After years of painful bills, Australian households may finally be getting a small dose of good news. Wholesale electricity prices have plunged, driven by a surge in renewable energy and a run of mild weather. It’s the first real sign that the country’s clean energy shift could start easing power costs — at least for now.
Renewables Power the Price Drop
Fresh analysis from The Australian, using data from the Australian Energy Market Operator (AEMO), shows that wholesale electricity prices across the National Electricity Market (NEM) tumbled sharply in the final quarter of 2025. The biggest drops came in New South Wales and Queensland, where prices more than halved compared with a year earlier, following months of extreme volatility.
Victoria and South Australia also recorded price falls, though less pronounced. Analysts point to the rise of renewable generation, which now makes up nearly half of Australia’s total electricity output. Higher solar and wind production during daylight hours has helped reduce reliance on coal and gas — and by extension, the expensive price spikes those fuels often trigger.
It’s a clear milestone for Australia’s energy transition. The combination of strong renewable output, fewer unplanned outages, and less extreme weather has created a calmer electricity market.
What Falling Wholesale Prices Really Mean
Wholesale prices matter because they play a major role in determining the default market offer — the regulated benchmark that influences household electricity bills. When wholesale prices fall, it usually signals that retail tariffs could ease in the months ahead, explains The Australian.
Still, it’s not an instant fix. The Australian Energy Regulator (AER) updates the default offer only once a year, with the next review expected in March. Even then, the benefit may take time to flow through, since energy retailers typically buy electricity months or even years in advance to protect themselves from volatility.
Renewable Growth Comes With Caveats
Renewables — including solar, wind, hydro, and battery storage — accounted for about 46% of total electricity generation in the December quarter, up from 42% a year earlier. But experts caution that the system still depends heavily on coal and gas during peak evening periods, particularly in winter when solar output fades.
This seasonal imbalance remains one of the biggest challenges for the transition. While summer conditions and sunlight boost renewable performance, cold spells can still drive prices higher when older coal plants are setting the marginal cost.
A Political Win, for Now
For the federal government, the data offers a welcome reprieve. Electricity costs have become a political headache, with households struggling under cost-of-living pressures and critics accusing the government of mishandling the transition. The recent fall in wholesale prices gives ministers a much-needed opportunity to argue that cleaner energy is finally starting to deliver cheaper power.
But the optimism comes with a warning. Analysts say the current price relief depends on steady renewable performance and benign weather. A hotter-than-expected summer or another round of coal outages could quickly reverse the trend.
