Merchant solar revenue hits 24-month high as gas generation sets record low

Merchant utility-scale solar revenues on the National Electricity Market reached $A107.7k/MW/year in October 2026, according to Modo Energy. This figure represents the highest level recorded since December 2024. The data indicates a substantial month-on-month rise, with October revenues running 159 per cent higher than those seen in September 2026.

Market Dynamics

Frances Hallen, a power market analyst at Modo Energy, observed that October merchant solar earnings hit their peak since December 2024, standing at 2.6 times the September figure. She attributed this to a tightening of supply across the National Electricity Market, where elevated midday cooling requirements met diminished wind and solar output, thereby boosting solar capture prices. Hallen further noted that this combination of rising demand and reduced midday renewable availability led to a decline in negative pricing events. Concurrently, coal and gas were the primary drivers of higher overall prices. Although the report details these market conditions, it does not provide specific breakdowns of merchant versus contracted revenue proportions for individual solar plants.

Queensland Specifics

• Queensland merchant solar project revenue rose 166 per cent month-on-month, according to Modo Energy.
• Midday demand in the state increased by 1.3 gigawatts.
• Rooftop solar generation fell by 9 per cent during the same period.
• The solar capture rate increased by 21.2 percentage points.

Structural Shifts

Rystad Energy reports that National Electricity Market gas generation hit 426 GWh in October 2026, the lowest level for an October month since the market began. This contraction coincides with a decline in negative price hours and curtailed utility solar and wind output on a trailing 12-month basis. According to Modo Energy, battery revenues also decreased during this period, driven by increased charging costs.

Battery Fleet Expansion and Grid Hedging

Rystad Energy senior analyst David Dixon notes that the NEM utility battery fleet is expected to grow from the current 26 GWh to almost 60 GWh by end 2028. This growth is based solely on projects that have reached financial close or are already under construction.

State-Level Revenue Gains and Storage Dynamics

Frances Hallen, Modo Energy power market analyst, reported that merchant solar revenues increased in every state, with the largest gains occurring in New South Wales and Queensland. Hallen added that battery revenues moved in the opposite direction as charging costs increased, noting that in a grid where both solar and storage are in surplus, the two assets partially hedge each other.

What to watch

Rystad Energy senior analyst David Dixon expects this trend to continue over the next 24 months. The primary catalyst is the scaling up of the National Electricity Market’s utility battery capacity, projected to surge from the existing 26 GWh to nearly 60 GWh by the end of 2028.