Wholesale energy markets might sound like the domain of power giants and policy wonks, but their movements ripple down to every Australian household and business. In 2025, with shifting regulations, record renewables, and volatile global prices, understanding wholesale energy is more relevant than ever.
What is Wholesale Energy and Why Does It Matter?
The wholesale energy market is where large-scale generators (like solar farms, wind parks, and coal-fired plants) sell electricity to retailers, who then supply it to homes and businesses. Prices in this market—set by real-time supply and demand—form the backbone of every electricity bill in Australia.
- Spot prices: Wholesale prices change every five minutes, reflecting the immediate balance of supply and demand.
- Retail pass-through: When wholesale prices spike or fall, retailers may adjust what they charge customers, especially on ‘time-of-use’ or ‘wholesale pass-through’ plans.
- Market operator: The Australian Energy Market Operator (AEMO) manages this complex system, ensuring reliability and transparency.
For most Australians, wholesale energy is invisible—yet its peaks and troughs determine what you pay, and how much risk your retailer faces.
2025: A Year of Change for Wholesale Energy
This year has brought significant shifts to Australia’s wholesale energy landscape. Here’s what’s driving the headlines:
- Record Renewables: As of 2025, over 40% of electricity in the National Electricity Market (NEM) comes from renewables, and daytime wholesale prices regularly dip into negative territory when solar floods the grid.
- Coal Exit Acceleration: Early closures of several coal-fired power stations in NSW and Victoria have tightened supply during peak evening hours, sending prices higher at sunset.
- Regulatory Updates: The new Wholesale Demand Response Mechanism allows large energy users to get paid for cutting demand during tight periods, smoothing price spikes and boosting grid resilience.
- Price Volatility: International gas prices remain unpredictable due to global tensions, impacting gas-fired generation costs and pushing up wholesale prices during periods of low wind or sun.
These forces combine to make wholesale prices more dynamic than ever. In 2025, some states have seen average quarterly prices swing by more than 60% compared to last year, according to AEMO data.
How Wholesale Prices Affect Your Power Bill
Wholesale prices don’t just impact energy retailers—they affect you directly, especially if you’re on a variable or wholesale-linked plan. Here’s how the connection plays out:
- Retailer pricing: Most retailers buy energy at wholesale rates and set fixed tariffs for customers, but some (like Amber Electric or Energy Locals) offer direct wholesale pass-through plans where your bill rises and falls with the market.
- Bill shock risk: In rare cases, extreme wholesale price spikes (such as during heatwaves or generator failures) can lead to sudden jumps in bills for pass-through customers. In 2025, new regulatory protections require retailers to cap maximum customer exposure on these plans.
- Opportunities for savings: Households with solar, batteries, or flexible usage can take advantage of negative or low wholesale prices by shifting consumption to cheaper times or exporting power back to the grid.
For example, in South Australia’s sunny autumn of 2025, some households on wholesale-linked tariffs actually earned credits during periods of negative pricing—turning a profit simply by using energy at the right time.
Looking Ahead: The Future of Wholesale Energy
As Australia continues its rapid energy transition, the wholesale market will remain the engine room of change. Expect more:
- Demand-side innovation—with consumers rewarded for flexibility and smart devices making real-time price response effortless.
- Storage and firming investment—as batteries, pumped hydro, and flexible gas fill gaps left by retiring coal plants.
- Regulatory evolution—with new safeguards and incentives to ensure the benefits (and risks) of wholesale pricing are shared fairly.
Understanding the wholesale market isn’t just for energy wonks—it’s key to making smarter decisions about your energy use, your retail plan, and your household’s bottom line in 2025 and beyond.
