Higher renewable energy output and less market volatility contributed to a fall in wholesale electricity prices across all National Electricity Market (NEM) regions during the September 2025 quarter despite growing demand.
The Australian Energy Market Operator’s (AEMO’s) Quarterly Energy Dynamics report shows wholesale electricity prices for the NEM averaged $87 per megawatt hour (MWh) in the September quarter, a fall of 27% year-on-year and 38% since Q2 2025.
Queensland recorded the lowest average quarterly spot price of $72/MWh, followed by Victoria ($77/MWh), New South Wales ($90/MWh), Tasmania ($91/MWh) and South Australia ($104/MWh).
AEMO Executive General Manager Policy and Corporate Affairs Violette Mouchaileh said the fall in NEM wholesale electricity prices arose despite increasing demand as significantly colder weather fuelled increased heating requirements.
“The electricity demand growth was driven by colder weather, alongside broader trends of increasing electrification of homes, adoption of electric vehicles, and rising data centre consumption,” Ms Mouchaileh said.
Compared to Q3 2024, demand from grid-scale generation increased 2.3% to average 22,323 megawatts (MW), while underlying demand (grid-scale demand and rooftop solar) was up 3.2% to a new Q3 high of 25,154 MW.
Partially offsetting demand growth is an increasing wave of new generation and storage projects connecting to the NEM, with 1,600 MW progressing through commissioning to reach full output in Q3.
“The impact of increasing renewable energy and storage connecting to the NEM became more evident in September when milder temperatures and less cloudy days led to a new 77.2% renewable contribution record on 22 September – up from 75.6% in Q4 2024,” Ms Mouchaileh said.
An average NEM-wide minimum demand of 10,175 MW was reached for the quarter – making it a fresh Q3 low. NEM regions with new Q3 minimum demand records were New South Wales (3,265 MW), Queensland (2,790 MW) and South Australia (-14 MW).
Throughout Q3, the NEM experienced 11% growth in rooftop solar output, which contributed to the minimum demand records. Wind and grid-scale solar also rose in Q3 – each up by 16%.
“This growth, along with a slight dip in coal-fired power output, led to renewables averaging 42.7% of the fuel mix, which was a new Q3 high,” Ms Mouchaileh said.
In the East Coast Gas Market, prices were up marginally to $12.62 per gigajoule (GJ), compared to $12.50/GJ in Q3 2024.
The slight increase in gas prices was despite a small decline in demand, which was driven by lower use in gas fired generation and reduced Queensland liquefied natural gas exports, which dipped 0.6 petajoules (PJ).
Ms Mouchaileh said Western Australia’s Wholesale Electricity Market (WEM) experienced colder than average temperatures, driving demand growth due to heating consumption in the morning and evening periods.
Average operational demand rose 10.9% during Q3 to 2,228 MW, while underlying demand was up 9%.
Average renewable contributions hit a new Q3 high of 36.4%, following on from last year’s Q3 record of 35.2%, while high rooftop solar and wind generation outputs also drove a Q3 peak renewable contribution record of 83.2%, up from 80.1% in Q3 2024.
“These fresh Q3 renewable records continue the upward trajectory from previous quarters and highlight the continuing changes underway in the WEM fuel mix,” Ms Mouchaileh said.
“Also, during Q3, Western Australia’s main power system would have hit a minimum demand record of 449 MW. However, battery charging to maintain system security was activated under the non-co-optimised essential system service mechanism, pushing operational demand to 832 MW,” she added.
WEM normalised energy costs lifted 8% on Q3 2024 to $149/MWh. The primary drivers for the higher WEM normalised energy costs were an $8.14/MWh rise in reserve capacity costs and a $21.61/MWh increase in Q3 energy prices, which averaged $101.76/MWh.
In Western Australia’s domestic gas market, consumption dipped 1.3% to 98.1 PJ, while production was up 2.6% to 109 PJ. This was the highest quarterly gas output since Q2 2020. Storage withdrawals rose 4.1 PJ compared to the same time last year.
ENDS