Electricity prices in Australia

Update February 2026

“Landmark moment:” Prices plunge as renewables supply half of grid, batteries surge and coal hits new low in the December quarter.

The Australian Energy Market Operator (AEMO) has hailed the December quarter as a “landmark moment”, with wholesale electricity prices falling sharply, renewables meeting half of all demand for the first time, battery output surging and coal generation hitting a new low, reports the Renew Economy.

“In short, the quarter represented much of what the government and market bodies have been arguing for the last few years – more renewables and storage will bring down prices and emissions, and still keep the lights on.

“It reflects years of sustained investment and demonstrates that more wind, solar and battery capacity in the system reduces reliance on higher cost coal and gas generation, placing sustained downward pressure on wholesale electricity prices.

The Renew Economy notes that, as usual, average wholesale prices were lowest in the those states with the biggest share of wind and solar – such as Victoria and South Australia (both $37/MWh) – and highest in those most dependent on coal, NSW ($75/MWh) and Queensland ($58/MWh).

Read more from the Renew Economy.

October 2025

Understanding our electricity prices is complicated. In our article below, EcoNetwork’s Brian Tehan has explained simply and carefully how the various energy sources interplay to create our retail energy price.

Brian is not the only person trying to understand this complicated story. Clarke and Dawe delved into this a few years back; they nailed it then and it’s just as pertinent today. Take a look at their satirical sketch. Enjoy: Clarke and Dawe – The Energy Market Explained.

The Editors

By Brian Tehan, EcoNetwork

Consumer electricity prices in Australia are set by the Australian Energy Regulator (AER). The prices are made up of several components including the wholesale electricity price – the price the electricity generators bid into the National Energy Market (NEM).

You may have heard that current high energy prices are due to the increasing proportion of energy from renewable resources. Nothing could be further from the truth.

In recent years, significant energy wholesale price rises have been due to the major disruptions in global energy markets resulting directly from Russia’s invasion of Ukraine. Countries – particularly in Europe – scrambled to reduce their dependence on Russian oil and gas. This greatly increased global gas demand from non-Russia sources, and a consequential market driven increase in gas cost. The high price of gas led electricity producers to switch to coal, driving up its wholesale cost too. This impacted Australia by increasing the amount of gas exported from Australia, exposing our domestic market to higher global prices – partly because east coast Australia doesn’t hold any gas in reserve for domestic use.

Additionally, the ABC, October 2025, explains Why Santos is behind your soaring electricity and mortgage costs price.

Wholesale electricity prices in Australia

The following graph and table from NEM data shows the average wholesale price by energy source – ie, solar, wind, coal, etc over the past year. It’s clear that wholesale prices for solar and wind in the NEM were far cheaper than coal or gas. It’s also clear that the overall price would be significantly higher if we were only relying on coal and gas – even if you include hydro into the renewables mix.

National Energy Market 7 OCT 2024 – 10 OCT 2025 Get the latest NEW data here.

National Energy Market 7 OCT 2024 – 10 OCT 2025
	Total Generation GWh	Percentage of all generation	Average Price per MWh	Curent contribution to average price
Solar	46,547	21.0%	$37.10	$7.79
Wind	32,949	14.9%	$71.55	$10.66
Hydro	13,252	6.0%	$179.06	$10.74
Battery (Discharging)	1,282	0.6%	247.32	$1.48
Gas	10,521	4.8%	$250.30	$12.01
Distillate	43	0.02%	$956.93	$0.19
Bioenergy	347	0.2%	$139.20	$0.28
Coal	116380	52.6%	$118.74	$62.46
Pumps	-2086	-0.9%	$14.40
Battery (Charging)	-1620	-0.7%	$33.78

Total average wholesale electricity price				$105.62

Importantly, the average wholesale price ($105.62), is $13 less than the price of coal alone ($118.74), and $145 less than the price of gas alone ($250.30), because of the renewable energy contribution. Clearly, the wholesale cost would be higher without renewable energy and should continue to decrease with the increase in the proportion of renewables.

Retail electricity prices in Australia

The Australian Energy Regulator (AER) was set up to bring some order to the free for all in the privatised energy market.

Annually, the AER determines a Default Market Offer (DMO), which is the maximum retail price that customers can be charged in New South Wales, South Australia and south-east Queensland. (The other states and territories have their own regulated pricing.)

It is a safety net price for residential and small business customers on standing offer plans – ie the default plan a retailer will apply to a consumer who has not selected a specific market (usually discounted) offer. (Retail customers can compare market offers at ‘Energy Made Easy’ or ‘Victorian Energy Compare’ to find the cheapest plans available at any time compared with the DMO.)

The DMO price considers the annual change in wholesale energy costs, network costs, and includes a retailer component (ie retailer operating expenses, profit margin and government mandated charges). It is based on data from 12 months ago or more. This means that there is a lag between current wholesale market prices and conditions and the calculated DMO.

The AER determines different DMOs for different distribution areas. Port Stephens is in the Ausgrid area. The graph below, from the AER, shows the 2024/2025 determination and the increase over the previous year.

The graph displays the annual average household price. Note that the wholesale price is about 38% of the retail price. Assuming an increasing proportion of renewables, as shown previously, this percentage should decrease over time.

Also of note is that network costs have increased. This is due to about 10 years of very little infrastructure or energy builds in the now mostly privatised electricity network, meaning a significant backlog.

The complexity of the DMO calculation is evident in AER’s Default market offer prices ( 118-pages).

Energy subsidies

The renewable energy network is almost entirely privately owned and built. The main subsidy available is Large-scale Generation Certificates (LGCs). This is a tradeable certificate-based incentive program for renewable energy. Retailers must purchase LGCs if they don’t generate enough renewable energy and don’t meet the government’s renewable energy target. The LGCs are traded in an open market. Most, but not all, renewable energy projects get LGCs. Currently they are trading at about $11 per MWh which would be less than half a cent per kWh on your bill.

In Australia, fossil fuel subsidies are significantly larger than renewable energy subsidies, totalling $14.5 billion in 2023/2024 – while renewable energy receives federal and state support to mature its market. These fossil fuel subsidies are provided through direct payments, infrastructure development support and tax breaks (such as the Fuel Tax Credit Scheme). These subsidies make it cheaper to consume fossil fuels increasing reliance upon them and might hinder the transition to renewable energy.

In Summary

The renewable energy contribution is significant in bringing down the wholesale cost of electricity.

While coal and gas are the most expensive energy source in the mix, they also receive the greatest subsidies, slowing our transition to renewables.

In Port Stephens we’re fortunate to have AusGrid determining our Default Market Offer as it is the lowest.

Electricity prices in Australia