Australia’s main electricity grid has reached a new milestone, with renewable energy sources supplying a record 43 per cent of power in the first quarter of 2025, according to the latest Quarterly Energy Dynamics Report from the Australian Energy Market Operator (AEMO).
This marks the highest first-quarter share of renewables in the National Electricity Market’s (NEM) 25-year history.
The surge in renewables-driven by significant growth in solar, wind, and battery storage — is credited with reducing wholesale electricity prices and cutting climate pollution by 5.1 per cent compared to the same period last year.
Key growth figures are as follows:
- Grid-scale solar generation rose 10 per cent year-on-year to an all-time high of 2,386 MW.
- Rooftop solar output expanded 16 per cent to 3,782 MW, setting a new Q1 record.
- Wind generation increased by 18 per cent to 3,517 MW.
- Battery output surged 86 per cent to a record 98 MW, fueled by new capacity entering the market.
Stephanie Bashir, CEO of Nexa Advisory, described the report as clear evidence of the positive impact of renewables and batteries on the energy system.
“The AEMO QED report clearly shows that increased market penetration of renewable generation and batteries is having a positive impact on the system dynamics, wholesale prices and emissions reductions,” Bashir said.
“That’s good for power security, reliability, and affordability.”
She emphasised the momentum of the transition, stating: “The record highs in grid-scale solar [increased by 10 per cent] and rooftop solar [grew by 16 per cent], coupled with increased wind [rose by 18 per cent] and batteries [surged by 86 per cent] in Q1 2025 really is a good demonstration that the energy transition is well underway and is unstoppable.”
However, Bashir warned that “transmission lines remain the missing link in the transition — we must unblock progress. Regional Australia matters. We cannot shy away from what is needed, we need to ensure we are supporting our regions to reap the benefits and bringing them with us on the journey.”
Tim Buckley, Director of Climate Energy Finance, highlighted the economic benefits: “The AEMO first quarter of 2025 report saw the national electricity market (NEM) benefit from the record high variable renewable energy penetration of 43 per cent, up 4 per cent year-on-year, driving lower average wholesale prices since the peak in mid-2024 despite record high methane gas prices and coal generation costs rising.”
Buckley also noted the grid stability provided by batteries and the strong pipeline of new projects: “There is a record 51GW of new wind, solar and battery proposals coming through the approvals process, up 37 per cent year-on-year, which will both accommodate increased electricity demand and cover for looming end of life coal fired power plant retirements.”
Johanna Bowyer, Electricity Analyst at IEEFA, underscored the impact on prices and emissions: “Renewables are carving out a bigger slice of the national electricity market while coal output decreases. Renewables provided 43 per cent of power supply across the NEM in Q1 2025.
“With rising renewables contribution, we are seeing downward pressure on wholesale prices, with prices zero or negative 18 per cent of the time across the quarter.”
Bowyer added: “Coal output and emissions fell to record Q1 lows and gas generation fell to the lowest Q1 level since 2004.
“Large-scale batteries are now earning 88 per cent of their revenue through the energy market — buying and storing abundant low-cost renewable power, which they sell back to the market in the evening when prices are higher.”
The report notes that while NEM-wide underlying demand reached a new Q1 record of 25,162 MW, operational demand dipped 0.8 per cent due to milder weather in some states.
Minimum operational demand records were set in Victoria and New South Wales, largely attributed to the growth in rooftop solar, which reached a new Q1 record of 11,680 MW.
Wholesale electricity prices averaged $83/MWh across the NEM, with coal and hydro prices rising, but these upward pressures were largely offset by increased renewable energy availability and fewer extreme price spikes.
In Western Australia, renewables supplied a record 41.6 per cent of the grid, while battery generation soared by 261 per cent. Rooftop solar’s share expanded to 20.5 per cent, and emissions intensity fell 5.7 per cent compared to Q1 2024.
AEMO’s Executive General Manager Policy & Corporate Affairs, Violette Mouchaileh, summarised the transition: “The impact of the transitioning electricity system was also seen, with a 5.1 per cent decline in total emissions, due to the combination of lower coal and gas-fired generation and higher renewable output.”
With a substantial pipeline of new wind, solar, and battery projects, industry experts say Australia is well-positioned to continue its rapid shift toward clean energy-provided infrastructure and policy keep pace with the accelerating transition.
