Wholesale Electricity Prices Are Falling. Should Businesses Delay Energy Investment?
Falling wholesale electricity prices do not automatically mean lower energy costs for every business. This article explains why management should look beyond market signals and examine its own cost exposure, load profile and avoidable costs before making an energy investment decision.
Wholesale electricity prices are falling.
So should a business delay a solar or battery investment?
Not necessarily.
The AER reported that wholesale electricity prices fell across all NEM regions in 2025, supported by fewer extreme price events and growing wind, solar and battery supply.
But a wholesale market signal is not the same as a business cost outcome.
The more useful management question is not:
“Are Australian electricity prices falling?”
It is:
“What is our business actually paying for?”
A lower wholesale price does not automatically mean a lower business energy cost
A business does not simply pay “the wholesale electricity price”.
Its actual energy costs are also influenced by network charges, retail pricing structures, when electricity is consumed, and whether the business experiences significant peak demand.
Victoria’s 2026–27 network pricing illustrates this.
Network costs are increasing for customers on some distribution networks and decreasing on others.
How those underlying network charges ultimately appear in a customer’s electricity price also depends on the retailer’s pricing arrangements.
So a headline saying that wholesale electricity prices have fallen does not, by itself, tell management what has happened to its own energy cost exposure.
Two businesses can use the same amount of electricity — and have very different economics
Consider two businesses that each consume around 1 GWh of electricity per year.
On annual consumption alone, they may look very similar.
But one business may experience significant demand peaks at particular times, while the other has a much flatter load.
One may already have substantial onsite solar and supply much of its daytime electricity itself.
The other may still purchase most of its daytime electricity from the grid.
Their pricing structures may also be different.
The annual consumption number can therefore be almost identical while the underlying energy cost structure is very different.
Annual Consumption Alone ≠ Energy Cost Structure
This distinction matters when management is considering solar, batteries or another energy investment.
What cost is the investment actually trying to change?
This brings us to an important concept:
Avoidable Cost.
A business may have a large annual electricity bill.
But that does not mean the entire bill can be eliminated by an energy investment.
The more relevant question is:
Which part of the existing energy cost can this particular investment realistically reduce or avoid?
For example, if a battery investment is intended primarily to reduce a business-specific peak demand cost, a lower average wholesale price does not automatically remove that cost.
Conversely, if the investment case depends heavily on electricity price spreads, changing market conditions may require those assumptions to be reassessed.
This is why management should not move directly from:
“Wholesale prices are falling”
to:
“We should delay the investment.”
Nor should it automatically conclude that an existing investment case remains unchanged.
The market signal should trigger a review of the business evidence.
Market information is an input — not the investment decision
Management should return to its own electricity bills and load data.
Where are our energy costs actually occurring?
Which costs are avoidable?
What was the proposed investment supposed to change?
Have the assumptions supporting that investment changed?
These questions matter more than the headline itself.
The principle is:
Market Signal ≠ Business Cost Exposure ≠ Investment Decision
Market prices tell management what is changing externally.
The company’s own bills and load data tell management what that change actually means for the business.
A falling market price does not automatically mean business energy costs will fall in the same way.
And an energy investment should not be designed around a market headline.
It should be designed around the business costs that the investment can actually change — its avoidable costs.
That is the owner-side perspective Lucia Advisory brings to energy investment decisions: not starting with whether the market is “good” or “bad”, but with the company’s own evidence, cost exposure and investment conditions.