The Australian Energy Regulator’s (AER) State of the Energy Market 2025 offers a rigorous snapshot of a system in structural transition: fast-rising distributed energy, evolving wholesale price dynamics, and a growing need to coordinate investment in generation, storage and transmission.
A defining message is the scale and system impact of distributed energy resources (DER). By the end of 2024, renewable technologies including rooftop solar, solar farms, wind, hydro and batteries made up 60% of the National Electricity Market’s generation capacity and contributed 39% of generation output, with new records for rooftop solar output (up 13% to around 23 GW) and home battery installations (a 62% increase compared to the year prior).
“In 2024, over 5 gigawatts of new solar, wind, battery and gas capacity entered the National Electricity Market (NEM) – the largest annual new entry of capacity since the NEM began in 1998,” AER Chair Clare Savage said, adding that this represents “a significant increase over the past decade.”
Within that shift, rooftop solar’s contribution is now unmistakable: rooftop PV supplied around 14.7% of total NEM generation in Q1 2025 – exceeding utility-scale solar (9.3%), wind power (13.7%), hydro (4.9%) and gas (3.5%) – underscoring how daytime demand is increasingly met by behind-the-meter resources.
Energy retailers are responding to the rapid evolution of the nation’s energy system.
"Australia’s energy system is shifting faster than most people realise,” commented Christopher Thompson, Co-founder and Co-CEO of Amber Electric. “Consumer energy resources are no longer a side story – they’re becoming central to how the grid works.”
Midday power is often free or negative as rooftop solar surges, while evening prices above $300/MWh are rising. With 62% growth in home batteries in 2024 and 50,000 more installed within weeks of the Federal Government’s new Cheaper Home Batteries Program, consumer energy is now central to grid stability and pricing.
The Australian Energy Market Operator (AEMO) CEO Daniel Westerman said the data shows a “healthy outlook”.
Even as DER reshapes operational patterns, affordability risks have intensified. The AER reports a rise in the number and share of residential customers with energy debt, and higher average debt, prompting a renewed focus on payment-difficulty protections and the Energy and Climate Change Ministerial Council ’s Better Energy Customer Experiences program.
Energy Consumers Australia (ECA) said it is critical to improve network efficiency to reduce network costs.
“Prices above $300 per megawatt hour (MWh) have increased significantly since 2020,” ESA said, “which has flow-on pricing impacts for consumers. This underscores the need for reform of the Market Price Settings, particularly the Market Price Cap.”
The AER attributes record negative-price intervals in 2024 to high renewable output (especially wind) and highlights separate periods of low generation and outages that drove high-price events – a volatility profile consistent with ECA’s own concerns about consumer exposure.
The AER’s system narrative dovetails with AEMO’s 2025 Electricity Statement of Opportunities – a 10-year reliability outlook that is “healthy” if projects are delivered on time and in full. AEMO reports a record 4.4 GW commissioned in FY25 and expects 5.2–10.1 GW per year over the next five years, helping replace roughly 11 GW of notified coal retirements.
Daniel Westerman puts it plainly: “The 10-year investment pipeline to manage energy reliability is healthy… [but] timely delivery of new generation, storage and transmission, along with the operation of consumer energy resources, remain critical.”