Green energy is shielding Australia from a global power price shock

Renewable energy and batteries insulate Australia’s energy prices from volatile global markets and help protect consumers from severe electricity bill shocks in other countries due to the ongoing war in Iran.

While the UK and parts of Europe and Asia face double-digit increases in electricity and gas prices this year, households in much of eastern Australia will face cuts to their electricity bills from next month due to sharp declines in the wholesale cost of electricity.

Fast-growing fleets of large-scale batteries, such as the Victorian Big Battery project near Geelong, are transforming the electricity grid.

Energy managers and regulators attribute this divergence to the rapid growth of renewable energy and battery systems; This better enabled the grid to capture cheap, abundant solar energy during midday peaks and send it after sunset, when demand (and prices) typically rise.

Schneider Electric senior manager Lisa Zembrodt, an advisor to some of Australia’s largest corporate energy consumers, said the decoupling of domestic electricity prices from globally exposed fossil fuel markets was a “turning point”.

“The benefits of the energy transition are starting to pass through to consumers,” he said.

“It’s not just market analysts and industry experts saying this is going to happen. It’s in the data now. We can see it now. There’s no longer any question about where we need to go.”

Capacity of grid-scale batteries across Australia has doubled in 12 months; This gives technology a greater role in shaping the electricity market, with renewable energy making up around half of the grid’s overall mix. Most importantly, these changes have reduced the need for expensive gas-fired generation to fill critical supply gaps.

Data from the Australian Energy Market Operator reveals that the volume of energy successfully transferred by batteries from daylight hours to evening peaks more than tripled in the March quarter compared to the same period in 2025.

Rick Wilkinson, managing director of Australian energy consultancy EnergyQuest, said this had led to an “immediate impact on prices”.

Wilkinson added that for more than a decade, clean energy advocates have struggled to convince the public that renewable energy would lower utility bills as electricity prices continue to rise and doubts remain about the reliability of a grid dominated by weather-dependent solar and wind.

But with grid-scale battery storage installations doubling last year, the national electricity market may now have “crossed a threshold”, he said.

Despite the Iran war driving up coal and gas prices around the world, Australian wholesale electricity costs (the amount retailers pay generators for electricity) have remained low. Wood Mackenzie analyst Natalie Thompson said this marked a “structural shift” and contrasted with the 2022 energy crisis caused by Russia’s invasion of Ukraine, which saw greater demand for expensive gas across the grid and increased electricity prices.

“Growth in renewable energy and batteries, reduced reliance on gas-fired generation, and increased distributed energy resources are significantly reducing dependence on international fossil fuel markets,” he said.

Although gas is the main reason for the increase in bills in 2022, local gas prices have not increased this year. Experts say prices have been stabilized by record-low gas-fired power demand as well as increasing government pressure on gas exporters to ensure the domestic market is fully supplied.

Zembrodt said Australia was in a very different position to four years ago. “The more our grid mix consists of local renewables and storage, the less exposed we are to coal or gas price increases,” he said.

From July 1, energy regulators’ changes to “default market quotes” will cut the electricity bills of hundreds of thousands of Australians without special deals on the east coast. But they will also serve as a reference point for retailers as they evaluate next pricing cycles for all their customers.

At an industry conference last week, Origin Energy chief executive Frank Calabria pointed out that the supposed price cuts were evidence that the energy transition was working.

“The shift is starting to show up where it matters most: household bills,” Calabria said.

But he warned that further relief next year was not guaranteed. Major price pressures continue to mount in the sector due to the enormous capital required to modernize the grid, meet growing demand, and maintain reliability as most of the nation’s coal-fired power plants are retired within the next decade.

“The road ahead is not easy,” Calabria said. “Knowing the magnitude of the investment required, we cannot count on further reductions in bills each year.”

For example, building a wind farm today is about 50 percent more expensive than in 2020 due to increased financing, logistics, labor, steel and concrete costs, he noted.

“All cost lines are moving in the wrong direction,” he said.

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