Australia’s energy markets are undergoing a major transformation amid the shift toward decarbonisation, the decentralisation of energy services, and advances in technology, according to the Australian Energy Regulator’s (AER) State of the Energy Market 2025 report.
The report, the AER’s 18th edition, provides an overview of national electricity and gas markets, outlining key developments and trends shaping the sector.
AER Chair Clare Savage said the nation’s energy profile had shifted dramatically in the past decade, with 2024 standing out as a pivotal year.
“In 2024, over five gigawatts of new solar, wind, battery and gas capacity entered the National Electricity Market (NEM) – the largest annual new entry of capacity since the NEM began in 1998.
“By the end of the year, renewable technologies including rooftop solar, solar farms, wind, hydro and batteries made up 60 per cent of the NEM’s generation capacity and contributed 39 per cent of generation output, representing a significant increase over the past decade,” said Savage.
The year also saw new records for rooftop solar output, which grew 13 per cent to reach 23 gigawatts, and a sharp rise in residential battery installations, up 62 per cent on 2023.
The regulator said wholesale conditions highlighted the system’s increasing volatility as weather influences, shifting demand, outages in coal generation and networks, and diverse generation mixes interact to drive price outcomes.
Between July and September 2024, high wind output drove record negative pricing periods, while low generation alongside outages contributed to extremely high-price events.
Consumers are also reshaping the system, increasingly using rooftop solar and batteries, improving efficiency, and drawing less grid power during the middle of the day.
“As the system continues to evolve consumer energy resources must be effectively integrated and coordinated to help achieve a least-cost transition, with networks evolving to support these new energy services and ensuring they are utilising their full capacity,” Savage said.
While network costs were passed on to households, the report found overall charges declined.
In the 12 months to June 30, 2024, electricity network providers received $270 million (2.1%) less for regulated services, reducing average electricity bills by $36 compared to 2023.
The gas market is also shifting, with demand from households and small commercial customers making up 36 per cent of domestic use in 2024.
Spot gas prices were mixed, starting lower than 2023 in the first half of the year but climbing higher in the second half.
Retail price movements diverged across states. As of March 31, 2025, median electricity offers ranged from a 5 per cent decrease in South Australia to a 4 per cent increase in Queensland compared with a year earlier.
Gas offers ranged from an 18 per cent drop in Queensland to a 3 per cent rise in Victoria.
The regulator highlighted concerns about customer vulnerability. In the year to March 2025, both the number and proportion of residential customers in energy debt increased, with higher average debts recorded.
Disconnection levels remained low, affecting just 0.06 per cent of small electricity or gas customers.
The AER said it is working with market bodies and policy makers to strengthen consumer protections, including its review of payment difficulty protections under the National Energy Customer Framework and the Ministerial Council’s Better Energy Customer Experiences reform program.
