The AER reviews the performance of the wholesale electricity market under the National Electricity Law. Our 2026 report – the fifth in this series – examines how the performance of the market has changed over the past 5 years, with a particular focus on outcomes over 2025.
For the first time, the report presents information collected directly from market participants about electricity contracting collected using a Market Monitoring Information Order.
Our central finding
The National Electricity Market (NEM) is transforming from one market into many different markets within each region, defined often by the time of day and service type.
Price outcomes increasingly depend on whether enough flexible capacity is available when it is needed. If flexible supply, storage, transmission and demand response do not scale to provide necessary capacity in the right places and at the right times, consumers may face higher prices and greater reliability risks, because the market will be more vulnerable to supply and demand shocks.
These changes are also making market behaviour more complex to assess and will shape our future monitoring priorities.
Key findings from the report include:
- Prices eased in 2025, but pressure remains outside the daytime. Prices and revenue were lower than in 2024 across all periods of the day.
- Competition improved overall, but risks remain at specific times, locations and for some services. Competition in the NEM improved in 2025 as new generation and storage entered the market and ownership became more diverse. Competition remains more limited during the evening peak and overnight, when the system relies more heavily on dispatchable generation.
- Contract markets have stabilised since 2022, but access to risk management remains uneven. Electricity contract markets have broadly stabilised after the disruption of 2022. Non-energy market participants provided much of the trading liquidity on the ASX, while energy market participants accounted for a larger share of open interest because they tend to hold positions longer to manage physical exposure to wholesale price risk.
- Participant conduct largely reflects market conditions. Analysis does not indicate sustained market power across the NEM, but it does show that automation, battery bidding and portfolio behaviour is making conduct more complex to assess.
- Recent entry has supported market outcomes, but future delivery is less certain. Batteries currently appear to have the strongest commercial case, but the recent fall in price spreads will affect the investment outlook. Wind, solar and gas face weaker investment signals.