The Australian Energy Regulator’s (AER) latest wholesale electricity market performance report for 2025 reveals substantial price reductions across all National Electricity Market (NEM) regions, a trend largely attributed to the surge in wind, solar, and battery storage capacity. Recent analysis, published on August 19, 2026, underscores how these clean energy technologies are actively reshaping market dynamics and putting downward pressure on wholesale electricity costs for Australian households and businesses.
The report indicates that wholesale electricity prices fell across all NEM regions in 2025. Queensland experienced the most significant reduction, with prices dropping by $32.73 per megawatt-hour (MWh) from an average of $127.73/MWh in 2024 to $95.00/MWh in 2025. New South Wales also saw considerable improvements, with prices decreasing by $31.66/MWh, from $150.43/MWh in 2024 to $118.77/MWh in 2025.
This positive shift is primarily driven by a near tripling of installed battery capacity, which grew from 2.2 GW in 2024 to an impressive 6.1 GW in 2025. This increased flexible supply during evening peak demand periods, when solar generation typically wanes, has made the market less vulnerable to price spikes caused by supply shocks or high demand.
“Batteries are playing an increasing role in pricing formation. They are now setting the price 31 per cent of the time rather than 16 per cent of the time last year.”
This statement, attributed to Department of Climate Change deputy secretary Matt Brine in earlier discussions related to the 2025 data, highlights the profound impact of battery storage. The growing ability of batteries to provide rapid response and firming services means less reliance on more expensive gas and coal-fired generation during critical periods, directly contributing to lower wholesale prices.
The Role of Renewables and Storage in Price Mitigation
The AER’s findings corroborate broader trends observed in Australia’s energy transition. The increased output from wind and solar farms, combined with the strategic deployment of battery storage, is displacing more expensive fossil fuel generation. This is particularly crucial during peak demand times, such as hot summer evenings or cold winter mornings, when historically, gas peaker plants would be dispatched at higher costs.
While wholesale prices do not immediately translate dollar-for-dollar to residential and small business electricity bills, they are a fundamental component of retail energy costs. Sustained reductions in wholesale prices create a downward pressure on the Default Market Offer (DMO) and Victorian Default Offer (VDO), which act as a safety net for customers on standing offers and a reference point for market offers. This means that over time, these wholesale savings should flow through to consumers.
For Australian households and businesses looking to further capitalise on these market shifts, investing in behind-the-meter solutions like rooftop solar and home batteries offers direct control over energy costs. The federal government’s Cheaper Home Batteries Program has already seen over 500,000 installations, demonstrating a strong uptake in consumer-led energy independence.
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State-by-State Wholesale Price Changes (2024 vs. 2025)
| Region | 2024 Average Wholesale Price ($/MWh) | 2025 Average Wholesale Price ($/MWh) | Price Decrease ($/MWh) |
|---|---|---|---|
| Queensland (Energex) | $127.73 | $95.00 | $32.73 |
| New South Wales (Ausgrid) | $150.43 | $118.77 | $31.66 |
| South Australia (SA Power) | Data not specified in source | Data not specified in source | Data not specified in source |
| Victoria (CitiPower) | Data not specified in source | Data not specified in source | Data not specified in source |
| Tasmania (TasNetworks) | Data not specified in source | Data not specified in source | Data not specified in source |
Note: Specific average prices for South Australia, Victoria, and Tasmania for 2024 and 2025 were not explicitly detailed in the cited source, only that prices fell across all NEM regions.
This significant shift in wholesale pricing dynamics highlights the increasing maturity and impact of Australia’s renewable energy transition. As more renewable generation and battery storage come online, the market becomes more resilient and less prone to the volatile price spikes that have characterised previous years. This trend is a crucial indicator for the future affordability and stability of Australia’s energy landscape, offering a tangible benefit to consumers grappling with cost-of-living pressures. Efforts to support energy efficiency and smart energy management continue to be vital in translating these wholesale savings into direct bill reductions.
For those seeking immediate relief, government programs remain available. Australia’s Energy Bill Relief Fund 2026: Your Guide to Current Support and Savings provides an overview of available support. However, the long-term structural changes in the wholesale market, driven by renewables and batteries, represent a more sustainable pathway to lower energy costs.