Australian electricity and gas markets – May and June 2026 Update 

What you need to know

Highlights for May and June 2026

May and June delivered a very busy period of regulatory and market activity across the Australian energy sector. This update highlights the developments most relevant to electricity and gas market participants.

The big news is:

• NEM Review implementation is in full swing and draft legislation and draft ESEM and MMO contracts are on their way;
• Network regulation is coming under the microscope from the AER and the AEMC;
• Gas reform continues - the domestic gas reservation design framework has been released and there is significant pushback from industry;
• AEMO has released the 2026 Integrated System Plan and is seeking feedback on future non-network options in Queensland and Tasmania;
• The SA Market Liquidity Obligation under the Firm Energy Reliability Mechanism starts on 1 October and it will be a litmus test for the MMO; and
• AEMO has published the 2026 WEM Electricity Statement of Opportunities and identifies material supply shortfalls from 2029-30.

NEM Review implementation

• Implementation of the NEM Review recommendations continues to progress. The key developments are the proposed ESEM and Market Making Obligation legislative package, commencement of the Electricity Contract Co-Design Working Group with draft contracts expected in mid-September and consultation on draft legislation and rules scheduled expected in October 2026.

Electricity network regulation and EV charging infrastructure

• The AEMC’s Electricity Network Regulation Review will consider fundamental questions about the role of transmission and distribution networks, how network revenues are set and incentives for networks to deliver services at least cost.
• Network resilience and EV charging infrastructure are also live issues, with AER consultation on network resilience guidelines and DCCEEW’s rule change request to facilitate timing and funding for the EVCI rollout.

Gas market reform

• The draft Domestic Gas Reservation design framework sets out key features of the proposed scheme. Industry feedback has raised key concerns about whether the scheme will support long-term investment and contracting, and provide sufficient certainty to LNG exporters and the domestic market.

AEMO 2026 Integrated System Plan

• The 2026 ISP outlines an optimal development path for generation, storage and network investments to 2050, and AEMO is seeking non-network options for Brisbane Area 275 kV Reinforcement, Central to North Queensland Reinforcement (Stage 1) and the Tasmania REZ Expansion by 17 September 2026.

SA MLO starts 1 October

• South Australia's FERM Market Liquidity Obligation guideline has been released, and the scheme kicks off from 1 October 2026. The guideline applies to long duration capacity providers and sets minimum volume, spread, contract and trading-period requirements.

2026 WEM Electricity Statement of Opportunities (ESOO)

• The 2026 WEM ESOO identifies a near-term capacity surplus followed by material supply shortfalls from 2029-30, signalling both confidence in the immediate outlook and urgency for new investment.

Highlights for May and June 2026

In this update, we take a look at the latest rule changes and market updates published in May and June 2026 which affect participants in the Australian electricity and gas markets.

National Electricity Rules

Facilitating EV charging infrastructure rollout under Commonwealth grants

On 28 May 2026, the Commonwealth Government Department of Climate Change, Energy, the Environment and Water (DCCEEW) submitted a rule change request to enable its “Accelerating Electric Vehicle Charging Program”.

The rule change request will only focus on Electric Vehicle Charging Infrastructure (EVCI), such as kerbside and regional black spot electric vehicle charging, supported by the program which the Commonwealth has outlined will be time and funding limited.

The DCCEEW submits that EVCI is not being rolled out at a rate needed to support emission reduction targets, explaining that there is a cycle of customer hesitation in purchasing EVs without sufficient EVCI, but investors are hesitant to deploy more EVCI with low EV uptake.

Submissions closed 25 June 2026.

AER begins consultation on network resilience guidelines

On 4 June 2026, the Australian Energy Regulator (AER) published a consultation paper and is seeking stakeholder views to inform the development of the network resilience guidelines.

The guideline sets out how network resilience expenditure is assessed under the National Electricity Rules (NER) including the factors the AER will have regard to when assessing resilience proposals.

Submissions close 10 July 2026.

AEMC commences Electricity Network Regulation Review

The AEMC has formally commenced its Electricity Network Regulation Review, a comprehensive review of the economic regulation governing electricity networks as Australia’s power system undergoes a significant transformation.

