Australian Energy & Environmental Market Update - January 2026

Australian Energy & Environmental Market Update January 2026

Highlights from this edition

Electricity markets

• Average monthly spot prices strengthened across the NEM, with the NEM-wide VWAP rising 28% to $67.65 /MWh, rebounding from the downward trend observed since June.
• SA and TAS recorded significant month-on-month price increases, underpinned by several extreme pricing events driven by heatwave conditions and interconnector constraints.
• Futures prices continued to soften across the curve, with all forward contracts falling sharply. Declines were most pronounced for Cal26 contracts, particularly in QLD (-$10.10/MWh) and NSW (-$15.40/MWh).
• NEM-wide average solar merchant revenue increased to $7.9k/MW, an 88% rise from October, driven by higher DWAPs and capacity factors.

Environmental markets

• LGC prices softened by 16% month-on-month, with spot closing at $5.25/MWh, the continued curve decline driven predominantly by the gradually increased seller flow.
• STC prices remained capped by a persistently elevated Clearing House surplus, fluctuating between ~5-7million certificates throughout January.
• VEEC spot prices recovered, reaching $81/tCO₂-e, with options activity re-emerging during the month.
• ESCs traded within a tight range for most of January, largely oscillating between $22.75 and $23.00/MWh.
• PRC trading remained subdued, with a slight uptick toward month-end, closing at $2.97/cert.

Market news

• Key market developments in January included the release of AEMO’s Q4 2025 Quarterly Energy Dynamics report and the announcement of delays in Eraring Power Plant Closure.