Electricity prices in this state are plummeting as they approach 100% renewables

As South Australia moves closer to its goal of running purely 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 for the financial benefits to be gained from large-scale decarbonisation of the grid.

“South Australia is a world leader in the transition to renewable energy and the risks involved, but it is now showing its successes,” he says Tim Buckleyan independent energy analyst at Climate Energy Finance, an Australian think tank based in Sydney. “Consumers in South Australia are starting to really benefit from sustainable lower electricity prices.”

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

This pressure on renewables is driving down electricity prices. Australian Independent Energy Market Operator (AEMO) latest news shows the average wholesale electricity price in South Australia fell by 30 per cent in the last quarter of 2025 compared to the previous year. As a result, the state had the lowest price in Australia, along with Victoria, which has the second highest share of wind and solar power in the country.

This is a good thing for the South Australian government, which has been criticized in the past for driving up electricity prices with its rapid adoption of renewable energy. The state has occasionally experienced big spikes in electricity prices when the wind wasn’t blowing or the sun wasn’t shining, as it had to rely on expensive gas power. Owners of gas generators charged high prices for this back-up power to offset its sporadic demand. Worse still, gas prices in Australia have risen by 500 per cent since the Russian invasion of Ukraine, Buckley says.

To deal with this price fluctuation, South Australia has built seven megabatteries, each the size of a football pitch. They are charged by adjacent solar and wind farms on windy, sunny days, and then provide some back-up power on calm, rainy days instead of gas generators. The last two of these batteries came online in 2025 and contributed to the price reduction.

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

Another contributor to the drop in 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 wind generation by 20 percent. “Basic economics says that if you create more supply, prices will go down,” says Buckley.

The AEMO report said wholesale electricity prices were actually negative in South Australia 48 per cent of the time in the last quarter. That meant the state produced more electricity than it consumed, so the price was negative to encourage power producers to stop producing, Buckley says.

In November, for example, South Australia set a new record when at one point it covered 157 percent of its electricity consumption only with renewable energy sources. On occasions like this, excess power 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 households have started using less or no electricity from the grid by powering themselves. More than half of the state’s homes now have solar panels on their roofs to provide power during the day. O 50,000 also installed home batterieswhich are charged by rooftop solar panels during the day and then deliver power after sunset. From July 2025, the Federal Australian Government has started offering 30 per cent rebates on household batteries, South Australia installed the most domestic batteries per inhabitant of any state or territory.

In December, the state finalized agreements to build two more large wind farms to meet its goal of reaching 100 percent clean renewables next year. “I think the goal is well on its way and these two new wind farms will make it possible,” says Buckley.

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