The review is set to consider a range of fundamental questions, including the changing role of networks at both transmission and distribution level, how revenues are set and the incentives for networks to deliver their services at least cost.

The AEMC published the final Terms of Reference and a consultation paper on 25 June 2026, which initiated Package 1 of a two-package process.

The review is structured into two packages due to the size and complexity of the issues to be examined. Package 1 examines what services networks should provide and which services should be subject to competition.

Package 2 will commence shortly and will consider how the framework ensures networks operate and spend efficiently, how risks and costs are shared between network businesses and consumers, and whether the process for setting network revenues is working as it should.

Package 1 is being initiated alongside two related rule change requests that also go to fundamental questions about the role of network businesses in emerging markets:

• The first, from Energy Networks Australia, proposes allowing distribution networks to install and operate kerbside electric vehicle (EV) charging infrastructure as a regulated service.
• The second, from Nexa Advisory, seeks to strengthen the ring-fencing framework.

Next steps for the review are as follows:

• Stakeholder consultation period open until 23 July 2026.
• The AEMC will host a public forum in August 2026.
• The AEMC will host a second public forum in October 2026.
• Following consultation, a final report will be published on 17 December 2026.

The AER is also running a review of its Distribution Ring-Fencing Guideline and Shared Asset Guideline in parallel. Its review covers immediate issues that can be addressed through its guidelines, while the AEMC's review considers whether changes to the NER or other more principles-based changes are warranted.

NEM Review

NEM Review Implementation Update

There have been key developments in NEM review implementation throughout May and June:

Ministers agree to develop legislative package to implement ESEM and Market Making Obligation

On 8 May 2026, all Ministers, except Queensland, forming the Energy and Climate Change Ministerial Council (ECMC) agreed to develop a legislative package to implement the Electricity Services Entry Mechanism (ESEM) and Market Making Obligation as recommended by the NEM Review.

Ministers also agreed to engage AusEnergy Services Ltd (ASL) to continue preparatory work related to the establishment of the ESEM.

The Ministers noted the proposed legislative package will provide for the ability to transfer contracts to the ESEM Administrator for pre-existing jurisdictional schemes, including contracts under Victoria's announced offshore wind auctions, South Australia's Firm Energy Reliability Mechanism (FERM) and NSW's Electricity Infrastructure Roadmap.

These developments reflect entering into the 'authorising and enabling' phase (Phase 2) of the ESEM implementation.

The finalisation of the legislative package and implementation will be considered further by the Ministers at an upcoming ECMC meeting.

Commencement of Co-Design Working Group

The Electricity Contract Co-Design Working Group has commenced, holding its first meetings in May and June 2026 as well as individual consultations.

The working group has been designed as an industry-led body comprising 11 individual market participants with deep technical expertise across a broad range of market segments. The group will co-design standardised electricity derivative contracts for bulk energy, shaping and firming auctions under the ESEM and the MMO.

The members are:

• Tom Arnold, ACEN Australia
• Ally Bonakdar, NAB
• Paul Curnow, Akaysha Energy
• Stephanie Easton, Iberdrola Australia
• Paul Grzinic, Aurora Energy
• Nick Hawke, Clean Energy Finance Corporation
• Declan Kelly, Flow Power
• Andrew Mulder, RWE
• Jialin Shen, Ampyr
• Daniel Teng, Origin Energy
• Andrew Wilkins, SA Water

Per the working group Terms of Reference, the Taskforce and ASL have provided guidance on industry consultation to allow the group to function effectively.

Draft contracts are expected in mid-September.

Draft legislation in October

The packaging out for consultation of the draft legislation and rules is currently scheduled for October 2026.

The final contract recommendations report for the contract co-design is also due 30 October 2026.

SA Firm Energy Reliability Mechanism Market Liquidity Obligation - Minister's Guidelines issued

On 11 June 2026, the guideline for Market Liquidity Obligation (South Australia) was released, effective from 1 October 2026.

The key features are:

NEM Review Implementation Taskforce Update – ESEM Development

On 15 June 2026, the NEM Review Implementation Taskforce gave an update to industry associations on the reforms.

