Batteries set Australian wholesale power prices 16.3 per cent of the time, regulator finds
The Australian Energy Regulator found batteries set NEM wholesale prices 16.3 per cent of the time in 2025, as fleet capacity nearly tripled to 6.1 GW.
Photo by zimochen on Pexels
Battery storage generation and charging load together set the wholesale price in Australia’s National Electricity Market 16.3 per cent of the time across 2025, up from around 1 per cent in 2021, the Australian Energy Regulator reported on 20 August 2026. The finding comes in the “Wholesale Electricity Market Performance Report 2026”, the regulator’s fifth review of the NEM under the National Electricity Law. Batteries are displacing gas and hydro as the units that most often determine price, and volume-weighted wholesale prices fell in all five NEM regions.
The shift in battery storage electricity prices tracks a fleet that roughly tripled in a year. Installed battery power output reached 6.1 GW by the end of 2025, from 2.2 GW at the start of the same year. At the start of 2021 the NEM had five utility-scale batteries totalling 261 MW, most of them earning revenue from frequency control ancillary services rather than energy trading.
AER board member Jarrod Ball said batteries were “increasingly shaping wholesale prices and strengthening competition during evening peaks, when demand remains high and solar output is lower”. He added that “batteries alone will not resolve every pressure in the market”.
Where prices fell
Every mainland region and Tasmania recorded lower volume-weighted prices in 2025 than in 2024, with Queensland and New South Wales seeing the largest falls.
| Region | 2024 (AU$/MWh) | 2025 (AU$/MWh) | Change |
|---|---|---|---|
| Queensland | 127.73 | 95.00 | -32.73 |
| New South Wales | 150.43 | 118.77 | -31.66 |
| South Australia | 132.50 | 113.91 | -18.59 |
| Victoria | 101.09 | 94.68 | -6.41 |
| Tasmania | 101.81 | 100.33 | -1.48 |
Source: Australian Energy Regulator, “Wholesale Electricity Market Performance Report 2026”, regional price table as published 20 August 2026.
Ball was careful about what that means for households. “Those wholesale market outcomes do matter for households and small businesses, but changes in wholesale prices do not flow through to retail bills immediately or dollar-for-dollar,” he said.
How often batteries now set the price
The price-setting share is the metric that changed most sharply. Across the NEM it moved from roughly 1 per cent in 2021 to 16.3 per cent in 2025. In Queensland’s evening peak, where the gap between demand and solar output is widest, batteries set the price a quarter of the time.
The revenue mix moved with it. Energy markets accounted for around 80 per cent of battery spot market revenue in 2025, in a market once dominated by FCAS earnings. FCAS costs themselves fell to their lowest level since 2016, though the AER flagged localised price spikes in South Australia. Nearly two-thirds of installed battery capacity now has at least two-hour duration.
What the regulator says still has to happen
The report’s overarching finding is structural. Energy-Storage.news reported the AER describing the NEM as transforming from one market into many different markets within each region, with outcomes increasingly dependent on whether enough flexible capacity sits in the right places at the right times of day.
The report is direct about the risk. RenewEconomy quoted it as warning that if “replacement supply, storage, firming and transmission are delayed, the NEM will face greater risks of price volatility, reliability pressure and reduced competitive pressure”. Energy-Storage.news reported that 6 GW of coal capacity is scheduled to exit the NEM over the next three years; AAP framed the same pressure differently, reporting that more thermal capacity is scheduled to leave in the next 10 months than in the past 10 years.
| Indicator | 2025 finding |
|---|---|
| Battery share of spot revenue from energy markets | Around 80 per cent |
| Installed capacity with two-hour duration or more | Nearly two-thirds |
| FCAS costs | Lowest level since 2016 |
| Committed battery power output in pipeline | 6.5 GW |
| Anticipated battery power output | 11.3 GW |
| Coal capacity scheduled to exit within three years | 6 GW |
| First 8-hour battery | Began operating June 2026 |
Source: Australian Energy Regulator, “Wholesale Electricity Market Performance Report 2026”, as reported by Energy-Storage.news, 20 August 2026.
Competition improved on the regulator’s measures. The largest participants accounted for a smaller share of generation output across mainland regions, and concentration was lower on average, particularly in the middle of the day when solar output is high. The report noted that new battery entry has more than doubled since mid-2024 with a more diverse set of owners.
Long-duration entry is being pulled forward by state schemes. The first 8-hour battery started operating in June 2026 with support from the New South Wales Energy Road Map, and South Australia’s Firm Energy Reliability Mechanism is expected to shape further long-duration projects. Winss Solutions has reported on Transgrid’s expansion of grid-forming battery storage in the New South Wales grid and on Australia adding a record 9.1 GW of renewables in FY26. Behind the meter, Australia’s Cheaper Home Batteries Program passed 500,000 installations.
The Australian result sits inside a global build-out: the IEA reported that battery storage additions hit 108GW in 2025. For readers new to the technology, Winss has an explainer on how grid-scale battery storage works and one on whether renewable energy is really unreliable due to intermittency.
About the Australian Energy Regulator
The Australian Energy Regulator was established in July 2005, initially as part of the Australian Competition and Consumer Commission. Within a year, all 13 bodies previously responsible for energy regulation in Australia had transferred their responsibilities to it. It regulates the revenues of electricity and gas transmission and distribution network businesses, monitors wholesale and retail energy markets, enforces the national electricity law and rules, and administers consumer protections including the Default Market Offer.
On 1 July 2026 the AER became a standalone Non-Corporate Commonwealth Entity, legally separated from the ACCC under the Competition and Consumer Amendment (Australian Energy Regulator Separation) Act 2025, which received Royal Assent on 6 November. The AER had always made independent regulatory decisions with its own chair, board and funding; the ACCC had provided staffing and corporate services. Chair Clare Savage said at the time: “Today is a milestone for the AER, but it is not a change in direction.” The board also includes deputy chair Justin Oliver, Jarrod Ball, Lynne Gallagher and Kate Symons. The 2026 wholesale performance report is the first annual market review the regulator has published as a fully separate agency.
Sources: Australian Energy Regulator; ESD News; Energy-Storage.news; RenewEconomy; AAP via Port Macquarie News; ESD News
Featured image: photo by zimochen on Pexels (free Pexels license).
Become a Sponsor
Our website is the heart of the mission of WINSS – it’s where we share updates, publish research, highlight community impact, and connect with supporters around the world. To keep this essential platform running, updated, and accessible, we rely on the generosity of you, who believe in our work.
We offer the option to sponsor monthly, or just once choosing the amount of your choice. If you run a company, please contact us via info@winssolutions.org.
I specialize in sustainability education, curriculum co-creation, and early-stage project strategy. At WINSS, I craft articles on sustainability, transformative AI, and related topics. When I’m not writing, you’ll find me chasing the perfect sushi roll, exploring cities around the globe, or unwinding with my dog Puffy — the world’s most loyal sidekick.
