Wholesale electricity prices fell across all regions of the National Electricity Market (NEM) in 2025, driven by the increased use of renewables and battery storage, according to the Australian Energy Regulator’s (AER) annual market performance report.
A surge in wind, solar, and battery storage helped ease market pressures and reduced the frequency of extreme price spikes. Installed battery capacity nearly tripled over the year, expanding from 2.2 gigawatts (GW) to 6.1 GW.
This rapid scale-up provided critical flexible power during peak evening periods when household demand stays elevated and solar output drops off.
Price reductions were recorded across every eastern state, led by steep declines in Queensland, down by AU$32.73 from AU$127.73 to AU$95.00 per megawatt-hour (MWh), and New South Wales, which fell AU$31.66 to AU$118.77/MWh.
South Australia dropped AU$18.59 to AU$113.91/MWh, while Victoria and Tasmania recorded smaller decreases to sit at AU$94.68/MWh and AU$100.33/MWh respectively.
AER Board member Jarrod Ball said that while storage expansion is transforming the market, ongoing grid investment remains essential.
“Batteries are increasingly shaping wholesale prices and strengthening competition during evening peaks,” Ball said.
“This is a significant shift, but batteries alone will not resolve every pressure in the market. Increasing flexible supply, storage, transmission and demand response to provide necessary capacity in the right places at the right times of day will become increasingly important as coal generators retire.”
The report noted coal’s changing role in the grid, with higher fuel costs prompting higher-priced bids and causing thermal plants to set the market price less frequently, but at steeper rates.
Clean energy advocates welcomed the report. Climate Council CEO Amanda McKenzie said the data clearly demonstrates that clean generation lowers energy costs.
“The evidence just keeps stacking up that solar and wind, backed by batteries, is driving power prices down,” McKenzie said.
“It’s economics at work: put more of the lowest cost electricity into the system and you drive power prices down.”
The AER cautioned that while wholesale market conditions have improved, cost reductions will take time to filter down to consumer retail bills.
