High Wholesale Electricity Prices in Western Australia
Western Australia’s electricity market has experienced elevated wholesale prices across 2025 and into early 2026, reflecting the power system transition. As the state moves away from coal-fired generation and integrates more renewable energy and battery storage, price dynamics are evolving – creating both opportunities and challenges.
The Wholesale Electricity Market (WEM) recorded some of its highest average wholesale electricity prices in recent years during 2025. Average energy prices rose compared to earlier years in the decade with peak period prices . In addition, the Reserve Capacity Price (which ensures sufficient generation is available to meet peak demand) increased significantly for upcoming capacity years. The mechanism is designed to maintain reliability but also signals that supply remains tight during the transition period.
So what’s driving higher prices?
- Tight Supply During Transition
Western Australia is progressively retiring coal-fired generation while new renewable and storage projects are still being developed. During peak demand periods – particularly hot summer evenings – the system can rely more heavily on higher-cost gas generation, which contributes to elevated wholesale pricing. - Timing of Renewable Generation
Rooftop solar continues to grow strongly across WA, delivering significant daytime supply. However, solar output declines in the evening just as household demand rises. Until significant large-scale battery storage is fully operational, this mismatch can result in higher peak prices. - Capacity and Investment Signals
Higher wholesale and capacity prices also serve an important purpose: they provide investment signals for new generation and storage projects. Developers require confidence that projects will be commercially viable, and stronger price outcomes can accelerate new solar, wind, and battery developments across the state.
It’s important to note that while peak prices have remained firm, renewable generation is increasingly placing downward pressure on prices during daylight hours. In some intervals, high solar penetration has contributed to lower wholesale outcomes compared to previous years. As more grid-scale batteries are commissioned and distributed energy resources (such as household batteries and VPPs) expand, price volatility is expected to moderate over time.
So what does this mean for energy customers?
Wholesale electricity costs are a major component of retail pricing, While network charges and policy costs also influence final bills, sustained high wholesale prices can place upward pressure on retail contracts. At Change Energy, we actively monitor market conditions within the AEMO framework for WA’s power system to ensure we provide competitive, transparent pricing aligned with evolving market fundamentals.
As we look ahead, Western Australia’s electricity market is undergoing one of it’s most significant structural shifts in decades. Short-term volatility and higher wholesale prices reflect the complexity of balancing reliability, affordability and decarbonization. However, continued investment in renewable energy and storage is expected to strengthen supply security and enhance price stability in the years ahead.