The dominance of the fossil fuel power source continues to be challenged by renewables, based on an Australian Energy Market Operator (AEMO) report released on Thursday.
AEMO executive general manager - reform delivery Violette Mouchaileh said renewable energy supplied a record 46 per cent of the market's electricity and drove emissions to record low levels.
Yet power prices were still higher compared with the same time last year, in part because low-cost renewable energy was not easily shared across the grid due to transmission constraints.
Coal plant outages and higher demand - stemming from warmer-than-usual weather ramping up air conditioner use and the ongoing take-up of electric cars and appliances - also kept upwards pressure on prices.
Wholesale electricity prices averaged $88 per megawatt hour in the December quarter, rising 83 per cent from a "very mild" last three months of 2023.
Average prices were still 26 per cent lower than the previous quarter.
Energy Minister Chris Bowen says more renewables in the system are bringing wholesale prices down. (Dean Lewins/AAP PHOTOS)
Southern states clocked much lower average prices than in NSW and Queensland, with the northern states stung by higher demand, coal outages and transmission constraints.
Energy Minister Chris Bowen said Thursday's update confirmed the energy system was evolving as expected.
"The data confirms what we know – unreliable coal is having a negative impact on energy prices, more renewables in the system bring wholesale prices down, and new transmission infrastructure is critical to keeping prices lower," he said.
"We are building an energy grid so everyone, everywhere has access to the cheapest form of energy at any given time."
The latest update from AEMO lands as fresh research makes the case to comprehensively rework the electricity market.
A Clean Energy Investor Group (CEIG) and Castalia Advisors report finds Australia is in danger of falling short of its climate and renewables targets without a full redesign of the market to incentivise more investment in solar, wind and batteries.
CEIG chief executive officer Richie Merzian said the national electricity market was designed for coal and gas, in the same era as "flip-phones and Nokia".
Clean Energy Investor Group CEO Richie Merzian says the national electricity market needs a redesign (Mick Tsikas/AAP PHOTOS)
"Now we have a system where you have hundreds of generators, you have low-cost variable energy, because solar and wind, once you build it, is relatively affordable to run," he told AAP.
"It's no longer providing an incentive to build more energy on the grid, that's sort of the gap."
In late 2024 the federal government launched a review of the main energy market.
Mr Merzian was hoping the panel would recommend long-lasting incentives for investment.
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