May 2026 Electricity Market Review

May 2026 continued the trend of moderating electricity prices across the National Electricity Market, supported by improving supply conditions and ongoing growth in renewable generation. Key developments during the month included: 

• NEM spot prices fell 17.9% year-on-year, with New South Wales recording the largest reduction across the mainland states. 

• Renewable generation increased to 39.4% of total supply, driven by a strong uplift in wind generation. 

• Battery discharge more than tripled compared with May 2025, highlighting the growing contribution of storage to market flexibility. 

• Forward electricity prices declined across most regions, with NSW, Queensland and South Australia now trading materially below long-term averages. 

These outcomes reflect the continued evolution of the electricity market as renewable and storage capacity expands across the NEM. While spot and futures markets both softened during May, regional differences remain evident as each state responds to its unique supply, demand and generation mix dynamics.

National Electricity Update

Spot Prices

Spot prices across the National Electricity Market (NEM) were lower in May 2026 compared with May 2025, with all regions recording year-on-year declines. NSW recorded the largest reduction at -33.3%, while SA and TAS proved more resilient, each down 7.0%. The NEM average fell by 17.9% year-on-year to $79.35/MWh. 

Current spot prices sit below rolling 12-month averages across all mainland regions, with NSW the most pronounced — May 2026 pricing was approximately 12% below its 12-month average of $92.82/MWh, indicating a meaningful step down from the elevated conditions experienced through mid-2025. 

Region	May-25 ($/MWh)	May-26 ($/MWh)	% Movement	12M Avg ($/MWh)
NSW	123.02	82.01	-33.3%	92.82
QLD	95.63	76.34	-20.2%	73.64
SA	83.31	77.49	-7.0%	88.50
TAS	103.39	96.14	-7.0%	N/A
VIC	78.05	64.77	-17.0%	69.33
NEM Avg	96.68	79.35	-17.9%	81.07

Futures Prices

Forward prices softened across most regions during May, continuing the downward trend observed since the March peak. All states declined in absolute terms, with the average of forward contracts now sitting well below long-term averages in NSW, QLD and SA. 

NSW forward prices closed the month at $94.77/MWh — the lowest monthly close since February 2022, reflecting sustained market repricing as supply conditions improve. QLD and SA show a similar pattern, both tracking 13-17% below their long-term averages. Victoria remains the exception, trading slightly above its long-term average of $74.56/MWh, underpinned by its structurally tighter supply profile.

Region	Month Open	Month Close	% Movement	LT Avg (Jan 23)	vs LT Avg
NSW	98.54	94.77	-3.8%	115.94	-18.3%
QLD	82.05	79.14	-3.5%	95.12	-16.8%
SA	89.92	86.93	-3.3%	100.38	-13.4%
VIC	78.53	77.82	+0.9%	74.56	+4.4%
NEM (Avg)	87.26	84.67	-3.1%	96.50	-12.2%

Generation Mix

Total NEM generation was broadly flat year-on-year at 17,715 GWh. The most notable shift was a strong increase in wind output (+15.5%), which drove the renewable share to 39.4% — a new high for May. Solar generation edged slightly lower (-3.6%), partially offset by the wind uplift. 

Battery discharge tripled year-on-year to 356 GWh, consistent with the rapid growth in dispatchable storage capacity across the NEM. Curtailment fell modestly for both solar and wind, a positive signal against a backdrop of rising renewables penetration. Coal and gas generation both declined, with emissions intensity improving by 2.9%.

Metric	May-25	May-26	Change
Total generation (GWh)	17,704	17,715	+0.1%
Renewable share (%)	37.6%	39.4%	+1.8 %
Coal share (%)	57.3%	55.8%	-1.5 %
Gas share (%)	5.5%	4.5%	-1.0%
Wind (GWh)	2,615	3,020	+15.5%
Solar (GWh)	2,899	2,796	-3.6%
Battery discharge (GWh)	114	356	+212%
Solar Curtailment (GWh)	96	80	-16.7%
Wind curtailment (GWh)	199	185	-7.0%
Emissions intensity (kgCO₂e/MWh)	588	571	-2.9%

State Electricity Update

New South Wales

Spot

NSW average spot prices declined to $82.01/MWh, down from $123.02/MWh in May 2025 (-33.3%). This was the largest year-on-year reduction across the mainland states. The May 2026 outcome sits below the 12-month average of $92.82/MWh, reflecting continued normalisation following the elevated pricing environment of mid-2025.

