batteries & Renewables
Australia is the largest gas exporter in East Asia but is replacing gas generation with renewables. Lower battery prices have made solar economical into the evening. Solar and wind equipment, including storage, is now cheaper. A summary from the Australian Energy Regulator
One market becomes many
Prices and revenue dropped in 2025 versus 2024 across the board. Solar and wind pushed daytime prices down; batteries, not gas or hydro, increasingly set the evening peak price as new storage capacity nearly tripled over the year, from 2.2 GW to 6.1 GW.
Queensland: down by $32.73/MWh, from $127.73/MWh in 2024 to $95.00/MWh in 2025
New South Wales: down by $31.66/MWh, from $150.43/MWh in 2024 to $118.77/MWh in 2025
South Australia: down by $18.59/MWh, from $132.50/MWh in 2024 to $113.91/MWh in 2025
Victoria: down by $6.41/MWh, from $101.09/MWh in 2024 to $94.68/MWh in 2025
Tasmania: down by $1.48/MWh, from $101.81/MWh in 2024 to $100.33/MWh in 2025
Coal still sets price less often overall but remains dominant overnight, especially in Queensland and NSW, where higher coal-linked fuel costs limited how much overnight prices could fall. The AER’s framing: this isn’t one NEM anymore, it’s several markets stacked by time slot and service type.
Competition improves on average, concentration risk gets more specific
New entrants and more diverse ownership cut concentration, particularly midday when solar output is high. But averages mask where the risk actually sits: evening peak and overnight in Queensland especially, where a handful of participants remain pivotal, and firming services, where the largest providers hold outsized shares regionally. Contract markets have stabilized — ASX volumes hit records, open interest recovered from early-2025 lows — but the top five participants account for most reported trading, and access issues (margining, credit, liquidity) persist for smaller players.
On the horizon: 15.7 GW of thermal capacity is scheduled to retire over the next decade, 6.8 GW of it in 2028-29 alone. Whether storage, transmission and new gas entry arrive on time — gas entry looks commercially shaky given turbine shortages and construction costs — is the report’s central open question for reliability and pricing both.
edited and authored by Dave with close collaboration by Claude