Australia’s renewable energy share exceeds 50% for the first time, reshaping grid stability and prices

Average demand across Australia’s largest grid climbed to a new quarterly peak at the end of 2025 even as low‑cost wind, solar and batteries supplied a majority of the power used across the eastern seaboard, according to the Australian Energy Market Operator.

AEMO’s Quarterly Energy Dynamics snapshot shows “average underlying demand” , the metric that counts consumption including what rooftop PV offsets , reached 24,271 megawatts in the three months to 31 December 2025. That was 530 MW, or 2.2 percent, higher than the previous record and was driven by rising heating and cooling loads, continued electrification, growth in data‑centre capacity and population increases. Rooftop solar was a major counterweight to that growth, contributing an average 4,407 MW over the quarter and at one point providing about 61 percent of instantaneous demand to the grid.

The agency reported that, for the first time, combined renewable generation and battery dispatch supplied more than half of NEM energy over a full quarter, with renewables delivering 51 percent of total supply compared with 46 percent in the corresponding quarter a year earlier. AEMO attributed the gain to a 29 percent increase in wind output, a 15 percent rise in grid‑scale solar and a near‑tripling of battery discharge as new storage assets came online. Coal and gas output both declined: coal averaged a quarterly low of 11,544 MW (down 4.6 percent year‑on‑year) while gas generation fell about 27 percent.

“This is a landmark moment for the NEM,” Violette Mouchaileh, AEMO’s executive general manager of policy and corporate affairs, 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.”

Those price effects were already visible. Wholesale spot prices across the national market averaged about $50 per megawatt hour for the quarter, AEMO said , a fall of roughly 44 percent compared with 2024 and a material reduction from the September quarter. Price declines were strongest in Queensland while South Australia and Victoria saw the lowest quarterly averages. AEMO noted fewer high‑price events, with intervals above $300/MWh adding only a small amount to the quarter’s average, and that increased evening battery discharge cut demand for gas and hydro in peak periods.

But the transition remains operationally complex. AEMO warned that system security requirements still necessitate a minimum number of synchronous machines , large spinning generators such as coal and gas turbines , to support frequency and voltage. The operator reported recurring interventions to sustain system strength in Victoria and New South Wales when synchronous plant counts fell too low. Transmission constraints also meant some wind and solar output that could have been traded was instead curtailed; AEMO quantified “economic offloading” at about 15 percent for wind and 18 percent for solar availability in the quarter.

The dynamics observed in the eastern NEM are mirrored in other grids. AEMO highlighted that Western Australia’s South West Interconnected System also saw renewables and storage supply more than half of demand for the period, with renewable share occasionally peaking very high. Independent summaries and sector data reinforce the rapid pace of change: earlier 2025 reporting showed the NEM reached a record first‑quarter renewables share of about 43 percent and calendar‑year renewables generation of around 42.9 percent, while Open Electricity datasets and industry outlets reported renewable shares near 50 percent in some measures for the December quarter and a SWIS average above 50 percent. Analysts at ANU’s climate and energy data centre have projected that, at current deployment rates, Australia would reach roughly 50 percent renewable electricity in 2025.

For industrial decarbonisation and large energy users, these developments carry immediate consequences. Lower average wholesale prices and reduced incidence of extreme price spikes improve the economics of electrifying industrial processes and of shifting flexible loads to take advantage of abundant daytime solar and battery discharge. However, the persistence of curtailment and the need for synchronous services mean that simply adding intermittent capacity is not a complete solution for sectors that require high reliability and continuous thermal or process heat. AEMO’s experience suggests that grid investments , in transmission to relieve bottlenecks, in system services that can replace inertia and in additional long‑duration storage , are becoming as critical as further renewable build to support heavy electrification.

The uptake of rooftop PV and behind‑the‑meter batteries also reshapes demand profiles for industry. While household solar reduced midday grid demand to record lows on some days, late‑afternoon and evening peaks still require dispatchable resources; on extreme weather days, regions have switched back to gas and imports when renewables fell away, producing very high short‑term prices. For corporate energy planners, that underlines the importance of diversified procurement strategies that combine contracted renewables, firmed supply or storage, and demand flexibility.

AEMO’s quarter‑end assessment captures both the scale of investment already delivering emissions reductions and the operational challenges that remain as Australia accelerates decarbonisation. For industrial actors charting emissions pathways, the message is clear: the falling cost of variable renewables improves the business case for electrification, but ensuring reliability and avoiding wasted renewable output will require coordinated upgrades to transmission, market arrangements for system security services and further deployment of storage that can absorb and time‑shift abundant renewable generation.