Australia’s main electricity grid recorded a 27 per cent drop in wholesale prices during the September quarter, driven by a surge in rooftop solar, home batteries, and a new wave of free midday power offers that pushed gas-powered generation down to its lowest level since 2000.
The Australian Energy Market Operator released its Quarterly Energy Dynamics report, detailing a quarter where underlying demand across the National Electricity Market climbed. That rise came despite lower heating requirements and was fuelled by ongoing electrification, higher industrial demand, and increasing data centre consumption. Yet operational demand fell because of rooftop solar, helping pull average wholesale electricity prices down to $63 per megawatt-hour, the lowest September quarter average since 2021.
Free Midday Power Offers Spark Daily Grid Spikes
The policy landscape shifted significantly in recent months with the introduction of free midday electricity plans. Under the Solar Sharer initiative launched on July 1 in New South Wales, South Australia, and south-east Queensland, retailers must offer tariffs that include three hours of free electricity between 11 am and 2 pm. Victoria followed with its Midday Power Saver on October 1, offering a similar 11 am to 2 pm window for households with smart meters.
Australia's gas-fired power fell 34% to its lowest Q3 level since 2000 as renewables hit a record 44.3% of generation, AEMO says. Grid-scale battery capacity more than tripled year-over-year. #Australia #Renewables #NaturalGas #Batterieshttps://t.co/ueCJntB2qu
Grid data shows an immediate response from consumers. Five-minute total demand across the National Electricity Market increases by 360 MW between 1100 hrs and 1105 hrs every day as households switch on batteries, electric vehicles, and appliances on timers. Victoria recorded the largest midday jump at 151 MW, followed by New South Wales at 114 MW and Queensland at 111 MW.
Some areas showed even larger spikes before formal state launches. Data from the Grattan Institute revealed that Victorian demand rose by more than 700 MW within 30 minutes of 11 am on August 28, indicating that some retailers were already running timed promotions ahead of schedule.
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Home Batteries Shift Evening Peak Demand
The midday influx of free power connects directly to a boom in residential energy storage, largely backed by federal and state battery rebates. Households equipped with rooftop solar and batteries are using the midday window to charge their systems before powering their homes through the expensive evening peak.
On average, households with PV and battery systems shifted to net exports later in the morning than PV-only households and exported less energy, as batteries charged before any surplus PV was exported to the grid.
Australian Energy Market Operator, via Renew Economy
During the evening peak from 4 pm to 9 pm, battery-equipped households remained net exporters for longer and drew around 74 per cent less electricity from the grid than homes with solar panels alone. That shift reduced evening pressure on the broader energy system and helped lower peak prices.
Record Renewable Penetration and Gas Generation at 26-Year Lows
Renewable energy reached a record third-quarter share of 44.3 per cent across the main grid, up from 41.8 per cent a year earlier, despite a six per cent decline in wind generation. Grid-scale solar output jumped by 30 per cent to a new high of 2,211 MW, aided by battery storage that reduced economic curtailment during high-production midday hours. On September 19, the grid reached a new half-hour renewable penetration record of 80.4 per cent.
Grid-scale batteries supplied eight per cent of evening peak generation, surpassing gas-powered generation at 5.1 per cent for the first time in any quarter. Gas-powered generation slumped by 34 per cent to its lowest third-quarter average since 2000. Grid-scale batteries also set prices in almost half of all dispatch intervals during the quarter, up from 18 per cent a year ago.
Historic: for the 1st time in any quarter, Australia’s big batteries out-supplied gas in the evening peak. Q3 2026, main grid (NEM):>Gas generation: lowest Q3 since 2000 (down 34% to 881 MW)>Renewables: record 44.3%>Wholesale prices: down 27%>Solar + battery homes: 75% less… pic.twitter.com/i8fFXnevYd
Electricity use continues to grow, but more solar and storage is changing when energy is produced, drawn from the grid and shifted across the day.
Violette Mouchaileh, Australian Energy Market Operator Executive General Manager Policy and Corporate Affairs
Regional Wholesale Price Breakdown
Wholesale electricity prices varied across states during the September quarter, reflecting local generation mixes and demand patterns. Victoria and Tasmania recorded the lowest regional averages, while New South Wales remained the highest.
| Region | Average Wholesale Price ($/MWh) |
|---|---|
| Victoria and Tasmania | $56 |
| Queensland | $61 |
| South Australia | $69 |
| New South Wales | $74 |
Negative pricing events also declined across the market due to increased battery charging, particularly in Queensland where negative prices fell to 43 per cent of dispatch intervals. The average magnitude of negative prices dropped from minus $16 per megawatt-hour down to minus $10 per megawatt-hour, alongside a halving of large-scale generation certificate prices to $7 per certificate.
Questions Remaining in the Energy Market
While the immediate data shows clear shifts in consumer behavior and wholesale pricing, several questions remain open as the energy transition progresses. Retailers have structured Solar Sharer offers with higher rates outside the free window, but exact cumulative household sign-up figures across participating states have not been published by energy authorities. The federal battery rebate backing the current residential storage boom is scheduled to step down every six months, with the next reduction slated for January 2027.
Good morning with good news: Australia's main grid Q3 2026 gas power fell 34% to 2000 level.Why?Battery supply about tripled, while renewables set new record of 44.3%, up from 41.8%.Small solar rose enough to match itself the grid's 1.3% growth!https://t.co/RM8JiY3kN5 pic.twitter.com/sLW8BZAySW