Australia’s wholesale electricity market saw prices ease across 2025 compared to the previous year, primarily driven by a significant increase in renewable energy generation and grid-scale battery storage. However, the Australian Energy Regulator (AER) warns that price pressure persists during evening peak and overnight periods, failing to return to pre-2022 levels in most regions.
In its Wholesale Electricity Market Performance Report 2026, released on 20 August 2026, the AER detailed how wholesale prices and revenue decreased across all periods of the day in 2025 compared to 2024. This positive trend reflects the growing influence of new, flexible generation capacity, particularly batteries.
“Batteries are increasingly shaping wholesale prices and strengthening competition during evening peaks when demand remains high and solar output is lower.”
Battery Storage Reshapes Market Dynamics
The report highlights the transformative role of battery storage. In 2025, battery generation and charging load collectively set the wholesale price in the National Electricity Market (NEM) for 16.3% of the time, a substantial increase from just 1% in 2021. This growing influence displaced gas and hydro as more frequent price setters.
Grid-scale battery capacity experienced rapid expansion, almost tripling from 2.2 gigawatts (GW) in 2024 to 6.1 GW in 2025. This surge in capacity has been instrumental in providing flexible supply, particularly during critical evening peak times when solar generation declines and demand remains high.
Further data from the Bloomberg New Energy Finance (BNEF) Australia Power Market Quarterly report, also released on 20 August 2026, reinforces these trends. It found that average power prices across the NEM fell between 40% and 65% year-on-year in the second quarter of 2026. Realised battery arbitrage spreads, a key revenue stream for storage operators, plunged by 84% in Q2 2026, averaging AU$103/MWh – a 79% year-on-year decline. This suggests increased competition among the expanding battery fleet.
Uneven Price Relief and Regional Variances
While the overall picture for 2025 shows easing wholesale prices, the relief has been uneven. Prices during the evening peak and overnight periods remained materially above pre-2022 levels in every NEM region except Queensland. This indicates that despite the influx of renewables and batteries, sustained pressure remains when solar output is lower and demand is high.
Queensland experienced the most significant wholesale price reductions in 2025, with prices falling by AU$32.73 per megawatt-hour (MWh) from AU$127.73/MWh in 2024 to AU$95.00/MWh. New South Wales also saw substantial improvements, with prices decreasing by AU$31.66/MWh, from AU$150.43/MWh in 2024 to AU$118.77/MWh. South Australia recorded a fall of AU$18.59/MWh.
Looking at more recent data, the Australian Energy Market Operator’s (AEMO) Quarterly Energy Dynamics report for Q2 2026 indicated that average wholesale prices in the NEM fell to AU$74/MWh, the lowest June quarter average since 2020. Victoria experienced the largest decline, with prices dropping 60% to AU$56/MWh.
Market Fragmentation and Future Challenges
The AER’s report describes a fundamental shift where the NEM is “transforming from one market into many different markets within each region,” with outcomes increasingly dependent on the availability of flexible capacity at specific times and locations.
This market evolution presents both opportunities and challenges. While the proliferation of batteries and renewables is driving down overall wholesale costs, the AEMC’s Residential Electricity Price Trends report (released 5 August 2026) projects that residential electricity unit prices could rise by 13% from 2030–2035 if new generation, battery, and transmission projects are not delivered faster than currently anticipated.
For households and businesses, understanding these evolving market dynamics is crucial. Engaging with demand response programs, such as joining a Virtual Power Plant (VPP), can help consumers leverage their home batteries to benefit from grid stability payments and potentially earn up to AU$1,500 annually.
Furthermore, optimising energy consumption through technologies like Home Energy Monitoring Systems can help Australians better manage their electricity usage and respond to changing price signals, particularly during those persistent evening peaks.
Key Wholesale Price Changes (2024 vs. 2025)
| Region | Average Wholesale Price 2024 (AUD/MWh) | Average Wholesale Price 2025 (AUD/MWh) | Price 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% |
| South Australia | Not specified in detail | Not specified in detail | -$18.59 | Not specified in detail |
Note: Specific 2024 and 2025 average prices for South Australia were not detailed in the available snippets, only the change amount.
The AER’s findings underscore the ongoing transition of Australia’s energy landscape, where the benefits of renewables and storage are increasingly evident, but strategic investment and consumer engagement remain vital to manage costs and ensure reliability.