Renewable energy and batteries are decoupling Australia’s power prices from volatile global markets, helping shield consumers from severe electricity bill shocks emerging in other countries due to the ongoing war in Iran.
While Britain and parts of Europe and Asia are facing double-digit power and gas price hikes this year, households across much of eastern Australia will receive power bill cuts starting next month, driven by steep falls in the wholesale cost of electricity.
Energy executives and regulators credit the divergence to the rapid growth of renewable energy and battery systems, which have better-enabled the grid to capture cheap, abundant solar power during midday peaks and dispatch it after sunset when demand – and prices – typically spike.
Schneider Electric senior director Lisa Zembrodt, an advisor to some of Australia’s largest corporate energy consumers, said the decoupling of domestic power prices from globally exposed fossil fuel markets was a “turning point”.
“The benefits of the energy transition are starting to move through to consumers,” she said.
“It’s not just market analysts and industry experts saying this is what is coming. Now it is in the data. Now we can see it. Now there is no question on where we need to go next.”
The capacity of grid-scale batteries across Australia has doubled in 12 months — giving the technology a bigger role in shaping the electricity market — while renewables make up about half of the grid’s overall mix. Crucially, these shifts have lessened the need to call on expensive gas-fired generation to plug critical supply gaps.
Data from the Australian Energy Market Operator reveals that the volume of energy that batteries were successfully shifting from daytime to evening peaks had more than tripled in the March quarter compared with the same period in 2025.
This had led to an “immediate impact on prices”, said Rick Wilkinson, chief executive of Australian energy consultancy EnergyQuest.
For more than a decade, clean energy advocates had struggled to convince the public that renewables would lower power bills, largely because electricity prices had continued to climb and doubts had persisted over the reliability of a grid dominated by weather-dependent solar and wind, Wilkinson added.
But with the doubling of installed grid-scale battery storage over the past year, the national electricity market may have now “crossed a threshold”, he said.
Despite the Iran war driving up coal and gas prices worldwide, Australian wholesale electricity costs – what retailers pay generators for power – have stayed subdued. Wood Mackenzie analyst Natalie Thompson said this marked a “structural shift” and stood in contrast to the 2022 energy crisis caused by Russia’s invasion of Ukraine, when expensive gas was in heavier demand across the grid and sent electricity prices surging.
“Growth in renewables and batteries, reduced reliance on gas-fired generation, and the rise of distributed energy resources are materially lowering exposure to international fossil fuel markets,” she said.
While gas was a key cause of soaring bills in 2022, local gas prices have not risen this year. Experts say prices are being anchored by record-low gas-fired power demand, as well as greater government pressure for gas exporters to ensure the local market is fully supplied.
Zembrodt said Australia was in a vastly different position to four years ago. “The more that our grid mix is local renewable energy and storage, the less we are exposed to coal or gas price increases,” she said.
From July 1, energy regulators’ changes to “default market offers” will cut power bills for hundreds of thousands of Australians on the eastern seaboard who had not taken up special deals. But they will also act as a reference point for retailers as they assess their next pricing cycles for all their customers.
At an industry conference last week, Origin Energy chief executive Frank Calabria pointed to the default price cuts as proof that the energy transition was working.
“The transition is starting to show up where it matters most – on household bills,” Calabria said.
However, he cautioned that further relief cannot be guaranteed next year. Major price pressures continue to loom over the industry due to the immense capital required to modernise the grid, satisfy rising demand and maintain reliability as most of the nation’s coal-fired power plants are retired over the next decade.
“The path ahead isn’t straightforward,” Calabria said. “We can’t bank on further reductions in bills each year when we know the magnitude of investment required.”
For instance, he noted that building a wind farm today is roughly 50 per cent more expensive than it was in 2020, driven by surging financing, logistics, labour, steel and concrete costs.
“Every cost line is moving in the wrong direction,” he said.
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Nick Toscano is a business reporter for The Age and Sydney Morning Herald.Connect via X or email.
Mike Foley is the climate and energy correspondent for The Age and The Sydney Morning Herald.Connect via email.