The work on ESEM implementation has focused on how the ESEM will be enacted through the National Electricity Law (NEL) and NER. In particular, how the tenders will run will be critical to the overall success of the ESEM.

The group gave indicative working positions on the tender design features:

1. Clearing Approach – procurement mechanism to be a sealed-bid, pay-as-bid auction, whole bid volumes will be accepted/rejected, bids will have a uniform format, procurement volumes in a given auction will be informed by the Anticipated Entry Trajectory but are at the discretion of the ESEM Administrator (ESEMA), and bids will be assessed purely on financial value.
2. Pre-qualification Criteria – projects must meet project criteria (which are yet to be established but will be included in the consultation package), additional criteria can be set by states/territories, no minimum readiness thresholds.
3. Contracted Period – ESEM contract period to be fixed in each procurement round, the ESEMA will determine the period that is appropriate for each ESEM service, successful proponents will sign a project development agreement.
4. Procurement frequency and timing – alternate option for semi-annual tenders to be the default cadence.
5. Cooling-off period – alternate option of no cooling-off period.

National Gas Rules

DCCEEW releases gas reservation design framework

On 25 May 2026, the DCCEEW released the draft Design Framework for the Domestic Gas Reservation.

The development of the draft Design Framework was informed by stakeholder feedback during a public consultation period that closed on 13 March 2026.

The draft Design Framework outlines how the reservation scheme would operate, including key design features such as:

• regulatory framework
• reservation design, including how the DSO is calculated
• compliance and other operational elements
• integrated market reforms

Submissions closed on 30 June 2026.

A submission from a key industry body, although supportive of introducing a gas reservation scheme, detailed that:

• the gas reservation scheme should be a strategic mechanism directed at ensuring supply over the long-term, not a mechanism to deal with short-term operational challenges
• the reservation scheme should be designed to support long-term investment and contracting
• as currently proposed, the scheme does not provide certainty to either LNG exporters or the broader domestic market and as a result is likely to prove unworkable

AEMC initiates minor changes

On 4 June 2026, the Australian Energy Market Commission (AEMC) initiated a minor rule change to make minor corrections and non-material changes to the National Gas Rules and Western Australian version of the National Gas Rules to improve their quality.

Written submissions to the rule change proposal close on 2 July 2026.

AEMC finalises stage 2 gas reforms to strengthen east coast gas system reliability

On 25 June 2026, the AEMC finalised three new rules to assist the east coast gas system navigate short term supply shortages.

These rules are:

• Enhancing reliability and supply adequacy arrangements, introducing a risk or threat signalling framework, new governance arrangements for market settings reviews, and enhancements to AEMO's Gas Statement of Opportunities and Victorian Gas Planning Report.
• Supplier of last resort mechanism
• Projected Assessment of System Adequacy, introducing short term (ST) and medium term (MT) PASA into the NGR to provide stakeholders with better information on the demand and supply balance across the ECGS.

National Energy Retail Rules

AER publishes draft Retail Guidelines

On 5 June 2026, the AER published the draft AER Retail Guidelines, which combine 4 separate updated enforceable retail guidelines into a single, easy-to-use document.

The draft AER Retail Guidelines are designed to reduce regulatory burden for retailers while improving protections and outcomes for customers at the same time. They include the:

• Retail Pricing Information Guidelines
• Benefit Change Notice Guidelines
• Billing Guideline (formerly the Better Bills Guideline)
• Customer Hardship Policy Guideline

Submissions are open until 17 July 2026 and will inform the development of the final AER Retail Guidelines, expected to be published in September 2026.

Strengthening standards for payment difficulty assistance

On 18 June 2026, the AEMC published a consultation paper to seek stakeholder feedback on the Strengthening standards for payment difficulty assistance rule change request from the AER.

The AER outlined, in its rule change request, that assistance provided under the current framework is often ineffective, places inappropriate expectations on customers and is provided in an inconsistent way across retailers. The AER also identified problems with payment plans failing because they are either not aligned with a customer's capacity to pay at the time they are first established or become unaffordable for some customers due to a change in their circumstances, which is not reflected in the plan.

