This state’s power prices are plummeting as it nears 100% renewables

As South Australia moves closer to its goal of running solely on solar and wind power, its electricity prices have fallen by a third in a year and are now the lowest in Australia. The state serves as a test case to assess the financial benefits that can be gained from large-scale grid decarbonization.

“South Australia is a world leader in terms of transitioning to renewable energy and that comes with risks, but it is now showing its successes,” says Tim Buckley, an independent energy analyst at Climate Energy Finance, an Australian think tank based in Sydney. “South Australian consumers are really starting to benefit from sustained, lower electricity prices. »

South Australia produced 84% of its electricity from solar and wind in the final quarter of 2025, the highest proportion of any major grid in the world. The state plans to reach 100 percent by the end of next year.

This push for renewable energy is driving down electricity prices. The latest report from the Australian Energy Market Operator (AEMO) shows the average wholesale price of electricity in South Australia fell 30% in the final quarter of 2025, compared to the previous year. As a result, the state had the lowest price in Australia, with Victoria having the second largest share of wind and solar power in the country.

This is a boon for the South Australian government, as in the past it has been criticized for driving up electricity prices due to its rapid adoption of renewable energy. At times, the state has seen big spikes in electricity prices when the wind didn’t blow or the sun didn’t shine because it had to fall back on expensive gas power. Gas generator owners have charged high prices for this backup power to compensate for its sporadic demand. Worse still, gas prices rose 500 per cent in Australia following Russia’s invasion of Ukraine, says Buckley.

To deal with this price volatility, South Australia has built seven mega-batteries, each the size of a football field. They are recharged by adjacent solar and wind farms on windy, sunny days, then provide some backup power on calm, rainy days instead of gas generators. The last two of these batteries came online in 2025 and contributed to lower prices.

The success of South Australia’s batteries inspired other Australian states to build their own. Last week, a report from consultancy Rystad Energy noted that “large-scale batteries are no longer a complementary technology in Australia’s electricity system – they are actively replacing gas generation in several states”. This made Australia a “global proof point” for the technology’s effectiveness, he said.

Another contributor to lower electricity prices is a giant new wind farm in South Australia called Goyder South, which came online in October. The 412-megawatt wind farm is the largest in the state and is expected to increase its wind production by 20 percent. “Basic economics says that if you increase supply, prices go down,” says Buckley.

The AEMO report notes that wholesale electricity prices were actually negative in South Australia 48 per cent of the time in the most recent quarter. That meant the state was producing more electricity than it was consuming, so the price became negative to encourage power producers to stop producing, Buckley says.

In November, for example, South Australia set a new record by meeting 157% of its electricity demand with renewable energy alone. On such occasions, excess energy is absorbed by the state’s batteries, exported to neighboring Victoria or curtailed, meaning wind and solar farms are temporarily disconnected from the grid.

At the same time, many South Australian homes have started using less electricity from the grid, if at all, by self-powering. More than half of the state’s homes now have solar panels on their roofs, which provide electricity during the day. About 50,000 people have also installed home batteries, which are charged by rooftop solar panels during the day and then provide electricity after sunset. Since the Australian Federal Government began offering 30% rebates on home batteries in July 2025, South Australia has installed the highest number of home batteries per capita of any state or territory.

In December, the state finalized agreements to build two additional large wind farms so it can meet its goal of reaching 100% net renewable energy next year. “I think the goal is on track and these two new wind farms will be the main enablers,” Buckley says.

Fossil hunting in the Australian outback

Join this extraordinary adventure in the heart of Australia’s fossil frontier. Once a shallow inland sea millions of years ago, eastern Australia is now a fossil hotspot. For 13 unforgettable days, you will travel to the heart of the hinterland, in the footsteps of prehistoric giants and discover the secrets of the ancient history of the Earth.