Australia’s electricity market is entering a period of significant change.
Over the coming years, major coal power stations are scheduled to retire, electricity demand from data centres is expected to grow rapidly, and futures pricing is currently showing higher wholesale electricity prices further into the decade.
For Australian businesses, understanding these changes can help when planning future electricity contracts and deciding when to review energy pricing.
Coal Power Station Closures Are Changing Australia’s Electricity Supply
Coal generation continues to play an important role in the National Electricity Market, but several large power stations are scheduled to close over the coming years.
Based on current closure information, around 11 GW of coal generation capacity is expected to retire from the NEM by 2033.
Major scheduled closures include Yallourn, Callide B, Gladstone, Eraring, Bayswater and Vales Point.
A significant portion of these closures is expected between 2028 and 2029, with another major reduction around 2033.
As existing generation leaves the market, new renewable generation, storage and transmission infrastructure will need to continue growing to support Australia’s future electricity needs.
Data Centre Electricity Demand Is Expected to Grow Rapidly
At the same time as electricity supply is changing, demand is also expected to increase.
Data centres are emerging as one of the largest new sources of electricity demand in Australia.
AEMO forecasts data centre electricity consumption across the NEM to rise from around 5 TWh in 2025 to 26 to approximately 34 TWh by 2035 to 36.
That represents close to a sevenfold increase within a decade.
Data centres can consume large amounts of electricity and typically operate around the clock. As more facilities connect to the grid, this will add another significant source of demand while Australia’s generation mix is undergoing major change.
The combination of changing electricity supply and increasing demand could place further pressure on wholesale electricity prices over time.
Electricity Futures Pricing Is Higher Further Into the Decade
Australia’s electricity futures market provides another indication of how the market is currently pricing electricity in the years ahead.
NSW base futures show wholesale electricity pricing increasing from around $80/MWh in FY27 to more than $100/MWh by FY30, an increase of approximately 24%.
Futures pricing is not a guarantee of what electricity will ultimately cost in those years. It reflects what the wholesale market is currently pricing electricity for future periods and can move as conditions change.
However, it gives businesses useful insight into how future electricity costs are currently being valued by the market.
What Australia’s Changing Electricity Market Means for Business Energy Costs
For businesses, the important point is that significant changes are happening on both sides of the electricity market.
Generation supply is changing as coal power stations retire, while electricity demand is expected to grow from new sources such as data centres.
At the same time, the forward market is currently showing higher wholesale electricity prices further into the decade.
Businesses with upcoming electricity contract renewals may benefit from understanding their future energy position earlier, rather than waiting until their existing agreement is close to expiry.
Reviewing the market early can provide more time to assess retailer pricing, consider different contract periods and determine whether securing future electricity rates makes sense for your business.
Why Businesses Should Review Electricity Contracts Early
Business electricity prices can move quickly as expectations around electricity supply, demand, generation availability, weather and wider energy market conditions change.
There is no guarantee that today’s electricity pricing will be the lowest available, and futures markets can move in either direction.
What businesses can do is make informed decisions using the market information available today.
With major power station closures scheduled over the coming years, data centre electricity demand expected to increase significantly and futures pricing currently higher further into the decade, reviewing your electricity contract early can help your business better understand its options before these market changes become more pronounced.
Review Your Business Electricity Contract
If your business electricity contract is approaching renewal, or you have not reviewed your energy agreement recently, now could be a timely opportunity to understand what pricing is available.
Choice Energy can review your current electricity contract, upcoming expiry dates and energy usage and seek competitive options from multiple electricity retailers.
References:
- AEMO 2026 Electricity Statement of Opportunities for data centre electricity demand forecasts and the broader NEM outlook.
- ASX Energy settlement prices, as at 26 August 2026 for NSW calendar and financial year base futures pricing.
- Participant coal closure disclosures and AEMO outlook for scheduled coal generation retirements across the NEM.
