With a 50 per cent increase in capacity in the last two years, batteries are finally fulfilling their long-held promise of stabilising a renewable-powered grid.
Renewable energy sources now produce almost 40 per cent of Australia’s electricity. But even though wind and solar energy deliver affordable, high-output power, their generation can’t be counted on come rain, hail or shine – posing a significant hurdle in the transition towards cleaner energy.
Yet, according to the Australian Energy Market Operator (AEMO), the most cost-effective strategy for powering homes and businesses as Australia moves towards net zero is to back up renewables with storage and gas.
Batteries installed at large, grid-connected facilities and in homes and small businesses play a critical role in capturing excess renewable energy – releasing it during periods of higher demand to smooth the flow of electricity and reduce stress on traditional generators.
What storage technologies does Australia currently have?
Australia is currently experiencing a surge in large-scale battery investments, with approximately 10 GW under construction, said Grant Watt, Senior Policy Advisor at Engineers Australia.
“Grid-connected, MW-scale [batteries] provide frequency control, load shifting and contingency reserves – operating under market dispatch or grid operator control,” he said.
Then there are community or neighbourhood batteries, which typically store up to 5 MW and are connected to the distribution network. “These are relatively new and have generally been subsidised pilots,” Watt said.
On a residential scale, EV batteries not only decarbonise passenger vehicles, but also play an emerging role in bidirectional charging (V2G) to support grid services.
“There have been some great stories recently from storm-impacted communities where people were using their vehicles to keep the power on,” Watt said.
For example, when Tropical Cyclone Alfred left roughly 450,000 homes in northeast Brisbane without power, one household used their BYD Atto 3 EV’s vehicle-to-load system to run essential appliances – keeping their young children safe and comfortable. Other local EV owners also powered lights and medical devices until the grid was restored.
Meanwhile, household batteries are kWh-scale are typically lithium-ion – with around 185,798 installed across Australia.
“In the second half of 2024, 28.4 per cent of rooftop solar installations had an accompanying small-scale battery installed,” he said. “There could be as much as 10 GW of home batteries by 2030.”
How utility-scale batteries maintain grid stability
Over the week of 7–13 March 2025, renewable generation consistently contributed about 40 per cent of the NEM’s output, with black and brown coal still supplying roughly half of total generation. Despite this substantial renewable share, flexible resources such as gas, hydro and especially batteries were required to smooth the short-term fluctuations.
In practice, batteries charged during the late-morning hours when solar and wind output peaked, and wholesale prices were lowest, then discharged in the early evening as residential demand surged. By absorbing surplus midday renewables and releasing that stored energy at peak times, batteries reduced reliance on thermal generators during steep ramps – helping to maintain reserve margins.
“Batteries provide millisecond response for grid stability and frequency control, voltage support and peak shaving,” Watt said. “The latest AEMO Quarterly Energy Dynamics report shows that batteries are the dominant source of frequency control ancillary services.”
Behind-the-meter battery adoption
At the residential and small-commercial level, battery uptake has followed rooftop solar adoption.
But when measured per 100,000 residents, installations cluster unevenly across jurisdictions. South Australia, the Australian Capital Territory and the Northern Territory each exceed the national average of 478 installations per 100,000 people – reflecting stronger incentive programs and higher electricity tariffs that enhance battery economics.
Yet, Western Australia, Victoria, Queensland, New South Wales, and Tasmania fall below that threshold. Policy settings, retail pricing structures, and consumer awareness campaigns vary significantly by jurisdiction – influencing household decisions about storage.
There are four million rooftop solar systems installed nationwide, but only about 3 per cent of those homes and businesses have added battery storage. While this is still small potatoes, 48 per cent (128,000) small-scale batteries have been installed in the last two years.
“Rising electricity costs, cost of living and government subsidies can significantly reduce upfront costs and improve the payback period,” Watt said. “It’s that simple – consumers looking for alternatives.”
