Australian Renewables Surpass Fossil Fuels as Battery Output Triples

2026-01-29 global

Canberra, Thursday, 29 January 2026.
Renewables met over half of Australia’s power demand for the first time in late 2025, slashing wholesale prices by 50 percent as battery discharge capacity tripled to ensure stability.

A Deflationary Impact

The final quarter of 2025 marked a definitive turning point for the National Electricity Market (NEM), where renewable energy supplied 51% of total demand, surpassing the 50% threshold for a full quarter for the first time [1]. This surge in supply—up from 46% in the same period in 2024—placed significant downward pressure on costs [1]. Wholesale electricity prices averaged $50 per megawatt hour (MWh), representing a steep decline of 44% compared to the fourth quarter of 2024 [3]. The correlation between high renewable penetration and lower prices was particularly evident in Victoria and South Australia, where averages dropped to $37/MWh, contrasting with New South Wales where prices remained higher at $75/MWh [4].

Storage at Scale

Crucially, the grid managed this high renewable penetration without compromising stability, largely due to a massive expansion in storage capabilities. Battery discharge rates nearly tripled to 268 MW during the quarter, supported by the integration of 3,796 MW of new battery capacity since late 2024 [3]. This rapid scaling of dispatchable storage allows the system to smooth out the intermittency of solar and wind, shifting low-cost energy generated during the day to meet evening peak demand [8].

The Thermal Retreat

As renewables and storage ascended, traditional thermal generation retreated to historic lows. Gas-fired power generation plummeted by 27% to its lowest level since the fourth quarter of 2000, while coal-fired generation fell 4.6% to a new quarterly low of 11,544 MW [1][3]. This structural displacement of fossil fuels resulted in a significant environmental dividend; emissions in the NEM fell to a record low of 23.4 million tonnes of CO₂-e, a 6.2% decrease compared to the previous year [4].

Sources

Energy Transition Battery Storage