In Australia, the installed capacity in BESS (Battery Energy Storage Systems) is expected to increase eightfold by 2035.

Australia is on the verge of a dynamic growth in energy storage systems at a utility scale. According to the BloombergNEF report “2025 Australia Energy Storage Update,” the capacity of these systems could increase up to eightfold – from 2.3 GW in 2024 to 18 GW by 2035. The main factors driving this growth are market volatility, policies supporting renewable energy, and the gradual phase-out of coal-fired power plants.

Boom in Large-Scale Energy Storage The Australian energy market has been subject to significant price fluctuations for years, and the growing share of variable renewable energy sources further intensifies these fluctuations. The National Electricity Market (NEM), which covers Queensland, New South Wales, South Australia, Victoria, Tasmania, and the Australian Capital Territory, experiences significant price differences depending on the time of day.

In 2024, wholesale electricity prices dropped during periods of high renewable generation, while coal and gas plants increased production when renewable output was low, driving prices up. This situation creates lucrative opportunities for energy storage systems, which can charge during low-price periods and sell energy when prices rise. In 2024, BESS systems in the NEM earned a record 165.4 million AUD (104 million USD) from price arbitrage, a threefold increase compared to 2023.

Negative Energy Prices and the Coal Phase-Out An increasing frequency of negative energy prices is another factor shaping the Australian market. This phenomenon occurs when supply exceeds demand, typically around midday when solar energy production peaks. During these times, energy producers have to pay to supply power to the grid. In Q4 2024, negative prices were observed for 23.1% of the time in the NEM.

Experts emphasize that although this situation seems problematic at first glance, it presents an opportunity for hybrid solar projects combined with energy storage systems. The ability to store energy and sell it during more favorable periods makes BESS a crucial part of Australia’s energy sector transformation.

At the same time, Australia is accelerating the process of phasing out coal-fired power plants, which, according to BNEF, is expected to be completed before 2040. By 2035, as much as 70% of the existing coal units could be shut down. This creates space and conditions for the adaptation of large-scale storage systems. A notable example of this trend is the BESS installation at the Eraring coal plant, owned by Origin Energy.

The Role of Batteries Regardless of Election Outcome The upcoming federal elections in Australia, scheduled for May 3, 2025, could influence the country’s energy policy. Current Prime Minister Anthony Albanese of the Labor Party has supported the development of renewable energy sources and energy storage systems since 2022, including through the Capacity Investment Scheme (CIS). So far, government support has covered at least 3.9 GW of battery storage.

However, Peter Dutton from the Liberal Party of Australia, Albanese’s main rival, promises a shift towards greater use of fossil fuels (including nuclear power plants). He also plans to lift the ban on nuclear energy, which has been in place in Australia since 1983.

Despite these differences, BNEF analysts agree that regardless of the election outcome, the role of energy storage systems in Australia will remain crucial. Whether the country continues to develop renewable energy or turns toward nuclear and fossil fuels, batteries will be essential for balancing the volatile energy market.

Source: https://www.energy-storage.news/