The rule change request proposes the following amendments to the National Energy Retail Rules (NERR):

• Banning retailers from requiring documentary evidence as a precondition to providing payment difficulty assistance to customers experiencing payment difficulty or hardship.
• Strengthening protections to make payment plans more affordable.

Submissions to the consultation paper are due 30 July 2026.

AER publishes January – March 2026 Retail performance quarterly update

On 24 June 2026, the AER published its quarterly retail performance update for the January–March 2026 period.

Retail performance indicators show that energy affordability pressures remain high.

Compared to last quarter and the same quarter last year, more residential energy customers are carrying debt, entering hardship programs and using payment plans, while disconnections and credit collection activity have also increased.

In this environment, the AER continues to advocate for improved protections for customers experiencing payment difficulty, submitting five rule change requests to the AEMC to improve protections for customers experiencing payment difficulty.

Final rule to improve life support processes

On 25 June 2026, the AEMC published a final determination to improve the registration and communication processes for Australian households that rely on life support equipment. The final rule seeks to clarify and improve roles, responsibilities, and processes of retailers and distributors in registering and serving energy customers with life support equipment at their premises.

The final rule takes effect on 1 December 2027.

Other publications

AER releases inaugural report into wholesale gas market performance

On 8 May 2026, the AER released its inaugural report into the competition and efficiency in wholesale gas markets. The Wholesale gas performance report 2026 provides an assessment of how aspects of the east coast wholesale gas markets are performing under their current structure, including short‑term gas markets facilitated by AEMO, pipeline transportation and storage.

Key findings from the report include:

• overall, facilitated gas markets are performing well
• liquidity and price transparency can be strengthened
• prices have stabilised, but risks remain
• electricity and gas market outcomes are increasingly linked
• supply, transport and storage constraints are increasing risks for southern markets
• LNG exports have increased exposure to global market risks

National electricity grid remains reliable and secure in latest Reliability Panel review 

On 21 May 2026, the Reliability Panel released the annual NEM Reliability and Security Report (RASR). The report found that the NEM continued to meet reliability standards in 2024-25, despite the growing complexity of the energy transition. The findings also show that recent reforms appear to be addressing immediate system security challenges.

However, they also underscored the need for timely investment in new generation, storage, networks and essential system services ahead of further coal plant closures.

AER releases final Default Market Offer 2026-27

On 26 May 2026, the AER released the final prices for the 2026-27 Default Market Offer (DMO), with electricity prices set to fall for most households and small businesses on the DMO from 1 July.

The DMO provides a regulated safety net for households and small businesses on standing offer electricity plans and acts as a reference price to help consumers compare market offers.

AER reports on significant electricity prices for Q1 2026

On 28 May 2026, the AER published a report on significant prices in the NEM across January to March 2026.

This is the first report published under the revised Significant price reporting guidelines (Guideline) outcome criteria. Instead of the fixed $5,000/MWh price to determine a significant price outcome, the AER will now take a principles-based approach to select the significant price outcomes each quarter and report on a minimum of four days.

A total of 16 days were considered in the quarter, with the highest 30-minute energy prices ranging from $336/MWh to $20,158/MWh, both in South Australia.

AEMC announces Reliability Panel appointments

On 18 June 2026, the AEMC announced the appointment of three new panel members, representing consumers, generators, and innovation and emerging technologies.

The new appointments include:

• Ashley Bradshaw, appointed as the representative for end-use consumers
• Erin van Maanen, appointed as the representative for generators
• Dani Alexander, appointed as the discretionary member representing Consumer Energy Resources (CER) and Distributed Energy Resources (DER).

The Reliability Panel is established under the NEL and forms part of the AEMC institutional arrangements. The primary function of the Panel is to monitor, review and report on the reliability, security and safety of the NEM.

AEMC charts new direction for simpler electricity pricing

On 18 June 2026, the AEMC published final recommendations following The Pricing Review, one of Australia's most comprehensive reviews of electricity pricing. The recommendations set out a practical roadmap to make power bills simpler, fairer and better suited to the energy system Australians are already building.

