This state’s power prices are plummeting as it approaches 100% renewable energy

As South Australia moves closer to its goal of running entirely on solar and wind energy, electricity prices have fallen by a third in a year and are now the lowest in Australia. The state acts as a test case for the economic benefits that can be reaped from large-scale grid decarbonisation.

“South Australia is leading the world in the transition to renewable energy, and with that comes risks, but now it’s showing the successes,” said 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 power prices.”

South Australia generated 84 percent of its electricity from solar and wind energy 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 renewable power drives down electricity prices. The independent Australian Energy Market Operator’s (AEMO) latest report shows the average wholesale price of electricity in South Australia fell by 30 per cent in the last quarter of 2025, compared to a year earlier. 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 boon for the South Australian government because it has previously been criticized for driving up electricity prices with its rapid deployment of renewable energy. At times, the state has experienced large increases in electricity prices when the wind has not blown or the sun has shone, because it has had to fall back on expensive gas energy. Gas generator owners have charged high prices for this reserve energy to compensate for the occasional demand. To make matters worse, gas prices went up by 500 percent in Australia after Russia’s invasion of Ukraine, says Buckley.

To address this price volatility, South Australia has built seven megabatteries, each the size of a football field. They are charged by adjacent solar and wind farms on windy, sunny days, and then provide some backup power on quiet rainy days instead of gas generators. The last two of these batteries went online in 2025 and helped the price go down.

The success of South Australia’s batteries has inspired other Australian states to build their own. Last week, a report by consultancy Rystad Energy noted that “utility-scale batteries are no longer a complementary technology in Australia’s power system – they are displacing active gas generation across several states”. This has made Australia a “global proving ground” for the effectiveness of the technology, it said.

Another contributor to falling power prices is a giant new wind farm in South Australia called Goyder South, which was switched on in October. The 412 megawatt wind farm is the largest in the state and is expected to increase wind production by 20 percent. “Basic economics says that if you build more 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 last quarter. This meant the state generated more electricity than it used, so the price went negative to encourage electricity producers to stop producing, says Buckley.

In November, for example, South Australia set a new record when at one point it met 157 percent of its electricity needs with renewable energy alone. On occasions like this, the surplus energy is absorbed by the state’s batteries, exported to neighboring Victoria or capped, meaning wind and solar farms are temporarily disconnected from the grid.

At the same time, many homes in South Australia have started using less electricity from the grid, or none at all, by supplying themselves. Over half of the houses in the state now have solar panels on the roof, which provide electricity during the day. Around 50,000 have also installed home batteries, which are charged by rooftop solar panels during the day and then provide power after the sun goes down. Since the Federal Australian Government began offering 30 per cent rebates on home batteries in July 2025, South Australia has installed the most home batteries per capita of any state or territory.

In December, the state finalized agreements to build two more large wind farms so that it can reach its goal of reaching 100 percent net renewable energy next year. “I think the target is on track and these two new wind farms will be key to that,” says Buckley.

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