Futures

Contract	Month Open	Month Close	% Change
CY27	100.03	94.34	-5.7%
CY28	97.41	93.79	-3.7%
CY29	98.35	96.18	-2.2%

Forward prices declined across all contracts during May, with CY27 seeing the sharpest fall (-5.7%). The forward curve now sits consistently below the $100/MWh level, with the broader repricing reflecting growing confidence in NSW supply conditions as coal retires are offset by new renewable and storage capacity.

Generation Mix

Metric	May-25	May-26	Change
Total generation (GWh)	6,286	6,218	-1.1%
Renewable share (%)	31.0%	30.7%	-0.3%
Coal (GWh)	3,831	3,786	-1.2%
Gas (GWh)	178	71	-60.1%
Imports (GWh)	499	565	+13.2%
Battery discharge (GWh)	19.7	19	-3.6%
Emissions intensity (kgCO₂e/MWh)	605	606	+0.2%

Total NSW generation was slightly lower YoY at 6,218 GWh. The standout shift was a sharp reduction in gas generation (-60.1%), with imports rising to partially compensate. Renewable share was broadly flat at 30.7%, with solar and wind output largely unchanged. Emissions intensity was essentially flat at 606 kgCO₂e/MWh.

Queensland

Spot

QLD average spot prices fell to $76.34/MWh, down from $95.63/MWh (-20.2%). At $76.34/MWh, May spot pricing sat marginally above the 12-month average of $73.64/MWh — the narrowest gap of any mainland state, suggesting QLD pricing has been broadly range-bound over the past year.

Futures

Contract	Month Open	Month Close	% Change
CY27	85.21	79.15	-7.1%
CY28	81.48	79.25	-2.7%
CY29	80.08	79.01	-1.3%

Forward prices declined across all contracts, with CY27 the most affected (-7.1%). The QLD curve is now effectively flat across CY27-CY29 in the $79/MWh range, suggesting the market sees limited price escalation risk over the medium term — supported by strong renewable growth and the continued rollout of battery and pumped hydro capacity.

Generation Mix

Metric	May-25	May-26	Change
Total generation (GWh)	5,045	5,065	+0.4%
Renewable share (%)	29.5%	35.4%	-5.9%
Coal (GWh)	3,485	3,209	-7.9%
Gas (GWh)	358	309	-13.7%
Wind (GWh)	346	625	+80.6%
Solar (GWh)	1,030	1,198	+16.3%
Battery discharge (GWh)	30	125	+316.7%
Emissions intensity (kgCO₂e/MWh)	634	567	-10.6%

QLD saw a significant shift in its generation mix, with wind output nearly doubling year-on-year (+80.6%) and solar growing by 16.3%. Combined, this drove the renewable share from 29.5% to 35.4% — a substantial 5.9 percentage point improvement. Coal generation declined by 7.9% and gas fell 13.7%, with battery discharge up over fourfold. Emissions intensity fell sharply by 10.6% to 567 kgCO₂e/MWh.

Victoria

Spot

VIC average spot prices fell to $64.77/MWh, down from $78.05/MWh (-17.0%). The 12-month rolling average of $69.33/MWh sits slightly above the May 2026 outcome, suggesting some recent softening. VIC continues to record the lowest absolute spot prices of any mainland state.

Futures

Contract	Month Open	Month Close	% Change
CY27	75.62	71.48	-5.5%
CY28	78.04	78.40	+0.5%
CY29	82.05	83.57	+1.9%

VIC forward prices presented a mixed picture in May: CY27 declined by 5.5%, while CY28 (+0.5%) and CY29 (+1.9%) edged higher. This creates a modest upward slope in the outer years, distinguishing VIC from the broadly flat-to-declining curves of other states. VIC remains the only region trading above its long-term average, reflecting its structurally tight supply position as brown coal retires and new renewable capacity ramps up.