The four recommendations are:

• Shine a light on energy service provider behaviour that contributes to negative outcomes for loyal customers
• Make it easier for consumers to find electricity plans and services that suit them
• Simpler energy plans, with complexity handled behind the scenes, to unlock the full value of a consumer-led energy system for everyone
• Regularly review customer outcomes to refine regulations and eliminate unnecessary red tape

This review is a key component of the CER roadmap to realise the benefits of CER for all energy consumers, including those without CER, and to support CER integration in the NEM.

AER Rebidding and Technical Parameters Guideline Consultation Update

On 19 June 2026, the AER decided to delay further revisions to the Rebidding and Technical Parameters Guideline due to AEMO's proposal to temporarily pause and reset the delivery path for implementation of the IPRR framework.

Instead, the AER will seek to re-open consultation on the Guideline after amendments to the IPRR framework are settled, and the implementation timeline clarified. This will allow amendments to the Guideline to be made as part of a single process, reducing the burden on stakeholders.

In the interim, the AER will shortly provide separate guidance relating to automated bidding.

AER releases analysis exploring the future of electricity network regulation

On 19 June 2026, the AER published an information paper exploring the future of electricity network regulation as Australia’s electricity system undergoes significant change.

It aims to assist stakeholders in understanding the breadth of AER’s network regulation, the current regulatory instruments the AER has available to influence the energy system and provides context for assessing whether this current framework will remain resilient as the system evolves.

The paper also provides initial observations on how the electricity system and regulatory framework are changing in response to decentralisation and digitisation. The role network service providers play is also changing as they are increasingly expected to act as platforms to enable and coordinate new energy services.

AEMO releases the 2026 Integrated System Plan

On 25 June 2026, AEMO published the current Integrated System Plan (ISP). The ISP is a roadmap for the NEM’s transition, and outlines an ‘optimal development path’ (ODP) for generation, storage and network investments to meet both consumer needs and government policies, at least cost, to 2050.

The 2026 ISP reaffirms that renewable energy, connected by transmission and distribution, firmed with storage and backed up by gas, presents the least-cost way to supply secure and reliable electricity to consumers through to 2050, as coal plants retire and while meeting government policies.

AEMO will present an overview of the 2026 ISP and host a Q&A session with the ISP team at a post-publication webinar on Tuesday, 7 July 2026 at 10am AEST. You can register for the webinar here.

AEMO is calling for non-network options to meet the identified need for three newly actionable ISP projects in the 2026 ISP by Thursday, 17 September 2026.
The projects are:

• Brisbane Area 275 kV Reinforcement
• Central to North Queensland Reinforcement (Stage 1)
• Tasmania REZ Expansion

Australian Energy Regulator begins operation as a standalone agency

On 1 July 2026, the AER became a standalone Non-Corporate Commonwealth Entity (NCCE).

The AER has always made independent regulatory decisions, with its own Chair, Board and funding. Until now, however, the Australian Competition and Consumer Commission (ACCC) has been responsible for staffing and corporate services under the legislation that established the AER. From 1 July, these responsibilities sit directly with the AER.

The AER will continue to regulate energy networks, monitor wholesale and retail energy markets, and administer key consumer protections, including the Default Market Offer.

Western Australia

Wholesale Electricity Market

Fuel, Energy and Power Resources Amendment Act 2026

On 18 May 2026, the Western Australian Government passed legislation to amend the Fuel, Energy and Power Resources Act 1972 (WA) (FEPRA) by introducing a modernised compensation framework, updated protection from liability provisions, and changes to enforcement and penalties.

The updated compensation framework provides that loss or damage is not compensable if it:

• arises directly or indirectly from any permit or rationing system, whether in relation to the sale or supply of fuel, energy or power, or any other type of goods or service; or
• arises directly or indirectly from any type of prohibition, limitation or restriction (that is not a permit or rationing scheme) on the sale or supply of fuel, energy or power, or any other type of goods or service; or
• is incurred in like manner by either the community as a whole or any substantial portion of the community.

