LITTLETON, Colorado, Feb 10 (Reuters) - Australia's wholesale electricity prices fell to the lowest in four years in 2025, bucking the rising price trends seen elsewhere and validating claims that renewables-heavy power system overhauls can help lower consumer power costs.

Increased battery storage capacity and solar farms should allow utilities to limit operating costs, with those savings potentially passing through to households and businesses as soon as this year.

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Australia's electricity system has undergone one of the world's most aggressive revamps over the past decade, with clean electricity output more than doubling since 2019, according to data from energy think tank Ember.

That growth rate far exceeds the 39% rise in global clean electricity supplies over that period. Europe saw a 12% rise in clean output, while North America saw a 16% rise.

Australia's power generators also cut fossil fuel electricity supplies by more than that seen at the global, European and North American levels since 2019, earning its status as a global stand-out in energy transition momentum.

RISING CLEAN SHARE, FALLING PRICES

Australia's rapid build-out of clean power capacity resulted in a critical power mix milestone being reached in 2025, when more utility electricity supplies came from clean power sources than fossil fuels for the first time.

Considering that fossil fuels still accounted for more than 70% of Australia's electricity mix through most of 2021, the pace of clean power growth since then underscores the extent of Australia's utility sector retooling.

Such speedy overhauls of national energy systems have generally been accompanied by steep increases in consumer electricity bills as utilities passed on the costs from new generation capacity and network upgrades.

And Australians have certainly faced their fair share of energy inflation in recent years: average national electricity prices surged by more than 200% in 2022 alone, and since then have averaged 60% more than the levels seen in 2020 and 2021.

However, price dynamics across Australia's largest wholesale electricity markets over the past year or so suggest that the trend may now be shifting the other way.

DOUBLE-DIGIT DECLINES

Wholesale electricity prices across New South Wales, Queensland, Victoria and South Australia declined by an average of 11% in 2025 from 2024's totals, data from LSEG and Australian Securities Exchange (ASX) shows.

Queensland prices recorded the largest year-over-year fall at 15%, followed by New South Wales' 13% drop.

Prices in New South Wales - Australia's largest state with the highest energy costs - averaged just under $109 per megawatt hour (MWh) in 2025, compared to nearly $125/MWh in 2024.

Prices in Queensland averaged around $95/MWh last year, which was the first annual reading below $100 since 2021.

The state of Victoria saw prices average around $75, while in South Australia prices averaged around $89/MWh.

PROTRACTED PASS-THROUGH

There can be a long lead time between shifts in wholesale markets and consumer bills, and Australian households have yet to see much benefit from 2025's broad declines in wholesale electricity prices.

That said, thanks to record deployment of battery energy storage capacity in recent years, utilities are well placed to meet rising electricity demand through battery systems and solar farms that can help further cut output from fossil-fuel power plants.

That in turn should allow them to limit overall operating costs and potentially pass on electricity generation savings to households and businesses.

Following an overall inflation rate of nearly 4% in 2025, Australians will be grateful for any reductions in key household bills going forward.

But the future trend in Australian electricity costs will be tracked well beyond the country's borders, as utilities in Europe, North America and elsewhere weigh whether the clean power paths taken Down Under can be replicated in other markets.

The opinions expressed here are those of the author, a columnist for Reuters.

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https://www.reuters.com/markets/commodities/australias-renewables-boom-delivers-coveted-power-price-payoff-2026-02-10/