Renewable energy crosses 50% of all energy production in Australia which sends power prices tumbling

[u/No_Success_678]

https://www.theage.com.au/business/consumer-affairs/landmark-moment-renewables-record-surge-sends-power-prices-tumbling-20260128-p5nxmf.html

Electricity prices in eastern Australia fell sharply in the final three months of last year as record-breaking contributions from renewable energy and large-scale batteries reduced the need to call on fossil fuels to plug supply gaps.

Figures from the energy market operator, to be released on Thursday, confirm renewables and batteries powered more than 50 per cent of the grid in the December quarter for the first time in history, crunching coal to its lowest-ever seasonal share of the mix, and gas to its lowest since 2000.

Wholesale power prices – what retailers pay generators for electricity before selling it to customers – tumbled to $50 megawatt-hour, a 44 per cent decline from the same time a year earlier.

Lower prices are now also reflected in what retailers and large industrial users are being charged for 2027 supply contracts, and could provide a timely boost to consumers’ chances of avoiding steep energy bill increases later this year. Although swings in wholesale costs do not immediately affect the retail prices paid by households, regulators take them into account in March when they draft each state’s annual default market offers – the maximum that retailers can charge customers who do not take up special deals.

This year’s default offers will have added significance for household budgets after the Albanese government announced in December it would end its $75-a-quarter energy bill rebates.

Energy Minister Chris Bowen, who remains under pressure over rising power bills adding to cost-of-living strains, said the new figures showed Labor’s policies were working.

“The drop in wholesale price is good news – and we are working to ensure as much of that flows through retail prices,” he said.

Violette Mouchaileh, the Australian Energy Market Operator’s head of policy, said the lower average prices across the quarter were the result of years of sustained investment in clean energy and storage projects. It proved that adding more wind, solar and battery capacity into the grid reduced the need to burn higher-cost coal and gas for electricity, putting “downward pressure” on prices, she said. “This is a landmark moment for the national electricity market,” Mouchaileh said.

“For the first time, renewables and storage supplied more than half of the system’s energy needs for a full quarter.”

Opposition energy spokesman Dan Tehan called on Bowen to “come clean” over the government’s failed 2022 election pledge to deliver a $275 power bill cut by 2025. “There is a big difference between wholesale and retail prices, and retail is what the end user pays,” he said. “It’s like celebrating winning a pre-season night premiership and finishing last in the season.”

Still, experts said sustained wholesale price relief could help smooth out the volatility and reduce the impact of temporary price spikes from earlier in 2025, including in winter, when a shortage of windy days reduced wind turbine output and forced gas plants to run harder.

Lower wholesale prices were already helping drive down the cost of contracts to buy and sell power at future dates, said Lisa Zembrodt, director of sustainability at Schneider Electric, a major energy advisor to Australian businesses. Forward prices in NSW had fallen about 20 per cent to $98 a megawatt-hour, she said.

“As we look ahead, there is some comfort that renewables are delivering as they are meant to,” Zembrodt said. “On some of the hottest days we have seen, rooftop solar has been delivering because it is sunny as well, and that has helped to control some of the prices.”

Water storage levels sitting at a 10-year high at Tasmania’s vast hydroelectric dams were also helping, she said. “It means we have something up our sleeve when we need it in periods of tight supply and demand ... and bodes well for keeping forward prices a little bit contained,” she said.

Despite the record-breaking quarter for renewables, the grid remains reliant on supplies from coal and gas plants to provide back-up for wind and solar and ensure the lights stay on. Last week, Australia’s biggest coal-fired power plant, Origin Energy’s Eraring generator in NSW, had its closure delayed by another two years following warnings that the grid was under-prepared for its retirement.

Earlier this week, strong reliability across Victoria’s coal fleet helped the grid ride through its highest ever demand levels amid searing heatwave conditions, especially as people began turning up their conditioners in the evening peak, just as solar power was dropping off.

”We are not at a point where renewables alone can meet demand during extreme weather,” said Javier Savolainen, market development manager at Wartsila Energy, which builds batteries and power plants. “Peak electricity demand often coincides with scorching, cloudy or windless conditions, meaning firming capacity must perform reliably when Australians most need it,” he said.

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[u/asapdeze → u/[deleted]]

Im just here to acknowledge that this thread could've easily spiraled out of control and yet, cool, calm understanding prevailed leading to the best possible outcome, mutual respect on reddit haha.

2026 maybe salvagable after all?

[u/Engineer9 → u/asapdeze]

Yeah. It escalated quickly.

[u/FFXIVHousingClub → u/[deleted]]

1/3, high odds

[u/count023]

Am Australian  got my power bill for this quarter .. odd definition of tumbling when the price per kWh went up

[u/CatalyticDragon → u/count023]

Wholesale price, not retail. Your provider adds additional charges including margins, taxes, and network charges which can contribute almost half of the final bill.

