Hot weather and hungry datacentres lift Australia’s energy demand to record highs but batteries quell prices | Renewable energy
More data centers and warmer conditions helped power demand rise to record levels in the first three months of the year, while growth in batteries kept average wholesale prices low, according to the Australian Energy Market Operator.
Electricity demand from homes, businesses and industry reached record levels of 25 GW in the first quarter of 2026, up 1.2% compared to the same quarter last year. This growth across the grid was offset by record production from rooftop solar.
But in New South Wales, where data center demand has increased by 18% in a year, grid electricity demand has increased by 1.8% despite the increase in rooftop solar.
Previous Aemo forecasts suggested data center power demand would triple within five years, surpassing the energy used by electric vehicles by 2030.
Aemo’s quarterly report showed network demand is also rising in Victoria following a near doubling in data center demand. The state also set a new all-time record for maximum power demand on January 27, when temperatures soared to 43°C in parts of Melbourne amid a heatwave.
Two extreme heatwaves in January have led to higher cooling requirements in most cities, particularly Adelaide, where air conditioning demand has more than doubled from 2025 levels.
In the national electricity market, which powers the eastern states and South Australia, renewable energy provided 46.5% of all generation; It broke a new record in the first three months of this year.
Aemo said batteries have more than tripled day-to-night energy transition and more than doubled total installed capacity, thanks to the 4,445 MW of large-scale battery capacity added in the last 12 months.
Violette Mouchaileh, Aemo’s chief policy officer, said this significant increase in large-scale and home battery capacity is changing the way electricity is produced, consumed and priced throughout the day.
“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.”
Batteries also contribute to a 12% drop in average wholesale electricity prices from the first quarter of 2025 by reducing reliance on gas and hydroelectric power at peak times, he said.
Energy systems researcher Dr. from the University of New South Wales. Dylan McConnell said batteries are “one of the bright spots of the energy transition right now.”
“We’ve seen a lot of capacity come online in the last 12 months,” he said. “We are now seeing the impact of this, it is contributing significantly to peak demand in the evening hours and displacing gas.”
The Aemo report showed gas production was at its lowest level since 1999; This goes back almost to the beginning of the national electricity market. Gas production decreased by 24% compared to the same quarter last year. The coal-fired generation also fell.
