Renewables topped 50% of NEM output in late 2025 as AEMO flags mounting grid stress
A record renewable quarter masks deepening operational pressures, from AEMO's market suspension to transmission constraints limiting new capacity.
Renewables supplied more than half of National Electricity Market power for a full quarter for the first time in late 2025, driven by rooftop solar, wind and battery deployment, Asian Power reported on Friday (2026-07-24).4 The milestone arrived alongside growing evidence that the grid is struggling to absorb the pace of change.2
The NEM has now retired nearly 40% of its coal fleet since the market started, and the remaining stations average 38 years of age, AEMO CEO Daniel Westerman said at Australian Energy Week on Thursday (2026-06-11).2 Replacing that capacity with weather-dependent generation has introduced operating conditions that scheduled thermal plant would have managed without intervention.
Westerman described the period in question as one of the most operationally difficult AEMO has ever faced. Extreme prices coincided with a cold snap and unplanned generator outages, pushing AEMO to issue around 500 directions to more than 5 GW of generation before taking the unprecedented step of suspending the entire NEM to maintain electricity supply.2
Consumer-owned generation is now a central variable in that balance. More than 4 million generators sit on the rooftops of one in every three Australian homes, Westerman told the conference on Thursday (2026-06-11), and their combined capacity exceeds what remains of the coal-fired fleet.2 At times those resources meet more than 60% of all NEM demand.2 But unlike scheduled capacity, rooftop solar cannot be dispatched on command into a winter evening peak.
John Rae, Pacific Renewable Energy Leader at Willis Natural Resources, told Asian Power on Friday (2026-07-24) that renewables accounted for about 36% of Australia's total electricity generation in 2025, with NEM penetration reaching around 40% in early 2025 before the late-2025 quarterly breakthrough.4 Transmission, supply chains, planning approvals and variable renewable integration constrain how fast that buildout can continue, Willis Natural Resources said, and addressing those bottlenecks is essential to reaching Australia's 82% renewable electricity target by 2030.4
Industry sentiment at conferences in late May and early June 2026 reflected the pressure those constraints are placing on project pipelines. At the Australian Wind Industry Forum, the dominant view — expressed during the industry outlook panel and later by Mark Leersnyder of KPMG — was that many wind auction outcomes had been struck against a materially different cost environment, according to WattClarity on Wednesday (2026-06-03).1 Rising costs and grid bottlenecks, Leersnyder said, made execution risk the defining concern for new projects.1
NEM spot prices were largely subdued through the 2025-26 summer, a pattern WattClarity attributed in part to the expanding role of battery storage in flattening intraday price swings, WattClarity reported on Sunday (2026-06-21).3 The quiet did not hold. Volatility returned sharply in Tasmania on Sunday (2026-06-21) and then in South Australia on Sunday (2026-06-21) and Monday (2026-06-22), a reminder that battery capacity has not yet smoothed every weather-driven dislocation.3
The 50%-plus quarterly figure coexists with an operator that has suspended the entire NEM and a spot market where price spikes returned in two states over the same June weekend, ending months of suppressed volatility.2,3
Transmission bottlenecks, supply chain delays and wind developers working from pricing struck against a materially different cost environment mean the path to Australia's 82% renewable target by 2030 runs through constraints that remain largely unresolved.1,4