Federal and state government rebates, feed-in tariffs, regulatory support for Virtual Power Plant (VPP) integration and dynamic export limits have been the most effective incentives to boost home-battery installations, he added.
“VPPs are one of the keys to integrating distributed energy resources into market operations. But still limited in scale – something to watch in the future.”
What’s next in storage?
Beyond lithium-ion, which are now facing safety concerns and supply chain risks, other storage options can complement battery deployment in Australia.
“Pumped hydro is probably the most important, but concentrated solar thermal and compressed air are becoming more prominent.” Watt said. “Hydrogen is energy storage as well.”
AEMO’s 2024 Integrated System Plan envisages up to 12 GW of new utility-scale battery capacity by 2032 to firm a renewable-dominated grid. And as fossil-fuel–based generators retire, the notion of baseload power is giving way to a paradigm of flexibility.
“The emphasis has shifted to flexibility, not constant output. Grid planning now prioritises resource adequacy and resilience.”
On the residential side utility-scale storage is predicted to be around 60 per cent and distributed around 40 per cent.
But shifting home-storage penetration requires continued cost reductions and streamlined processes – including recycling, which remains complex and expensive.
“Approximately 10 per cent of Australia’s lithium-ion batteries are being recycled compared to about 99 per cent of lead-acid batteries,” he said. “Apart from the obvious environmental benefits, if reuse is not possible, recycling offers the opportunity to recover high-value critical minerals and battery metals.”
There are also many new batteries in development, buoyed by billions in private equity, venture capital and grant funding – with several expected to be available over the next decade or so.
“New technologies will likely be implemented for high-performance applications (such as the military) first, followed by EVs, which are more cost-sensitive,” Watt said.
Emerging battery chemistries include:
- Vanadium-redox flow batteries: Better suited for stationary uses because of their size, these batteries were first developed at the University of New South Wales in the 1980s and are expected to capture significant market share by 2040.
- Microemulsion and water-based redox flow batteries: Allegro Energy’s microemulsion flow battery, developed in NSW, offers a more sustainable, safer technology at lower cost. Monash University engineers have also developed a water-based redox flow battery, aimed at storing rooftop-solar energy cheaply, safely and efficiently.
- Solid-state batteries: Safer with higher energy density and efficiency, offering a significant advantage for EVs.
- Sodium-ion batteries: Currently lower in density and cycle life, but significantly cheaper and far less prone to thermal runaway.
- Lithium-oxygen batteries: Provide a high energy density that is particularly suitable for EVs.
- Edge Functionalised Graphene: Emerged from the ARC Centre of Excellence for Electromaterial Science at the University of Wollongong; highly conducive and readily processable for advanced electrodes.
“It should be noted that Australian researchers punch well above their weight,” Watt added.
Examine further the country’s renewable future with Engineers Australia’s Accelerating the energy transition essay series.
Hornsdale grid battery plant: “…power from the battery to the grid for a price of around A$14,000/MWh”.
That’s great…except the cost of energy from that battery is about 140x more than the wholesale price of energy being about $100/MWh. And somehow this is “cost effective”, “lowers the energy prices” and “saves the consumers money”.
Yes – battery power is shaping the energy grid in Australia. When the “shaping” is over – no one will be able to switch on the lights.
You appear to have missed this part of the article:
“Batteries provide millisecond response for grid stability and frequency control, voltage support and peak shaving,”
The value of grid stabilisation services and energy arbitrage is orders of magnitude higher than raw power provision, and batteries have undercut every other technology to deliver those services.
But your chosen example is even more misleading.
Since you seem to be quoting the Wikipaedia page for Hornsdale, you will have read the rest of the sentence:
“During two days in January 2018 when the wholesale spot price for electricity in South Australia rose due to hot weather, the battery made its owners an estimated A$1,000,000 (US$800,000) as they sold power from the battery to the grid for a price of around A$14,000/MWh.”
Even at that price Hornsby was cheaper than any other available power at that moment.