a stronger position, reducing near-term supply pressure but not removing winter risk. AEMO reported healthy pre-winter storage levels, with Iona at 91%, Dandenong at 94% and Newcastle at 83%. This helped support softer spot prices, but storage remains a key winter variable. If cold weather, lower renewable output or higher gas-fired generation lift demand, southern markets may require higher storage withdrawals and stronger Queensland flows.
Victoria remains the main structural exposure. Local production continues to decline, with AEMO forecasting Victorian annual gas production to fall 52.8% by 2030, while daily supply capacity falls 35.2% over the same period.
Victoria and policy developments
May brought two important gas-market developments: the Federal Government's proposed domestic gas reservation scheme from 1 July 2027 and approval of Victoria's Annie Gas Field. The proposed reservation scheme will require LNG exporters to supply gas to the domestic market equivalent to 20% of LNG exports, while respecting export contracts entered into before 22 December 2025.
The Annie Gas Field in the Otway Basin has received production approval, with works expected to start in 2027 and gas targeted from 2028. The project could provide gas equivalent to more than one-third of Victoria’s annual gas use, supporting medium-term supply confidence. However, it does not remove winter 2026 or 2027 risk.
Western Australia: Stable Near Term, Tighter Long Term
AEMO forecasts WA domestic gas consumption to rise from 1,085 TJ/day in 2026 to 1,295 TJ/day in 2030, mainly-driven by industrial growth, including the Perdaman Karratha Urea Project. Over the longer term, demand is expected to fall to 1,044 TJ/day by 2045 as electrification increases, battery participation grows and gas-fired generation declines.
The key risk emerges beyond 2030. AEMO expects supply gaps to develop and widen to 478 TJ/day by 2045, as production declines faster than demand. WA’s domestic gas reservation policy remains an important structural difference, requiring LNG exporters to make gas equivalent to 15% of LNG production available to the local market. This helps explain why WA contract prices remain below east-coast levels, although the new national LNG reservation scheme creates uncertainty around how federal and WA policy settings will interact.

Small Scale Technology Certificates (STCs)​

Spot Prices
East-coast spot gas prices softened during May before stabilising later in the month. Daily prices fell as low as $4.21/GJ in Victoria and $7.38–$7.49/GJ across NSW, Queensland and South Australia, supported by mild late-autumn conditions and lower heating demand.Monthly averages settled at NSW $9.21/GJ, Queensland $9.21/GJ, South Australia $9.19/GJ and Victoria $8.20/GJ, remaining below indicative contract-price levels.Victoria’s lower outcome reflected the structure of the Declared Wholesale Gas Market (DWGM), where proximity to Longford supply, lower transport costs and periods of softer demand can allow lower-priced gas to clear.Spot prices may firm as winter demand builds, particularly if cold snaps, higher storage withdrawals or increased gas-fired generation tighten southern supply conditions.

Large Generation Certificates (LGCs) ​

Retail Contract Prices

LGC spot prices firmed through May, opening at $2.10 before moving to $2.60 by month end. Total spot activity was slightly lower than April, with 1,461,000 certificates traded. Despite the spot uplift, the market remains well supplied, with oversupply dynamics continuing to weigh on forward prices.

Victorian Energy Efficiency Certificates (VEECs) 

May trading reflects a market with strong near-term engagement, maintaining spot market turnover. Spot prices rose slightly over the month, while 2026 forward participation remained active and continued to trade at a small premium on top of spot. Strong spot and forward volumes show compliance-driven buying remains active in the 2026 market.
Spot Market
VEEC spot prices traded up marginally through May, opening at $88.00 and moving to $89.50 before closing end of month at $88.85 per certificate. Monthly cumulative trading volumes has halved from April currently sitting at 265,000 certificates. The largest daily trade of 30,000 certificates recorded on 20May.
Forward Contracts
VEEC 2026 saw consistent activity, with frequent 5,000 certificate tranches traded throughout the month. Prices held close to spot held against a small premium, finishing around $90.00. VEEC 2027 trading was comparatively thin, a grouping of 5,000 certificate daily trades, and pricing broadly in line with spot by month end.
Key Insight
The 2026 premium reflects active near-term buying, while 2027 pricing at parity with spot indicates limited conviction in longer-dated tightening. This divergence reinforces a short-dated, compliance-driven market focus.

Energy Saving Certificates (ESCs)

ESC spot prices strengthened further through May, rising from $27.60 to $29.00, with trading volumes falling significantly from April. Forward buying volumes also softened within May. Stronger buying demand from last month was likely driven by compliance driven certificate surrendering targets with stronger buyer engagement.
Spot Market
ESC spot prices rose through May, opening at $27.60 and closing at $29.00. Trading activity was dampened from last month with 1,033,000 spot certificates traded (against 1,615,000 certificates traded in April). Despite the softening volume, this represents a return to normal volumes post certificate surrender targets.
Forward Contracts
Forward trading volumes similarly fell through May, totaling 465,000 certificates. For CAL 26 Prices ranged throughout the month from $27.70 - $30.00. CAL 27 prices traded at $30.50, with a small premium embedded. This points to increased buyer interest in future vintage supply as market participants respond to rising spot prices.
Key Insight
May pricing suggests the ESC market continued to tighten, with both spot and forward markets still strong, however seeing weaning volumes post certificate surrender compliance. Current trading behaviour still points to sustained upward pressure, with buyers increasingly active across both current and future supply.

Australian Carbon Credit Units (ACCUs)

May pricing suggests a firmer but still spot-led ACCU market. Standard and HIR ACCUs both moved higher across the month, although HIR certificates continued to trade at a moderate discount to Standard ACCUs. With no forward trades observed, market activity remained focused on immediate requirements rather than longer-dated positioning.
Price Movements by ACCU Type:
Standard ACCUs (No AD): Standard ACCUs traded within a narrower range, moving between $37.50 and $38.50 before ending May at $37.60 per certificate. Total spot volume reached 850,000 ACCUs for the month, reflecting active but still spot-led participation.
HIR ACCUs: HIR ACCUs moved higher through May, opening at $37.50 and closing at $37.55 per certificate. Total spot volume reached 225,000 certificates, primarily driven by a large daily trade of 115,000 certificates. No forward trades were observed, indicating limited visible market depth beyond spot.
Key Insight
ACCU pricing in May reflected a firmer but still near-term market. Standard ACCUs moved higher and HIR ACCUs followed, although the absence of forward trades suggests market participants remain focused on immediate demand rather than broader future supply risk.

Latest data available from Utilibox as of 29th January