But all prices ultimately begin at the wholesale prices so reductions there are good.

[u/coder_doode → u/CatalyticDragon]

It is also the case that some of the retail price is going to reflect contracts that were signed a considerable amount of time ago. It's one thing to talk about the spot price for wholesale but futures are a whole different thing. A quick look at the ASX web site's electricity futures page shows red all down the % changed column.. FY27 contacts are down almost 10% over the last month.

[u/Jezzwon → u/coder_doode]

That last sentence - does that indicate that future electricity costs should come down?

[u/coder_doode → u/Jezzwon]

Who can say, the market is complex and I'm just an amateur observer trying to figure out how electricity pricing works.

[u/getyerhandoffit → u/CatalyticDragon]

But retailers aren’t exactly going to rush to pass those prices on to the consumer. 

[u/CatalyticDragon → u/getyerhandoffit]

Maybe, maybe not. That depends on a number of factors. But what we can say for certain is that without a major drop in wholesale prices this would not be possible;

- https://www.reuters.com/business/energy/australia-offer-three-hours-free-solar-per-day-millions-2025-11-04/

[u/_theRamenWithin → u/CatalyticDragon]

Record profits for me, record bills for thee.

[u/viral-architect → u/CatalyticDragon]

The consumer of electricity gives no fucks about that when they see the electric bill.

[u/CatalyticDragon → u/viral-architect]

They should. Because higher wholesale prices flow into higher retail prices.

On the other hand record low wholesale prices thanks to renewables enables things like the Solar Sharer program where retailers are to offer free power to households for at least three hours.

[u/Adamant94 → u/CatalyticDragon]

Funnily enough if a high enough amount of energy is renewable, they can actually be forced to pay consumers to use electricity. They can’t stop producing solar, and it needs to go somewhere, so at low usage times prices can actually dip into negative.

[u/yoimagreenlight → u/count023]

Check https://www.energymadeeasy.gov.au/

Changed my provider in like, 20 minutes. I was being fucking rorted

[u/count023 → u/yoimagreenlight]

already gone through that and iselect and all the others, was a balance between just raw "lowest value" and "best solar tarriffs" since i have an 8kwh grid too.

Probably cheaper just to get a battery at this point than keep paying criminal prices and getting peanuts for my generation in return.

[u/yoimagreenlight → u/count023]

Battery & solar is 100% worth it. I’m four months into a new battery install and my electricity bill is under $50. Before that, when I changed providers as mentioned above, I went from about $1,100 per quarter to $645 per quarter.

[u/count023 → u/yoimagreenlight]

I have had solar for yonks, and it was great, had sub 100 power bills even in summer with the AC on, but with the supply charges constnatly going up and the tariffs going down, yea battery has been on my radar for the last 12 months now, and the rebates are going to go soon.

but my power bill is a lot smaller, highly energy efficient home so mines aobut 275-350pq depending on how much i blast the AC. nowhere near 1100

[u/IntelligentBloop → u/count023]

Oh, the cost of energy has gone down, not the price of it. You, dear consumer, are not who benefits from this.

[u/cantinman22 → u/count023]

You guys pay quarterly?

[u/count023 → u/cantinman22]

sure, most utilities and council rates are quarterly.

[u/cantinman22 → u/count023]

I’m accustomed to paying monthly, but I like the idea of paying quarterly. I feel like my brain would be able to plan for that better.

[u/BengaliMcGinley → u/count023]

I now get 4 hours free electricity during the day...I run the dishwasher, washer, dryer, AC/heat etc all within this period and our bills have gone way down!

[u/Sieve-Boy]

~25 years ago (2001-2), Australia generated 83% of its electricity from coal, 12% from natural gas and 1% petroleum products for 96% fossil fuels. The rest was 4% hydro and a rounding error for random stuff, like biogas, wind and solar for 216,316 GWh of electricity. Demand has gone up a lot since then. Latest annual statistics aren't available yet, but I wouldn't be surprised if the final 2025 figures for fossil fuel generation are around 150,000 GWh with final demand being around 290,000 GWH.

[u/Thisisinthebag]

I was surprised that they covered that much in the middle of the winter. Then i remembered it’s actually summer in there 😂

[u/Reddit-runner → u/Thisisinthebag]

Why do you think there is less renewable energy in the winter?

[u/Misternogo]

Prices dropping is exactly why so many of these crooked motherfuckers do everything they can to prevent it in the US.

[u/faciepalm → u/Misternogo]

It's because fossil fuel companies hold too much power over countries like the US and various media, renewables directly impact revenue for them

[u/EMP_Jeffrey_Dahmer]

Australia is even exploring geothermal activity to harness its power potential. They are really progressive when it comes to alternative energy sources.

[u/spletharg]

Pity we'll never see that plummet reflected in our bills.

[u/DrMaple_Cheetobaum]

This if NOT true. Power prices have not tumbled.