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Renewables contain electricity prices.

Without renewables, electricity prices would be much more expensive.

Gas generators are often idle or running slowly. This is because they generate expensive electricity, and the grid uses cheaper wind and solar electricity first.

You can see this on the Open Electricity website, which shows wholesale electricity prices and generation sources for the last seven days. The impact of renewables is especially obvious in South Australia (SA), where wind and solar provide over 70% of the state’s electricity.

Renewables compete to supply the grid, pushing prices down, sometimes so low that they go negative. The competition is fiercest when renewables meet or exceed total demand in SA.

Think of it like this: imagine walking into a fruit shop where apples are priced below zero. You would get free apples, and the shop would pay you to take them. That’s how negative electricity prices work.

The Coalition says it will cut electricity prices by making more gas available and reducing the cost of gas. This might cut electricity prices slightly; however, even with the biggest cuts to gas prices, gas generation will never lead to negative electricity prices.

With renewables, you get negative wholesale electricity prices, which is really cheap electricity. Without renewables, electricity prices would be much more expensive. The best way to get cheaper electricity is to roll out more renewables.

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Renewables give negative electricity prices.

The price at which generators sell electricity to the grid often goes negative:

• Particularly around noon, you can see the negative prices on the AEMO web dashboard.
• In South Australia, prices were negative for 34% of the December quarter of 2024.

You can check this out by viewing the prices on the AEMO National Electricity Market web dashboard as discussed below.

The best way to cut retail electricity prices is to roll out renewables and keep wholesale electricity prices negative for more of the time.

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Renewables can profit even with negative prices.

Renewables can sell their electricity to the grid at negative prices and still make a profit because they get saleable “Large Scale Renewable Energy Generation Certificates” whenever they generate. Renewables profit as long as the value of the received certificates exceeds the negative price. This is why, when renewable generators compete, the price can go negative.

Where there are coal generators, this competition can go further. Baseload coal generators bid against one another and renewables, driving the prices to even more negative values. It is because coal plants want to avoid the costs of shutting down and restarting.

These certificates encourage renewable generation and are an established part of our energy system. For a short while, we had a carbon tax that had a similar function; it discouraged the burning of fossil fuels to limit global heating.

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Examine SA wholesale electricity prices.

A careful look at the South Australian wholesale 5-minute prices on the AEMO website shows:

• When renewable generators compete to sell their electricity to the grid, they often drop the wholesale price of electricity to below zero, e.g., minus 24 $/MWh. This often happens around noon.
• As competition from renewable generators eases, gas generation sets high prices like 300 $/MWh. This often happens when demand peaks in the morning and evening.
• Electricity prices would stay high all the time without renewables. 

Renewable generation will cut the cost of living far more than ANY cut in gas prices and increasing gas generation.

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Why examine South Australian prices?

You can see this price movement due to the generation source in the South Australian prices because:

• Solar generates 28.8% of the state’s annual electricity, dominating the day and giving low prices.
• Gas generates 25.2%, often dominating at night, giving high prices,
• Coal: There are no coal generators in the state to obscure the contrast between gas and solar.
• Wind generates 43.8%: Wind could obscure this pattern, as a windy night could lead to low prices, and you would not see the high prices caused by gas.

The sources of South Australian electricity.

Particularly at night, SA imports large amounts of electricity from Victoria. This is not included below.

SA Electricity source	Percentage in 2022/23
Gas	25.2%
Wind	43.8%
Large-scale Solar	10.4%
Rooftop solar	18.4%
Other	2.2%
Total	100%
Total Solar	28.8%
Total Renewables	73.3%

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AEMO 5-minute prices graph

On the graph:

• The time starts on Tuesday, 1 April 2025, at 1 pm.
• The time ends on Thursday, 3 April 2025, at 1 pm.
• The period covered is the previous 48 hours from when I copied the graph on 3 April at 1 pm.
• The purple line shows the 5-minute spot prices over the 48 hours in dollars per megawatt-hour ($/MWh).
• The green line shows the SA state demand in megawatts (MW).
• (At this time of year, sunrise is 7.30 am and sunset is 7.07 pm.)

