What a value factor measures
Every five minutes the NEM sets a price in each region. Averaging those prices over a year gives the time-weighted average price: what a generator producing the same amount in every interval would have earned. Weighting the same prices by what solar farms produced gives solar's output-weighted price. The ratio of the two is the value factor. At 1.00, solar earns the average. Below it, solar sells into cheaper intervals than the market as a whole.
The ratio matters more than either price. Average wholesale prices more than doubled in every region in 2022 and fell back after, so a solar price in dollars mostly tracks the market around it. The value factor removes that level and leaves the shape: whether the hours solar produces in are worth more or less than the hours it does not.
From premium to discount
In 2019 utility solar was close to an average-priced product in three of the four regions, between 0.93 and 1.06, and at 0.78 in Queensland. In summer it was a premium one: in January 2019 the monthly value factor was 1.41 in South Australia, 1.35 in Victoria, 1.24 in New South Wales and 1.05 in Queensland, which means the daylight intervals solar produced in were, on average, the higher-priced ones.
By 2025 every region had moved a long way below 1.00. Queensland fell furthest, from 0.78 to 0.28, and Victoria from 1.06 to 0.34. New South Wales ended at 0.43. South Australia fell to 0.37 in 2023 and then partly recovered, to 0.53 in 2025, which makes it the one region where the decline did not run in a single direction.
| Year | NSW | QLD | SA | VIC |
|---|---|---|---|---|
| 2019 | 0.93 | 0.78 | 1.00 | 1.06 |
| 2020 | 1.09 | 0.80 | 0.75 | 0.89 |
| 2021 | 0.61 | 0.57 | 0.43 | 0.43 |
| 2022 | 0.61 | 0.52 | 0.50 | 0.57 |
| 2023 | 0.57 | 0.36 | 0.37 | 0.37 |
| 2024 | 0.55 | 0.36 | 0.43 | 0.37 |
| 2025 | 0.43 | 0.28 | 0.53 | 0.34 |
The decline was not smooth. It broke in 2021, when New South Wales, Victoria and South Australia each lost between 0.32 and 0.48 in a single year, and it held through 2022 despite that year's price spike, which lifted solar's dollar price with everything else and left its value factor near 0.5 to 0.6.
Half the output, below zero
The mechanism is visible in when solar is paid a negative price. In 2019 almost none of it was: under 5 per cent of utility solar output in every region. By 2025 it was more than a third in every region.
49.5%
of Queensland's utility solar output in 2025 was generated while the regional price was below zero
| Year | NSW | QLD | SA | VIC | Solar output, GWh |
|---|---|---|---|---|---|
| 2019 | 0.1 | 2.9 | 4.4 | 1.5 | 5,115 |
| 2020 | 0.4 | 7.7 | 11.6 | 6.5 | 6,705 |
| 2021 | 7.4 | 11.1 | 28.9 | 27.0 | 8,825 |
| 2022 | 8.6 | 12.4 | 35.5 | 25.7 | 11,392 |
| 2023 | 16.0 | 33.0 | 44.2 | 39.6 | 14,605 |
| 2024 | 17.9 | 35.2 | 43.5 | 43.2 | 15,929 |
| 2025 | 35.8 | 49.5 | 41.2 | 45.8 | 18,133 |
Over the same years utility solar output across the four regions rose from 5,115 GWh to 18,133 GWh, more than three and a half times, into the same daylight hours. AEMO describes those hours directly: negative prices are more frequent "in daytime hours when operational demand is low due to high distributed PV output", when large-scale wind and solar output is strong and coal units hold their minimum stable output.
Checked against AEMO
AEMO publishes a volume-weighted price by fuel type in its Quarterly Energy Dynamics, computed the same way, so this series can be tested against it. For Q4 2020 this computation gives South Australian solar farms $17.0/MWh; AEMO reported that their "VWAP was $17/MWh". For Q4 2025 it gives NEM grid-scale solar an average output of 2,535 MW, the figure AEMO reports, and a volume-weighted price of $24.6/MWh, against AEMO's $24/MWh. That last difference is small and has not been allocated to a cause.
How often prices were negative is AEMO's measure to state, and this report quotes it rather than counting its own: in Q4 2025 AEMO recorded negative prices in 48.4 per cent of South Australian intervals, 43.1 per cent in Victoria, 30.2 per cent in Queensland and 26.7 per cent in New South Wales.
What these numbers are not
- Not revenue. This is the spot price at each region's reference node, weighted by output. A solar farm's revenue also depends on its marginal loss factor, its power purchase agreement or hedges, and certificates. AEMO's own note to the same measure says it "does not reflect the full revenue earned by generators".
- It flatters solar slightly. Output is what was generated, not what was available. Farms that reduce output when prices go negative drop those megawatt-hours out of the weighting, so the value factor of all the solar that could have been produced is lower than the one shown.
- Utility-scale only. Rooftop solar is not in the weighting. It shapes the prices shown here by lowering midday demand, but its own output is an estimate, not a metered series, and it is kept out.
- The NEM only. Western Australia's SWIS runs a different market with different price rules, and none of these figures describe it.
The other side of the same price shape
A midday price that is low or negative, followed by an evening price that is not, is the spread a battery is paid to move energy across. Solar Analytica's TBx capture index measures how much of that spread NEM batteries capture. The two measures read the same five-minute prices from opposite sides: this one records what the shape costs the generation that fills the middle of the day.