The key market operator has applauded a ‘milestone’ moment for Australia’s energy market as renewables surged past the halfway market for the first time, driving new lower prices.
The AEMO’s latest quarterly report analysing the National Electricity Market (NEM) for wholesale electricity prices, show they nearly halved in the December 2025 quarter, driven by record renewable generation.
Renewables, including energy storage, delivered 51.0 per cent of overall supply, up from 46 per cent in Q4 2024, with generation records broken across the sector including roof-top solar.
Distributed PV (rooftop solar) output reached an all-time quarterly high at 4,407 MW (+8.7 per cent) and offsetting daytime demand.
Grid-scale solar and wind output set a new quarterly average output record of 6,627 MW, up 23 per cent from Q4 2024, with output increases of 29 per cent for wind and 15 per cent for grid-scale solar.
Battery nearly tripled to average 268 MW, with 3,796 MW / 8,602 MWh of new large-scale battery capacity added to the grid since the end of Q4 2024.
As a result, the AEMO’s latest Quarterly Energy Dynamics report shows wholesale electricity prices averaged $50 per megawatt hour (MWh) across the NEM, a $39/MWh (-44 per cent) reduction from Q4 2024 and a $37/MWh (-43 per cent) decline from Q3 2025.
Coal-fired generation fell to an all-time quarterly low, down 4.6 per cent year-on-year, while gas-fired generation dropped 27 per cent to its lowest level since Q4 2000.
Milestone
AEMO Executive General Manager Policy and Corporate Affairs, Violette Mouchaileh, said the quarter marked a significant milestone for Australia’s energy transition.
“This is a landmark moment for the NEM. Mouchaileh said “For the first time, renewables and storage supplied more than half of the system’s energy needs for a full quarter,”.
“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,” she said.
New minimum operational demand records were set for the NEM (down 4 per cent to 9,666 MW), Victoria (1,287 MW), Tasmania (678 MW) and South Australia (-263 MW).
In the East Coast Gas Market, a 3 per cent reduction in total demand, largely driven by lower liquefied natural gas (LNG) export requirements in Queensland and reduced gas-fired generation, saw wholesale gas prices fall to $12.68 per gigajoule.
Gas production declined across all regions; however, Queensland LNG export demand fell faster than the associated supply reduction, making an additional 2.3 petajoules (PJ) available for the domestic market. This, coupled with an overall reduction in demand, increased flows from Queensland to southern states and helped offset an 8.9 PJ decline
The report also found In Western Australia’s domestic gas market, consumption fell 9.3 per cent to 94.5 PJ, while production dropped 1.7 per cent to 102 PJ.
“Greater renewable and storage output continued to place downward pressure on wholesale energy prices in Western Australia, contributing to a 13 per cent fall to $69.55/MWh,” Mouchaileh said.