There is also an increase in offence exposure. The maximum fine for an individual who commits an offence under the FEPRA will increase from $10,000 to $50,000, and that the maximum fine for a body corporate that commits an offence under FEPRA is $250,000.

For more information on the amendments, please refer to the Explanatory Memorandum published by the WA Parliament available here. 

Review of the effectiveness of the Synergy regulatory scheme 2025 - Publication of report

On 19 May 2026, the Economic Regulation Authority (ERA) published its 2025 Review of the effectiveness of Synergy’s regulatory scheme.

The Electricity Generation and Retail Corporation (or EGRC) scheme was introduced following the merger of electricity generation and retail government trading enterprises in 2014. The EGRC scheme aims to promote competition in the Wholesale Electricity Market (WEM) and curtail Synergy’s potential exercise of market power as the dominant generator and retailer in the SWIS.

The review by the ERA considered the effectiveness of Synergy’s pricing and suitability of the terms and specifications of standardised wholesale electricity contracts (or standard products) in the SWIS given the changes in the WEM market design (implemented on 1 October 2023) and the State Government’s pathway for decarbonisation which involves the retirement of Synergy's major coal-fired generation assets and changing generation asset mix.

The key findings were as follows:

• Market concentration and market power: The WEM remains highly concentrated, with Synergy continuing as the largest wholesale generator and retailer in the SWIS. Synergy retains the ability and opportunity to exercise market power, necessitating the continuation of the EGRC scheme, though no fundamental changes to the design of the scheme are currently recommended.
• Standard products remain essential: Market Participants rely on Synergy's standard products for price discovery, hedging against volatile spot prices, and informing long-term bilateral contracts. The standard products regime should be retained to support retail market competition and access to wholesale electricity hedges.
• Forecasting challenges amid volatility: Between 2022 and 2024, Synergy's standard product prices were consistently below realised spot prices (with an estimated average loss of ~$13.80/MWh), largely driven by unanticipated gas price increases and the implementation and uncertainty in the changes to WEM market design. More recent data suggests improving alignment between forecasts and realised prices. The ERA has indicated a longer data series is required before firm conclusions are drawn.
• Transparency of pricing methodology: Stakeholders raised concerns about the lack of transparency in Synergy's standard product pricing methodology. The ERA considers there is benefit in requiring Synergy to publicly disclose further details of its forecasting methodology and model inputs, balanced against Synergy's legitimate commercial interests.

Frequency Co-optimised Essential System Services Offer Price Ceiling Determination - Final Report

On 21 May 2026, ERA published the Frequency Co-optimised Essential System Services Offer Price Ceilings determination final report, which set the price cap for offers by Market Participants to provide Frequency Co-optimised Essential System Services (FCESS) in the WEM.

In making the determination, the ERA employed a new method to determine the FCESS Offer Price Ceilings that used operational information and real market data, and in making the determination, changed how the amounts are indexed.

The FCESS Offer Price Ceilings are indexed monthly. In making the determination, the ERA made two changes to the indexation process, to change the:

1. reference fuel type: indexation is now based on changes in Western Australian gas trading prices, rather than diesel to reflect the highest cost generation facilities in the WEM; and
2. rounding up: amounts are to be rounded-up to the nearest dollar per MW per hour rather than the nearest $50 per MW per hour.

The FCESS Offer Price Ceilings in the determination remain unchanged from the draft determination, with the exception of the Contingency Raise OPC which has increased by $50 per MW per hour to $300 per MW per hour (relative to the draft determination – see our Australian electricity and gas markets – April 2026 Update. This increase was due to a different scheduled Facility being identified as the highest cost Facility (PINJAR_GT5 as opposed to ALINTA_PNJ_U2 as the highest cost Facility in the draft determination).

The OPCs in the determination and the indexation came into effect from 1 July 2026.

The final determination of the FCESS Offer Price Ceilings is:

2026 WEM Electricity Statement of Opportunities

The WEM Electricity Statement of Opportunities (ESOO) is published annually by the Australian Energy Market Operator (AEMO). It provides a ten-year outlook on the electricity supply-demand balance for the South West Interconnected System (SWIS) and serves as a critical input to the Reserve Capacity Mechanism (RCM).

