The Australian Energy Market Operator has revealed that Western Australia's wholesale electricity prices experienced a significant decline during the December quarter of 2025, with renewable energy sources and battery storage systems playing a crucial role in driving down costs.
Substantial Price Reductions Recorded
According to the latest data from AEMO, wholesale power prices in Western Australia dropped by an impressive 13 per cent during the final three months of 2025 compared to the same period in the previous year. This substantial decrease brought the wholesale price below the $70 per megawatt hour threshold, marking a positive development for energy consumers across the state.
Grid Reliability Charges Remain Significant
Despite the encouraging wholesale price reductions, the overall cost of electricity remains considerably higher when additional charges for grid reliability are factored into the equation. The end cost reached $132 per megawatt hour, representing a 12 per cent decline from previous levels but highlighting how power bills are increasingly influenced by payments for generator availability rather than actual electricity production.
These reserve capacity payments, designed to ensure generators are available when needed, have become a significant component of energy costs. This shift in cost structure means that while wholesale prices may continue to decrease, the benefits to consumers could be partially offset by these reliability mechanisms.
Record Renewable and Storage Contributions
AEMO executive Violette Mouchaileh expressed optimism about the improving energy outlook, noting that greater renewable and storage output continued to place downward pressure on wholesale energy prices throughout Western Australia. The data revealed that renewable and storage generation supplied a record-breaking 52.4 per cent of the state's energy needs during the quarter.
Western Australia's expanding battery infrastructure achieved a notable milestone, with facilities in Kwinana and Collie pumping more than 1 gigawatt of energy into the grid on two evenings leading up to Christmas. This demonstrated the growing capacity of battery storage systems to support the state's energy network during peak demand periods.
Government Response and Energy Transition
Energy Minister Amber-Jade Sanderson welcomed the AEMO report, stating that it validates the government's energy transition strategy. She highlighted how renewables met more than half of the state's energy demand for the quarter, bringing down prices while decreasing reliance on traditional coal and gas generation.
The minister emphasised the importance of the state's growing battery fleet, describing it as a vital component of Western Australia's renewable energy transition. She noted that these batteries are effectively soaking up excess renewable power for use during times of high demand, creating a more balanced and efficient energy system.
Ongoing Challenges and Future Considerations
Despite these positive developments, questions remain about whether the additional renewable and storage capacity will be sufficient to maintain reliable power supply during extended periods of low wind and solar generation. The energy sector continues to grapple with the challenge of ensuring consistent electricity availability as the state transitions away from traditional fossil fuel generation.
Coal Power Station Debate Intensifies
The AEMO report comes amid intense debate about Western Australia's preparedness to phase out taxpayer-owned Synergy's coal power stations by the end of the decade. The government recently committed to underwriting Collie miner Griffin Coal for an additional five years to maintain operations at the private Bluewaters coal power station.
This decision reflects ongoing concerns that the development of renewable energy infrastructure may not proceed quickly enough to ensure reliable power supply. Energy experts from Rystad have warned that closing the Bluewaters facility too rapidly could result in electricity bill increases of 10 to 20 per cent, highlighting the delicate balance required in managing the energy transition.
The contrasting approaches to energy policy underscore the complex challenges facing Western Australia as it navigates the shift toward renewable energy while maintaining grid reliability and managing costs for both residential and industrial consumers.
