The Australian Energy Regulator’s (AER) latest Wholesale electricity market performance report finds wholesale electricity prices fell across all National Electricity Market (NEM) regions in 2025, as fewer extreme price events and growing wind, solar and battery supply helped ease pressure in the market.
Installed battery capacity almost tripled during the year, rising from 2.2 GW to 6.1 GW, adding flexible supply during evening peaks when demand remains high and solar output is lower.
The report says new entry and more diverse ownership of generation is improving competition, but pressures remain at certain times of day and in particular regions. Evening and overnight prices remain higher than they were in 2021 in most regions, when the market relies more heavily on dispatchable generation.
The report also finds that coal’s role in the market is changing. Higher fuel costs reduced low-priced offers. This reduction led to coal setting the price less frequently, but at higher levels.
AER Board member Jarrod Ball said batteries have demonstrated the benefits of bringing new storage capacity into the market and are becoming an increasingly important source of competition, but timely delivery of new capacity would be critical, particularly as coal exits approach.
“Batteries are increasingly shaping wholesale prices and strengthening competition during evening peaks, when demand remains high and solar output is lower,” Mr Ball said.
“This is a significant shift, but batteries alone will not resolve every pressure in the market. Increasing flexible supply, storage, transmission and demand response to provide necessary capacity in the right places at the right times of day will become increasingly important as coal generators retire.”
The AER report recommends shifting flexible demand into solar-rich hours and strengthening incentives for the timely delivery of government-supported projects, providing the capacity needed to keep the market reliable and competitive.
While wholesale costs are a component of retail prices, Mr Ball said movements in the wholesale market typically take time to flow through to household and small business bills.
“Those wholesale market outcomes do matter for households and small businesses, but changes in wholesale prices do not flow through to retail bills immediately or dollar-for-dollar,” Mr Ball said.
The report also finds contract markets have largely stabilised since 2022, helping retailers manage wholesale price risk.
Looking ahead, the AER will continue to adapt its monitoring as the NEM becomes increasingly differentiated by time of day and service type, including monitoring changes in bidding and rebidding activity and providing guidance as the market evolves.
About the report
The AER reviews the performance of the wholesale electricity market under the National Electricity Law. This annual review assesses whether the NEM is competitive, efficient and reliable through the energy transition and also provides advice to energy ministers on reforms needed to address significant risks.
This is our fifth review of wholesale electricity market performance. It examines how market performance has changed over the past five years, with a particular focus on outcomes in 2025. The report identifies where market outcomes have improved, where risks are becoming more concentrated, and what this means for policymakers as the NEM transitions to a lower-emissions system.
Wholesale electricity prices by region
- Queensland: down by $32.73/MWh, from $127.73/MWh in 2024 to $95.00/MWh in 2025
- New South Wales: down by $31.66/MWh, from $150.43/MWh in 2024 to $118.77/MWh in 2025
- South Australia: down by $18.59/MWh, from $132.50/MWh in 2024 to $113.91/MWh in 2025
- Victoria: down by $6.41/MWh, from $101.09/MWh in 2024 to $94.68/MWh in 2025
- Tasmania: down by $1.48/MWh, from $101.81/MWh in 2024 to $100.33/MWh in 2025