Australian households and businesses saw significant relief in wholesale electricity prices throughout 2025, primarily driven by the escalating penetration of wind, solar, and battery storage across the National Electricity Market (NEM). A new report from the Australian Energy Regulator (AER), released on 20 August 2026, details how these clean energy technologies eased market pressure, leading to substantial price reductions compared to the previous year.
The AER’s Wholesale Electricity Market Performance Report 2026, its fifth comprehensive review, found that wholesale electricity prices and revenue declined across all periods of the day in 2025 compared to 2024. Queensland experienced the most pronounced benefit, with average wholesale prices falling by $32.73 per megawatt-hour (MWh), from $127.73/MWh in 2024 to $95.00/MWh in 2025. New South Wales also saw considerable improvements, with prices dropping by $31.66/MWh, from $150.43/MWh in 2024 to $118.77/MWh in 2025.
“The National Electricity Market (NEM) is transforming from one market into many different markets within each region, defined often by the time of day and service type. Price outcomes increasingly depend on whether enough flexible capacity is available when it is needed.”
The Rise of Batteries as Price Setters
A pivotal finding of the AER report is the dramatically increased role of battery storage in setting wholesale prices. In 2025, battery generation and charging combined to set the wholesale price in the NEM for 16.3% of the time, a substantial increase from approximately 1% in 2021. This shift has seen batteries displace gas and hydro as more frequent price setters, particularly during periods of high demand.
At the close of 2025, Australia’s installed utility-scale battery storage capacity had surged to 6.1 GW, up from just 2.2 GW at the start of the year. This rapid expansion, from only five utility-scale systems totalling 261 MW in early 2021, has had a material impact on wholesale market outcomes.
Daytime Savings vs. Evening Peaks
The report highlights a clear divergence in price trends. While daytime wholesale prices continued to decline due to low-priced offers from abundant new wind and solar generation, evening peak and overnight prices remained significantly above pre-2021 levels. This indicates that while renewable energy is driving down costs during daylight hours, the challenge of firming capacity through the evening and night remains.
Black coal, despite the overall trend, remained the dominant price setter in Queensland and New South Wales, responsible for setting prices more than 40% of the time in 2025. However, this figure represents a significant reduction compared to 2021, underscoring the growing influence of solar and battery generation.
Implications for Consumers and Future Investment
While lower wholesale prices do not immediately translate to corresponding drops in household electricity bills due to retailers’ long-term contracts, sustained reductions are expected to gradually flow through to consumers. This trend reinforces the financial benefits of integrating consumer energy resources like rooftop solar and home batteries. Households participating in Virtual Power Plants (VPPs), for example, have consistently recorded some of the lowest electricity bills, as noted in previous ACCC reports.
For those considering how to further reduce their energy costs, understanding different electricity tariffs and investing in energy-efficient upgrades are crucial. Exploring options like joining a VPP can allow homeowners with batteries to earn income by supporting grid stability. You can learn more about these opportunities in our guides: Maximise Your Home Battery Savings: Earn $1,000+ Annually with a VPP in 2026 and Best Home Energy Monitoring Systems in Australia 2026: Unlock $1,000+ Annual Savings.
The AER’s report also touches upon the investment outlook for new capacity. While batteries currently present the strongest commercial case, the recent narrowing of price spreads is anticipated to weigh on future investment, with wind, solar, and gas facing weaker investment signals. Policy attention is now recommended to focus on reducing overnight and evening price pressure, as current battery deployments are better suited for evening peaks than overnight conditions where wind power plays a more relevant role.
Wholesale Price Changes Across NEM (2024 vs. 2025)
The AER’s data highlights the following average wholesale price changes across key NEM regions:
| Region | Average Price 2024 (AUD/MWh) | Average Price 2025 (AUD/MWh) | Change (AUD/MWh) | Percentage Change |
|---|---|---|---|---|
| Queensland | $127.73 | $95.00 | -$32.73 | -25.6% |
| New South Wales | $150.43 | $118.77 | -$31.66 | -21.0% |
| Victoria | Data not explicitly detailed for 2025 in snippet, but overall decline noted in report. | |||
| South Australia | Data not explicitly detailed for 2025 in snippet, but overall decline noted in report. | |||
| Tasmania | Data not explicitly detailed for 2025 in snippet, but overall decline noted in report. |
This robust performance of renewables and storage in 2025 offers a positive signal for long-term energy affordability, demonstrating the grid’s increasing resilience against wholesale market volatility, even as challenges remain for overnight supply. Understanding these dynamics is crucial for all Australians seeking to manage their energy costs. For more information on navigating your energy options, see our guide: Energy Plans No Lock-In Contracts Australia 2026: Complete Guide.