The Australian Electricity Market Explained: A State-by-State Breakdown (2025 Guide)

Published September 05, 2025

The Australian Electricity Market Explained: A State-by-State Breakdown (2025 Guide)

Introduction

Australia’s electricity system isn’t one single market. Instead, it’s a patchwork of interconnected grids, regional operators, and state-specific rules. For energy users — whether households, businesses, or crypto miners — understanding how the market works in each state is essential.

This article breaks down the Australian electricity market, state by state, highlighting prices, generation mix, and unique features of each system.

The National Electricity Market (NEM)

Most Australian states are part of the National Electricity Market (NEM), a wholesale spot market where supply and demand set prices in real time. The NEM stretches along the eastern and southern seaboard, linking Queensland, New South Wales, the ACT, Victoria, South Australia, and Tasmania.

Queensland

  • Generation Mix: Historically coal-heavy, but rapidly transitioning to solar and wind.

  • Market Dynamics: Frequent price volatility during midday (solar surpluses) and evening peaks.

  • Trend: Major investment in large-scale solar farms and pumped hydro (e.g., Snowy 2.0 tie-in).

New South Wales (NSW)

  • Generation Mix: Coal remains dominant, though large retirements are scheduled before 2030.

  • Market Dynamics: Increasing imports from Queensland and Victoria to meet peak demand.

  • Trend: New renewable zones being developed under the state’s Electricity Infrastructure Roadmap.

Australian Capital Territory (ACT)

  • Generation Mix: Almost entirely renewable through GreenPower contracts and wind/solar PPAs outside the ACT.

  • Market Dynamics: Stable retail pricing due to long-term contracts.

  • Trend: A model for states seeking net-zero electricity supply.

Victoria

  • Generation Mix: Brown coal remains significant, but wind and solar expansion is strong.

  • Market Dynamics: Known for negative wholesale prices during strong renewable output.

  • Trend: Transmission upgrades planned to unlock wind projects in the west.

South Australia (SA)

  • Generation Mix: Over 70% wind and solar, one of the highest renewable penetrations in the world.

  • Market Dynamics: Prone to price swings, but often exports renewable energy to Victoria.

  • Trend: Grid-scale batteries (like Hornsdale and Torrens Island) are stabilizing supply.

Tasmania

  • Generation Mix: Hydropower dominates, supplemented by wind.

  • Market Dynamics: Linked to Victoria via the Basslink interconnector.

  • Trend: Positioned as Australia’s “battery” with future hydro expansion (Battery of the Nation project).

Outside the NEM — Western Australia (WA)

  • Market: Operates its own Wholesale Electricity Market (WEM), separate from the NEM.

  • Generation Mix: Gas, solar, and an increasing share of wind.

  • Market Dynamics: Prices can swing negative during high rooftop solar output.

  • Trend: Heavy investment in battery storage to manage midday solar surpluses.

Northern Territory (NT)

  • Market: Small, isolated grids (Darwin–Katherine, Alice Springs, etc.).

  • Generation Mix: Dominated by gas, with growing solar adoption.

  • Market Dynamics: Not interconnected with other states, making reliability more challenging.

  • Trend: Federal support for large solar and hydrogen export projects.

National Trends and Future Outlook

Across Australia, three forces are reshaping electricity markets:

  1. Coal retirements — legacy plants are closing earlier than expected.

  2. Renewables growth — wind and solar dominate new capacity.

  3. Storage and demand response — batteries, pumped hydro, and flexible loads are essential to balance volatility.

For energy-intensive industries (like crypto mining, manufacturing, or data centers), understanding which state offers the right mix of price, reliability, and policy support is critical to competitiveness.

Conclusion

Australia’s electricity markets are undergoing their fastest transition in history. While each state has unique characteristics, the direction is clear: a shift toward renewables, storage, and more dynamic pricing. Whether you’re a household bill-payer or a large-scale energy user, staying informed about your state’s market can unlock big opportunities.