This episode of Switched On explores how the rapid deployment of batteries in Australia's National Electricity Market is reshaping power market dynamics. With renewables supplying 40% of generation and a boom in utility-scale storage, batteries are now setting prices more often than coal plants and challenging the role of gas as a balancing resource, while the growing competition among batteries is beginning to thin arbitrage spreads.
Summarized by Podsumo
In Q1 2026, batteries set the power price 32% of the time, becoming the most frequent price-setting technology in Australia's National Electricity Market.
Batteries now meet 6.4% of evening demand on average, up from 2% a year earlier, and have overtaken gas as the primary intraday balancer.
Intraday arbitrage spreads fell 30% year-on-year to $230/MWh in 2025, signaling that more batteries are thinning profitability through increased competition.
Negative power prices now occur 14% of the time across the NEM; in South Australia, nearly half of all Q4 2025 prices were below zero.
Government incentives like system integrity protection schemes and Long-Term Energy Service Agreements are being used to support longer-duration (4–8 hour) batteries that the market alone may not finance.
"Australia really is a postcard from the future for everyone else around the world when thinking about what happens in the future power system where there's a lot of renewables and a lot of batteries."
"Batteries are eating each other's lunch, but they're also eating into gas plants as supper."
"The sweet spot might be around two hours, but from an arbitrage perspective, you don't want to go beyond four hours if you actually want the economics to improve."