Australia's energy grid hit a new milestone in the first quarter of 2026: batteries, not coal or gas, were the technology most frequently setting prices on the National Electricity Market (NEM). According to the Australian Energy Market Operator's (AEMO) Quarterly Energy Dynamics report, battery charge and discharge activity together set prices in 32 percent of dispatch intervals over the quarter, more than any other generation source.

The shift has been driven in large part by a boom in household batteries. The federal government's Cheaper Home Batteries program has now helped install more than 350,000 home battery systems, which store cheap rooftop solar power during the day and discharge it in the evening, displacing gas-fired generation at the time it is usually most expensive. Minister for Climate Change and Energy Chris Bowen said the rollout was helping "shield our grid from global energy volatility" while bringing down household bills.

"We've got the best sun and wind in the world, and we're using our sovereign renewables to shield our grid from global energy volatility and to bring down your energy bills," Bowen said, presenting the quarterly figures. "We know energy bills are still too high — because when coal breaks down, your bill goes up — but this quarter shows steady progress."

The broader numbers back up the trend. Renewable generation supplied a record 46.5 percent of NEM generation in the first quarter of 2026, up from 42.5 percent in the same quarter the previous year. Grid-scale solar output hit a new quarterly record of 2,706 megawatts, up 13 percent year-on-year, while wind output reached 3,845 megawatts, up 9.3 percent, with much of the gain coming from new and commissioning facilities in Queensland. Rooftop solar remained the single largest renewable contributor, averaging 4,090 megawatts and supplying 15.8 percent of total demand on its own.

Fossil fuel generation continued to retreat over the same period. Coal-fired output fell to a new first-quarter low of 13,102 megawatts, down 4.4 percent year-on-year, while gas-fired generation averaged just 712 megawatts, down 24 percent and the lowest quarterly average recorded since the final quarter of 1999. The result was a 12 percent year-on-year fall in average wholesale prices across the NEM, even as overall electricity demand rose to a quarterly record.

Not everyone agrees on what the figures mean for policy. The opposition Coalition has criticised the government's approach, arguing for a greater focus on extending the life of coal generation. Bowen rejected that framing directly: "The Coalition's plan is to stop renewables and household batteries, sweat coal, and leave Australians to pick up the bill of global shocks."

The household battery boom is also reshaping the wider energy retail market. Octopus Energy, an electricity retailer partly owned by one of Australia's largest energy utilities, has launched a new range of plug-in and wall-mounted battery products aimed at capturing demand from households that haven't yet joined the scheme — a sign that the market expects the trend to keep accelerating through the rest of 2026.

Claire Hutchinson

Articles

Batteries Are Now Setting Australia's Power Prices More Than Any Other Technology