Australia’s electricity grid has withstood a summer of record demand, with renewable energy and battery storage continuing to displace fossil fuels, according to the latest update from Australian Energy Market Operator.
A report on the National energy Market (NEM), which provides power to the eastern seaboard, shows that rooftop solar was a big part of meeting the high demand for energy during the heavy heat. Despite underlying demand rising steadily since 2022, solar generation has largely kept pace, helping to offset increased consumption.
Grid-scale wind and solar also put out a lot of power, setting new records for the season. However, the most significant development was the rapid growth of large-scale batteries, which are increasingly shifting excess daytime solar energy into the evening peak.
Wholesale electricity prices were lower than the same period last year, although slightly higher than the previous quarter due to elevated demand in January. As the weather got warmer in February and March, prices went down.
Batteries reduce reliance on gas
Battery capacity across the NEM has doubled compared to a year ago, enabling around three times more energy to be shifted from daytime to evening periods. This has significantly reduced reliance on gas-fired generation, which fell by more than 25 per cent year-on-year to its lowest quarterly level since 1999.
According to Grattan Institute energy program director Alison Reeve, batteries are now overtaking gas as the primary source of peak-time supply.
“They are soaking up excess solar during the day and delivering it in the evening when demand is highest,” she said. “Because batteries can supply this energy more cheaply than gas, they are helping to bring down wholesale electricity prices, which make up about 30 per cent of household bills.”
Renewables reach new highs
Coal generation also declined over the year, pushing the renewable share of electricity in the NEM to a record 46.5 per cent for the first quarter of 2026, up from 42.5 per cent last year. Emissions dropped by nearly 5 per cent over the same period.
In Western Australia, which operates outside the NEM, renewables accounted for 46 per cent of generation, up more than 5 percentage points year-on-year. Coal use fell by 18 per cent and gas by 2 per cent, with grid-scale batteries at times supplying more than 20 per cent of demand.
Grid handles extreme heat
Despite above-average temperatures and major heatwaves across South Australia, Victoria and parts of New South Wales, the grid experienced no major outages or supply disruptions.
As the weather got cooler, average market prices dropped to $73/MWh, which was lower than a year ago but higher than the previous quarter. Experts say the grid’s performance during the summer marks a turning point, with solar now helping to stabilise supply rather than strain it.
Bruce Mountain from the Victoria Energy Policy Centre noted that daytime summer peaks are no longer a serious issue because solar capacity is expanding so quickly.
Lower wholesale prices are expected to flow through to consumers in the coming months. The Australian Energy Regulator has already released its draft Default Market Offer for 2026–27, which sets a benchmark for electricity pricing across parts of the eastern states.
Overall, the paper emphasises how batteries and renewable energy are changing Australia’s energy balance and lowering emissions, lowering dependency on fossil fuels, and strengthening grid resilience even under extreme conditions.