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Maguire: Australia's renewables boom will deliver a coveted price for power

Australia's wholesale power prices dropped to their lowest level in four years by 2025. This bucking of rising price trends elsewhere, and proving that a power system overhaul based on renewables could help reduce?consumer electricity costs.

The increased battery storage capacity of solar farms and the reduction in operating costs should enable utilities to reduce their operating costs. These savings could be passed on to consumers and businesses this year.

According to Ember, an energy think tank, Australia's electrical system has been undergoing one of the'most aggressive' overhauls in the last decade. The clean electricity production has more than doubled since 2019.

This growth rate is far greater than the 39% increase in clean electricity worldwide over this period. Europe experienced a 12% increase in clean output while North America experienced a 16% increase.

Since 2019, Australia's electricity generators have also reduced fossil fuel electricity supply by more than what is seen in Europe, North America and the rest of the world. This has earned Australia its position as a global leader in energy transition momentum.

CLEAN SHARE RISING, PRICES FALLING

The rapid expansion of Australia's clean power capacity led to a crucial power mix milestone in 2025 when, for the first-time ever, more electricity was supplied by?clean energy sources than fossil fuels.

The pace of growth in clean energy since then is a testament to the extent of Australia’s utility sector's retooling.

As utilities pass on the costs of?new generation and network upgrades,' such rapid overhauls have been accompanied with steep increases in electricity bills for consumers.

Australians certainly have experienced their fair share of energy price inflation over the past few years. The average national electricity price jumped by more than 200% just in 2022, and has since risen to an average 60% higher than what it was in 2020 and 2021.

The price dynamics of Australia's biggest wholesale electricity markets in the last year or two suggest that this trend is now shifting to the opposite.

DOUBLE DIGIT DECLINES

Data from LSEG (Australian Securities Exchange) and LSEG shows that wholesale electricity prices in New South Wales, Queensland and Victoria, as well as South Australia, declined by an average 11% from the totals of 2024.

Queensland's prices fell the most, by 15%. New South Wales followed with a 13% decline.

In 2025, the average price of energy in New South Wales (Australia's largest state) was just under $109 per megawatt-hour (MWh), compared to $125/MWh for 2024.

The average price in Queensland was $95/MWh, the lowest annual figure since 2021.

In Victoria, prices were around $75/MWh while in South Australia they were around $89/MWh.

PROTRACTED Pass-Through

The wholesale market changes can take a long time to reflect in consumer bills. Australians have not yet seen the benefits of wholesale electricity price declines that will occur in 2025.

This?said that thanks to the record deployment of battery storage capacity in recent year, utilities are well-placed to meet increasing electricity demand by using battery systems and solar farm, which can help further reduce output from fossil fuel power plants.

This should enable them to reduce their overall operating costs, and pass on any savings in electricity generation to consumers and businesses.

Australians are grateful for any future reductions to their household bills, especially after an inflation rate of almost 4% by 2025.

The future of Australian electricity prices will be closely monitored by utilities from Europe, North America, and other countries, who will assess whether the clean energy paths taken in Australia can be replicated elsewhere.

These are the opinions of the columnist, an author for.

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(source: Reuters)