Solar bonanza: Merchant revenues soar to highest level in two years as gas generation hits all

After hitting record highs for energy generation in three states across Australia’s main grid in September, October 2026 has proven to be a cracker of a month for large-scale solar plants on the metric that matters most (to asset owners and investors, at least): earnings.

Modo Energy reports this week that ​merchant utility-scale solar revenues on the National Electricity Market (NEM) reached $A107.7k/megawatt (MW)/year in the second month of the Australian spring, up to 159 per cent higher than in September and the highest since December 2024.

As the Modo report notes, these figures refer to merchant revenues only – which is the amount asset owners earn by selling electricity directly into the wholesale spot market without a contract. Currently, most solar generators on the NEM have contracts of some form or other, like Power Purchase Agreements (PPAs).

Contracts have become increasingly popular, if not mandatory, because merchant revenues have been increasingly pummelled by negative daytime prices and large-scale solar curtailment caused by abundant rooftop solar generation and competition from wind.

But a month of more battery storage, less wind, more operational demand and a little help from high-bidding coal and gas plants has shown that the solar coaster has a ways to go yet.

“What a month for solar in the NEM!” Modo Energy power market analyst Frances Hallen said on LinkedIn on Tuesday. “October merchant solar revenues were the highest since December 2024, and 2.6x September.

“Revenues increased in every state, with the largest gains in New South Wales and Queensland,” Hallen writes. “Across the NEM, higher midday cooling demand and lower wind and solar generation tightened supply, lifting solar capture prices.

“And that median intraday price profile? Demand increased, and lower midday renewable availability led to fewer negative prices, while coal and gas drove higher [prices] overall.”

Queensland had the best of the bonanza, with revenues for merchant projects in that state jumping 166 per cent, month-on-month.

“Midday demand rose by 1.3 GW as cooling load increased, while rooftop solar generation fell by 9 per cent,” the Modo report says. “Together, these changes lifted Queensland’s capture rate by 21.2 percentage points, the largest increase of any state.

Meanwhile, Hallen adds, “battery revenues went the other way as charging costs increased. In a grid where both are in surplus, solar and storage partially hedge each other.”

Rystad Energy senior analyst David Dixon said in his own monthly update that the number of hours of negative prices and curtailed utility solar and wind generation are both beginning to decline, on a trailing 12-month basis, as big battery capacity comes online.

“This trend is expected to continue over the near term (next 24 months) as the NEM utility battery fleet grows from the current 26 GWh to almost 60 GWh by end 2028, just based on projects that have reached financial close or are already under construction,” Dixon says.

And where solar soared, Dixon also notes that it was another average month for gas generation on the NEM at a total of just 426 GWh – the lowest for the month of October since the NEM began.

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