Energy Transition in Australia: Renewable Electricity Covers More Than Half of Demand in the Country’s Largest Electricity Market NEM - Wholesale Prices Drop Significantly

Sydney, Australia - Australia has reached a historic milestone in its energy transition: In the fourth quarter of 2025, renewable energy and storage for the first time supplied more than half of the electricity demand in the National Electricity Market (NEM). This is according to the latest Quarterly Energy Dynamics Report from the Australian Energy Market Operator (AEMO).

Average wholesale prices in the NEM were 50 AU$ per megawatt-hour (MWh), a decline of 44 percent compared with the fourth quarter of 2024. The price development was mainly driven by strong growth in renewable generation: electricity production from wind rose by 29 percent, and from solar farms by 15 percent. Battery storage delivered an average of 268 MW over the quarter, supported by 3,796 MW of new storage capacity added since the end of 2024.

At the same time, coal-fired generation fell to a historic quarterly low, down 4.6 percent, while gas-fired generation dropped 27 percent to its lowest level since 2000.

Violette Mouchaileh, Executive General Manager Policy and Corporate Affairs at AEMO, commented: “This is a landmark moment for the NEM. For the first time, renewables and storage supplied more than half of the system’s energy needs for a full quarter.” She emphasized that this reflects years of investment and demonstrates that increasing wind, solar, and battery storage capacity reduces reliance on expensive coal and gas generation and puts sustained downward pressure on wholesale prices. Rooftop solar reached a historic quarterly high of 4,407 MW (+8.7 percent), reducing operational daily demand and contributing to battery charging.

Many of the trends observed in the NEM are also reflected in the Wholesale Electricity Market (WEM) in Western Australia, where renewable energy and storage supplied a record 52.4 percent of demand. At times, the contribution of renewables reached 91.1 percent - also a record. Increased renewable and storage generation simultaneously contributed to a decline in coal- and gas-fired generation and reduced wholesale prices by 13 percent to 69.55 AU$/MWh.

In the East Coast gas market, a 3 percent drop in demand led to lower gas prices of 12.68 AU$/GJ, while in Western Australia both consumption and production declined slightly.

The results highlight the growing market impact of wind, solar, and storage, as well as the continued pressure on fossil fuel generation.

Source: IWR Online, Feb 02 2026