{"id":455794,"date":"2026-02-03T13:53:11","date_gmt":"2026-02-03T13:53:11","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/455794\/"},"modified":"2026-02-03T13:53:11","modified_gmt":"2026-02-03T13:53:11","slug":"renewables-over-50-wholesale-prices-down-is-the-energy-transition-succeeding","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/455794\/","title":{"rendered":"Renewables over 50%, wholesale prices down \u2013 is the energy transition\u2026 succeeding?"},"content":{"rendered":"

Ten years ago, if a heatwave as intense as last week\u2019s record-breaker<\/a> had hit the east coast, Australia\u2019s power supply may well have buckled. But this time, the system largely operated as we needed, despite some outages<\/a>. <\/p>\n

On Australia\u2019s main grid last quarter, renewables and energy storage contributed more than 50%<\/a> of supplied electricity for the first time, while wholesale power prices were more than 40% lower than a year earlier. <\/p>\n

Australia\u2019s long, complicated and difficult energy transition is finally working. As our recent research suggests, if these trends continue \u2013 and nothing new goes wrong \u2013 we should begin to see<\/a> lower retail electricity bills by mid-2026. As more coal plants close and new transmission and storage infrastructure is delivered, electricity prices could rise again. But overall, shifting demand from gas and coal for power and petrol for cars is likely to deliver significantly lower energy bills for households. <\/p>\n

It\u2019s not yet job done and challenges remain, but the immediate trends are positive. <\/p>\n

Renewables and batteries up, wholesale prices down<\/p>\n

Last quarter, wind generation was up<\/a> almost 30%, grid solar 15% and grid-scale batteries almost tripled their output. Gas generation fell 27% to its lowest level for a quarter century, while coal fell 4.6% to its lowest quarterly level ever. <\/p>\n

Gas has long been the most expensive<\/a> way to produce power. Gas peaking plants tend to fire up only when supply struggles to meet demand and power prices soar. Less demand for gas has flowed through to lower wholesale prices. <\/p>\n

That doesn\u2019t mean consumers will see immediate benefit, as wholesale prices are only about 40%<\/a> of a power bill and most retailers move prices once a year. But if lower wholesale prices are sustained, it should begin to bring relief to consumers. <\/p>\n

\"solar<\/a><\/p>\n

Solar and wind farm power output jumped noticeably in the last quarter of 2025.
\n Mick Tsikas\/AAP<\/a><\/p>\n

Power system holding up under strain<\/p>\n

Last quarter was unusually good<\/a> for the system. In recent years, many ageing coal plants have become less reliable<\/a>. But the old plants held up at critical times. Rain filled Snowy Hydro\u2019s reservoirs, giving hydro power a boost, while solar and wind produced well. <\/p>\n

In early January, intense bushfires ripped through grasslands, forests and several Victorian towns. Some areas lost power when timber power poles burned<\/a> or when trees fell on transmission lines. Sustained heat can cause power substations or transformers to fail more often. But these issues were mostly localised. <\/p>\n

Until recently, summer heatwaves put real strain on the power grid, as millions of people fired up their air conditioners at once. But this summer, the system largely dealt fine<\/a>. Not only were most fossil generators available most of the time, but high output from rooftop solar pairs exceptionally well with demand for air-conditioning.<\/p>\n

Electricity storage expanding<\/p>\n

Until very recently, electricity had to be made immediately before use. Storing it was only possible in expensive and uncommon pumped hydro facilities. This is why batteries are proving revolutionary. For the first time, power can be made and easily stored for later use. <\/p>\n

Plummeting battery prices have led to a surge in installations<\/a> in Australia. Since 2024, close to 4,000 megawatts of grid storage has come online. Until recently, grid batteries found more use stabilising the grid<\/a> than powering it. But the growing fleet of grid-scale batteries is now beginning to outcompete gas<\/a> by soaking up surplus solar and wind and releasing it during evening peaks. <\/p>\n

At smaller scale, the government\u2019s home battery rebate has been hugely popular, leading to cost blowouts<\/a> and very rapid uptake. Many householders have found them a lifeline<\/a> during power outages. <\/p>\n

In the future, medium-scale community batteries able to power towns or suburbs could help boost grid resilience<\/a>.<\/p>\n

Transmission delays mean coal is needed longer<\/p>\n

Hitting higher levels of renewables will require new transmission lines<\/a>. Some of these are on track, but others are well behind<\/a>. <\/p>\n

This is one reason NSW\u2019s Eraring coal plant will sensibly keep running<\/a> until 2029. Delays completing the new NSW-South Australia transmission line, EnergyConnect, also pushed back the planned closure<\/a> of the Torrens Island gas power plant near Adelaide.<\/p>\n

Gas plays an important role<\/p>\n

Gas will be needed for longer than coal, given it can fire up quickly and fill gaps when wind and sun aren\u2019t abundant. It won\u2019t be used much, but will be an essential backup. <\/p>\n

The role of gas is changing, but the gas market has its own challenges. Governments are trying to address longstanding gas market problems. Late last year, the federal government flagged a mandatory east coast gas reservation scheme<\/a>.<\/p>\n

Victoria at the pointy end<\/p>\n

There are problems looming for Victoria, Australia\u2019s most gas-dependent state. Bass Strait wells are running dry<\/a> and most of Queensland and WA\u2019s gas is exported as liquefied natural gas (LNG). The Victorian government recently opened<\/a> up new areas for gas exploration after previously rejecting the idea. <\/p>\n

A new plan<\/a> by federal, state and territory energy ministers may see the Australian Energy Market Operator gain more power to intervene in the gas market, potentially through contracting for new infrastructure such as pipelines and import terminals. <\/p>\n

The state government is trying to shift away from gas<\/a>, but it\u2019s a slow process. <\/p>\n

The Victorian government has high hopes for offshore wind farms to take advantage of the stronger and more reliable winds whipping across Bass Strait. But progress towards the goal of 2 gigawatts by 2032 has been slow and no turbines have yet been installed. <\/p>\n

Some developers have withdrawn applications amid global uncertainty<\/a> and delays to the auction process. Last week, Victoria announced<\/a> the process would finally begin in August. The question is whether there\u2019s enough time left to replace retiring coal plants with new offshore wind. <\/p>\n

\"close<\/a><\/p>\n

Victoria is pinning its hopes on Bass Strait\u2019s strong, reliable winds.
\n Mitchell Luo\/Pexels<\/a>, CC BY-NC-ND<\/a><\/p>\n

Yes, it\u2019s progress<\/p>\n

It wasn\u2019t so long ago it was popular to claim Australia\u2019s grid could never accommodate more than 20% renewables. Now we\u2019re at 50%. <\/p>\n

That\u2019s not to say it will be smooth sailing. The government\u2019s goal of 82% renewables in four years looks to be a stretch. But it\u2019s clear real progress is being made \u2013 and not a moment too soon.<\/p>\n","protected":false},"excerpt":{"rendered":"Ten years ago, if a heatwave as intense as last week\u2019s record-breaker had hit the east coast, Australia\u2019s…\n","protected":false},"author":2,"featured_media":455795,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[43,44,41,39,42,40],"class_list":{"0":"post-455794","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-headlines","8":"tag-headlines","9":"tag-news","10":"tag-top-news","11":"tag-top-stories","12":"tag-topnews","13":"tag-topstories"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/455794","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=455794"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/455794\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/455795"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=455794"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=455794"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=455794"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}