The 2026 ESOO, published by AEMO in late June 2026, identifies a near-term capacity surplus followed by material supply shortfalls from 2029-30, signalling both confidence in the immediate outlook and urgency for new investment.

1. Near-Term Outlook: Capacity Surplus Through 2028-29

The ESOO confirms an adequate supply position for the first three years of the outlook period:

• For 2028-29, existing and committed capacity of 6,670 MW exceeds the Peak Reserve Capacity Requirement of 6,323 MW.
• 889 MW of committed capacity is expected to become operational by 2028–29, supported by Priority Project status under the State Development Act 2025 (WA) and the Capacity Investment Scheme.
• Bluewaters Power Station remains available until 2030-31 following the extension of the Griffin Coal Mine State Agreement to 2031.
• Average Unserved Energy (USE) is forecast to remain within the 0.0002% reliability threshold through 2029-30.
• Supplementary Reserve Capacity is not required for the 2026-27 Hot Season.

2. Emerging Supply Risks from 2029-30

Beyond the near-term surplus, the outlook deteriorates materially, driven principally by demand growth of 56% by 2035-36 (fuelled by electrification of transport and industry, data centre proliferation, and population growth); and the retirement of 1,661 MW of thermal generation:

• A capacity shortfall of 166 MW is projected for 2029-30, growing to 2,161 MW by 2035-36.
• USE is projected to exceed the reliability threshold from 2030-31.
• Anticipated capacity in the pipeline (not yet committed) could delay the onset of shortfalls to 2031-32.
• Network congestion is expected to rise from 0.2% to 2.7% by 2031-32, making transmission augmentations critical.

3. Reserve Capacity Developments

Key RCM parameters and regulatory changes for 2028-29:

• Peak Reserve Capacity Target: 6,323 MW; Flexible RCT: 2,617.
• Energy Storage Resource (ESR) Duration Requirement: increases from 6 hours (2027–28) to 7 hours (2028–29) for new ESRs.
• Benchmark Reserve Capacity Price (BRCP): A$488,500/MW/year representing a 35% increase from 2027-28, based on a 200 MW / 1,200 MWh (6-hour) BESS along the Clean Energy Link North transmission line.
• The Revised Relevant Level Method commenced on 1 April 2026 yielding an additional 240 MW of Capacity Credits for intermittent generators from 2028–29.

4. Investment opportunities, forecasts and observations

The convergence of tightening supply, strong demand growth, and supportive policy settings is considered to create a compelling investment environment:

• 85 valid Expressions of Interest were received in the 2026 Reserve Capacity Cycle, totalling 3,747 MW of potential Peak Reserve Capacity
• There is a strong investment pipeline, with a further 2,000 MW of projects responding – predominantly wind and ESR projects.
• The 35% BRCP increase signals strengthening market returns for new capacity.
• Rooftop solar, already the biggest generator in the system, is forecast to double to ~6000 MW by 2035-36.
• Household battery capacity is forecast to grow from approximately 550 MW (2026–27) to 2,300 MW (2035–36).
• Electric vehicle uptake is projected to grow from approximately 68,000 to 717,000 vehicles over the decade, driving significant new electricity demand.
• Consumer-led energy and coordinated battery storage participation in Virtual Power Plants (VPPs) is expected to reduce peak demand.

Kalgoorlie Vanadium Battery Energy Storage Expression of Interest: Stage Two - Now Open

The Western Australian State Government has committed $150 million towards the establishment of a 50 megawatt/500 megawatt-hour Vanadium Battery Energy Storage System (VBESS) in order to:

• reinforce power system security and reliability in Kalgoorlie and the Eastern Goldfields;
• support the adoption of long-duration energy storage technologies in WA; and
• catalyse the development of the local vanadium industry.

Proposals to deliver the VBESS facility and invest in the development of the local vanadium supply chain are now being sought. Alongside delivery, operational sustainability and commerciality, proposals will be evaluated based on their alignment with the Made in WA plan and support for broader regional, economic and community outcomes.

