Batteries and solar reshape Australia’s power mix

Australia’s main electricity grid recorded underlying demand averaging 25,472 megawatts in the September quarter, yet average wholesale prices fell to their lowest level in five years. Wholesale prices declined by 27 percent even as electricity use grew, reflecting shifts in when and how power is generated, stored and consumed across the day.

The rise in demand was linked to ongoing electrification, higher industrial activity and increasing data centre consumption, mostly in Victoria, while warmer winter conditions reduced heating needs. Despite these demand drivers, the changing generation mix and storage deployment altered price dynamics across the quarter.

Rooftop solar, home batteries and grid-scale batteries played a central role in reshaping the grid. Homes equipped with both solar and battery storage drew 75 percent less power from the grid during evening peaks than homes with solar but no batteries, sharply reducing peak-period demand.

Grid-scale batteries increasingly influenced market pricing, setting the price in nearly half of all dispatch intervals. For the first time, these batteries supplied significantly more power than gas-fired generation during evening peaks, contributing to lower prices at times of higher household and business demand.

Batteries also shifted record amounts of renewable energy from periods of high daytime output into the higher-demand evening period. This behaviour reduced the frequency of negative price events, particularly in Queensland, where the share of negative prices fell to 43 percent of dispatch intervals, a drop of 30 basis points.

Renewable generation reached a third‑quarter record from July to September, supplying 44.3 percent of National Electricity Market output. Surging solar output was a key contributor, alongside increased hydro generation over the quarter.

A record half‑hour renewable penetration of 80.4 percent was achieved on 19 September, underscoring the extent of variable generation on the system. Over the quarter, electricity generation from black coal and gas-fired plants fell by a combined 744 megawatts, reflecting the growing share of renewables.

Gas generation declined to its lowest third‑quarter level since 2000, coinciding with the period of lower average wholesale prices. This shift in the generation mix highlights the growing role of renewables and storage in meeting demand that continues to rise across the grid.