Generation Mix

Metric	May-25	May-26	Change
Total generation (GWh)	4,239	4,356	+2.8%
Renewable share (%)	40.9%	39.8%	-1.1%
Coal (GWh)	2,821	2,986	+5.8%
Gas (GWh)	100	107	+7.0%
Wind (GWh)	938	1,080	+15.1%
Solar (GWh)	515	408	-20.8%
Battery discharge (GWh)	37	83	+124.3%
Emissions intensity (kgCO₂e/MWh)	707	726	+2.7%

VIC total generation rose 2.8% to 4,356 GWh. Wind output increased strongly (+15.1%), though coal generation also rose (+5.8%), partly explaining the slight increase in emissions intensity to 726 kgCO₂e/MWh — the only state to record higher emissions year-on-year. Battery discharge more than doubled, and VIC shifted from a net importer to a net exporter during the month.

South Australia

Spot

SA average spot prices declined to $77.49/MWh, down from $83.31/MWh (-7.0%). This was among the more modest declines across the NEM, reflecting SA’s already-competitive pricing structure. The result sits below the 12-month average of $88.50/MWh, consistent with the broader softening trend.

Futures

Contract	Month Open	Month Close	% Change
CY27	87.00	83.23	-4.3%
CY28	91.02	88.54	-2.7%
CY29	91.74	89.00	-3.0%

SA forward prices eased across all contracts, with CY27 seeing the largest move (-4.3%). The SA curve remains relatively stable in the $83-89/MWh range across CY27-CY29, reflecting the state’s high renewable penetration and ongoing reliance on gas and interconnector flows to manage supply variability. SA forward prices closed May 2026 at levels last seen in April 2024.

Generation Mix

Metric	May-25	May-26	Change
Total generation (GWh)	1,221	1,187	-2.8%
Renewable share (%)	65.8%	62.1%	-3.7%
Gas (GWh)	327	304	-7.0%
Wind (GWh)	546	575	+5.3%
Solar (GWh)	279	192	-31.2%
Imports (GWh)	101	163	+61.4%
Battery discharge (GWh)	27	37	+37.0%
Emissions intensity (kgCO₂e/MWh)	227	240	+5.7%

SA total generation declined slightly (-2.8%) to 1,187 GWh. Wind remained the dominant source at 46.5% of generation, though solar fell sharply (-31.2%), contributing to a 3.7 percentage point decline in the renewable share to 62.1%. Gas remained elevated and imports rose significantly (+61.4%), filling the gap left by lower solar. Emissions intensity ticked up modestly to 240 kgCO₂e/MWh.

Closing Commentary

May reinforced the broader trend of improving supply conditions across the National Electricity Market. Increased renewable generation, growing battery participation and declining reliance on thermal generation continue to support more competitive wholesale pricing outcomes across much of the market. 

The continued softening of forward electricity prices is particularly notable, with most regions now trading well below long-term averages. This suggests market participants are becoming increasingly confident in the ability of new renewable and storage projects to support future supply requirements. 

Despite these positive developments, market conditions remain influenced by weather patterns, generation availability and the ongoing transition of the electricity system. As renewable penetration increases, factors such as curtailment, storage deployment and transmission constraints will continue to play an important role in shaping market outcomes. 

Leading Edge Energy will continue to monitor these developments closely to help clients navigate changing market conditions, manage risk and make informed energy procurement decisions.

Explainer:  Why we focus on Wholesale Futures Prices

Wholesale Futures Price: This reflects what the market expects wholesale electricity spot rates to be in future periods. The offers that commercial and industrial (C&I) customers receive via Leading Edge Energy are closely correlated to wholesale prices on the ASX Energy futures market; this is why we focus on these prices in our commentary.

Spot Price: This represents how much the spot market is charging for electricity currently based on demand and supply. Spot prices go up when demand is high and supply is tight. You can view live Spot Prices here. 

You can learn more about the difference between wholesale electricity futures and spot prices in our blog section.

Disclaimer: The information in this communication is for general information purposes only. It is not intended as financial or investment advice and should not be interpreted or relied upon as such.

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