. The time axis shows: 1 April 18 hours, 2 April 0, 6, 12 and 18 hours, and 3 April 0, 6 and 12 hours.

Graph events over time	Time	Example price $/MWh	Price setter
** Low cost around noon (Purple leftmost low 1)	1 Apr 1 pm	** Zero	** Solar
Peak evening demand (Green leftmost peak 1)	1 Apr 6 pm	180	Gas
Night price plateau (purple)	1 Apr 8 pm to  – 2 Apr 5 am	100	Gas
Peak morning demand (Green peak 2)	2 Apr 7 am	300	Gas
** Low cost around noon (Purple low 2)	2 Apr 11 am – 1 pm	** Minus 18	** Solar
Peak evening demand (Green peak 3)	2 Apr 6 pm	240	Gas
Night price plateau (purple)	2 Apr 8 pm – 3 Apr 5 am	110, 140	Gas
Peak morning demand (Green peak 4)	3 Apr 6 am	253	Gas
** Low cost around noon (Purple low 3)	3 Apr 11 am – 1 pm	** Minus 28	** Solar

This is the same graph repeated.

The SA electricity demand (the green line on the graph) has weekday morning and evening demand peaks, four peaks in all.

There are three low-cost periods (purple) around noon when renewables regularly generate more than the state demand; sometimes, rooftop solar does this unassisted. Renewables compete with gas generators, and prices often drop to minus 20 $/MWh.

The two nights shown have higher costs (purple) and start with (1) the evening peak cost, followed by (2) a nighttime plateau of cost, and then (3) the morning peak cost period. Without solar generation, gas often has little competition and sets the high prices, often from $100 to the cap of $600 $/MWh.

So there you have it, you can see renewables delivering very cheap electricity (negative prices) and gas delivering high prices.

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Conclusion

Without renewables, wholesale prices would remain elevated all day, without the regular low prices around noon and at many other times.

In South Australia, negative prices occurred for 34% of the December 2023 quarter. Renewable generators offer market competition and drive down wholesale electricity prices.

Low wholesale prices tend to drop retail prices.

Renewables produce cheap electricity. Gas produces expensive electricity.

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How to view these AEMO price graphs.

You can check out these claims by reproducing electricity price graphs similar to the above graph:

• Open the AEMO National Electricity Market web dashboard.
• Click on the “price and demand” tab.
• Click on the state of South Australia (SA).
• Click on “pre-dispatch” and choose “dispatch” on the right of the line where you chose South Australia.
• Move your mouse over the graph to see the price and time.
• Look at the graph on a Wednesday, Thursday or Friday to see the weekday fluctuations.

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This is clearer on Open Electricity.

You can see the expense of gas even more clearly on the website Open Electricity.

• Click on “tracker”.
• Click on “NEM” and view “SA”.

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South Australian generation sources between 1 April and 5 April

.. ! 1 April ……………………………………! 2 April …………………………………. ! 3 April ……………………………………! 4 April

• Greyed times are night between 10 pm and 7 am
• Light yellow: Rooftop solar
• Dark yellow: Large-scale solar
• Green: Wind
• Blue: Battery
• Orange: various types of gas
• Purple: Imports from Victoria
• The top of the solid colour is the SA demand
• When the solid colour drops below zero, we have export or battery charging, as there is more generation than demand.

The fourth graph on this Open Electricity page also shows the wholesale price movement.

Note:

• Rooftop and large-scale solar meet all the SA demand at times around noon on 1 and 2 April.
• Solar and wind meet the entire demand during periods around noon each day.
• Wind alone meets about 90% of the demand overnight, between about 31 March 11 pm and 1 April 7 am.
• There is always a little gas generation.

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Related pages on this site

Alternative facts about current Australian electricity costs.

The Coalition’s nuclear folly.

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First written 6 April 2025, updated 15 April 2025