Big batteries shut out gas in South Australia grid firming tender
Battery projects claimed every megawatt in a tender open to gas, a result that reprices firming economics in a grid already three-quarters renewable.
Battery storage projects won every megawatt of capacity awarded in South Australia's latest grid firming tender, a contest open to both battery and gas generation, leaving fossil-fuel firming with zero contracts.4
The result carries weight because South Australia already draws more than 70 per cent of its electricity from renewable generation, according to the state government, and the tender was written to buy system reliability rather than a specific technology. Batteries won on the one metric gas peakers have long claimed as their own.4
The awards point to a shift in how grid operators value flexibility. Batteries respond within milliseconds and carry no fuel price risk, while gas peakers remain exposed to the spot gas market, with Wallumbilla trading at A$11.10/MMBtu at Friday's close (2026-07-10). The tender bought firming capacity that regulators judged a meaningful contribution to reliability and strong value for consumers.4
EDF's French parent may take note. The utility said on Wednesday (2026-05-20) that electrification was "imperative" for France amid the latest energy shock caused by the Iran war, announcing a plan to lift power demand by 5.5 TWh, or 1 per cent a year. New heat pumps and electric trucks could add 0.5 TWh a year, and EDF said it would offer "turnkey sites" with grid connections to new industrial users.1
The French push faces different constraints. EDF's demand growth depends on connecting new industrial load rather than absorbing a renewables glut, and the South Australian tender does not automatically translate to a system with EDF's very different generation mix. Where South Australia is buying firming to manage variable output, France is trying to build the demand in the first place.1
The US battery market shows the same demand surge running into physical limits. The United States added a record 57.6 GWh of new battery energy storage capacity in 2025, taking total deployed capacity to 166.1 GWh, according to the Solar Energy Industries Association. The group projects annual deployments will reach 110 GWh by 2030, much of it driven by data centre demand.2
Those figures come with caveats. Energy storage firms face long queues to connect to the grid and a supply chain heavily dependent on China, both of which slow the pace at which pipeline turns into operating assets, Reuters reported. Fluence chief executive Julian Nebreda said the company is engaged in more than 30 GWh of data centre-related projects globally, with a meaningful portion in the United States.2
Australia's federal energy and climate minister Chris Bowen has pointed to data centre interest as a potential lifeline for wind projects that have struggled to land power purchase agreements and been left at the starting gate. If data centres anchor the off-take for new renewables, batteries become the firming layer that makes the stack work, and gas is squeezed from both ends.3
The South Australia tender may accelerate that squeeze. Gas generators that banked on being the preferred firming option in a high-renewables grid now face a market where regulators, not just merit-order prices, are choosing batteries.4
The unresolved test is duration. The one scenario that still favours gas is a multi-day wind lull, when batteries at scale can exhaust their stored energy before dispatchable generation runs out of fuel. Whether South Australia's reliability outlook holds through that event is the signal to watch, and the tender result does not yet answer it.4