Batteries undercutting gas, keeping lid on power bills
Australian power grids have proven far more resilient to the recent global energy crisis, fueled by battery explosions and low domestic gas prices, than to the Russia-Ukraine war.
The market operator says the fleet of balloon batteries, which absorb cheap, abundant solar energy to be discharged in the evening, reduces dependence on more expensive gas and hydropower generation.
Greater battery use has led to lower wholesale electricity prices on an annual basis in most regions.
Batteries have outpaced all other technologies, dominating prices by almost a third in the first three months of 2026.
“Utility-scale batteries increasingly absorb excess renewable energy during the day and shift it to the market during evening peaks, helping to moderate prices during periods of high demand,” said Violette Mouchaileh of the Australian Energy Market Operator.
With the rapid entry of grid-scale projects and subsidized home systems into the market, the eastern grid doubled its installed battery capacity in 12 months.
Wholesale spot prices on the eastern mainnet averaged $73/megawatt hour (MWh) in the first three months of 2026; This was down 12 percent from the same period in 2025, but was higher than the previous spring quarter.
Summer quarters often see higher prices as hot days increase demand and prices.
Prices at the beginning of 2026 were also well below the 2022 $250/MWh averages triggered by the Russia-Ukraine war, despite similar international price shocks following the latest conflicts in the Middle East.
Gas prices, which typically drive up east coast power bills as peak power plants meet the evening surge in demand, have also fallen, surprisingly given the geopolitical context.
Wholesale gas prices averaged $10.61/GJ for the first three months of 2026.
Ms Mouchaileh said lower gas demand for power generation and moderately lower Queensland LNG exports were putting pressure on domestic prices as international prices rose.
Wood Mackenzie research analyst Natalie Thompson said Australia’s energy system was undergoing a structural change that insulated it from global energy price shocks.
“Growth in renewable energy and batteries, reduced reliance on gas-fired generation, and increased distributed energy resources are significantly reducing dependence on international fossil fuel markets,” he said.
“Australia’s energy transition now delivers tangible energy security benefits alongside emissions reductions.”
Solar and wind continue to provide a growing share of Australia’s total generation, with 46.5 per cent a record figure for the first quarter, according to AEMO’s quarterly electricity report.
The share of renewable energy was lower than the 51 percent of total supply in the previous quarter; This reflected a surge in demand as air conditioners were turned on in scorching January temperatures, reaching 50C in some heatwave regions.
Ongoing electrification and data center connections also added to the new quarterly record for electricity demand, with 11 major projects running throughout the connection process.