Proposals must comply with the eligibility requirements and address evaluation criteria outlined in the Proposal Guidelines and are due by 4:00pm (AWST) on Monday, 20 July 2026. See here.

Proposed amendments to WEM Procedure: Monitoring Protocol – Draft proposal for public consultation

The Economic Regulation Authority (ERA) has published proposed amendments to its WEM Procedure: Monitoring Protocol (Monitoring Protocol) for public consultation. The Monitoring Protocol outlines how the ERA monitors, investigates and enforces Rule Participants’ behaviour for compliance with the Electricity System and Market Rules (ESM Rules) and WEM Procedures.

The proposed changes aim to improve the effectiveness of the ERA’s compliance processes. Key changes include a revised breach risk assessment framework and the removal of the mandatory 20 Business Day timeframe for self-reporting suspected breaches.

The ERA has undertaken an internal review of its breach risk assessment process, resulting in a simplified and streamlined framework. Under the new approach, the ERA assigns a baseline risk rating (low, moderate or significant) to each obligation in the ESM Rules based on the maximum potential impact of a breach on: (a) electricity system security and reliability; (b) effective functioning of the market; and (c) unfair financial gain or loss. Alleged breaches with a baseline risk rating of moderate or significant will be further assessed based on key breach risk factors (including the nature and extent of impact, circumstances of the breach, breaching party factors and external factors) to determine whether an investigation is required and its priority.

Rule Participants are required to submit a self-report to the ERA under the current Monitoring Protocol within 20 Business Days of determining that there is reasonable cause to suspect a breach. The proposed amendments remove this mandatory timeframe. Instead, Rule Participants must submit a self-report “as soon as reasonably practicable” after determining that they have breached, or suspect they may have breached an ESM Rule or WEM Procedure. The rationale for this change is the reduction of unnecessary administrative obligations for Rule Participants.

The proposed amendments also clarify reporting arrangements in respect of Generator Performance Standards and Generator Monitoring Plans, including immunity under clause 3A.12.1 of the ESM Rules.

Rule Participants should consider reviewing their internal compliance frameworks and incident response procedures in light of the proposed amendments. While the removal of the 20 Business Day self-reporting timeframe provides additional flexibility, the ERA will continue to consider the timing of self-reporting as a factor in breach risk assessments. Accordingly, Rule Participants should still aim to report suspected breaches promptly. We expect the revised breach risk assessment framework may result in different prioritisation of compliance matters by the ERA, with an increased focus on higher-risk matters affecting system security and financial market impacts.

The ERA has published the draft amended Monitoring Protocol and a Procedure Change Proposal outlining the reasons for the proposed amendments. For more information see here.

Submissions on the draft are due by 27 July 2026 and can be lodged online using the form on the ERA website under 'Current Consultations'.

Future Energy System Outlook 2027

Energy Policy WA (EPWA) has announced the commencement of the Future Energy System Outlook 2027 (FESO), a long-term, scenarios-based planning exercise for the SWIS.

The FESO 2027 will guide planning and infrastructure investment in the SWIS to 2050 by exploring how current and future trends including rising demand, supply chain challenges, emerging technologies, net zero by 2050 commitments, and economic and population growth could shape the evolution of electricity demand and supply. The FESO is intended to help inform Government and private sector investment decisions and ensure the SWIS continues to meet electricity market objectives.

Stakeholder engagement is now underway, commencing with a public webinar on 15 July 2026, with further consultation opportunities on the scenarios and modelling to follow.
The FESO will fulfil the system planning requirements of a Whole of System Plan under section 4.5A of the ESM Rules.

Register for the webinar here.

Upcoming | Review of the Offer Construction Guideline published by the ERA

On 11 June 2026, the Economic Regulation Authority (ERA) announced that it had commenced a review of its Offer Construction Guideline and that it expects to publish a discussion paper this month as part of the review and inviting stakeholder submissions.

Authors: Dale Gill, Partner; Paul Newman, Consultant; Lauren Zambotti, Counsel; Taylah Smith, Graduate; Elisabeth Gregory, Graduate; Jenna Matus, Paralegal.