Big batteries sweep Australia grid tender as gas generation fails to compete
Batteries and solar hybrids won almost every slot in a 7.8GW Australian tender that was explicitly open to gas generators.
Not one gas project made the cut. The Australian government awarded 19 projects under Capacity Investment Scheme Tender 7 on Monday (2026-05-26), delivering 7.8GW of renewable generation capacity — more than 50% above the 5GW target the scheme had set out to fill.4,2
Gas-fired generation was eligible to bid as a firming option. Eight of the successful projects are battery storage or solar-plus-storage hybrids, adding over 2GW of capacity and 7.9GWh of dispatchable storage to the National Electricity Market.4,3 That combination — batteries and hybrids sweeping a tender open to gas — tells the market something the project economics had already been whispering for several years.
South Australia's grid now draws more than 70% of its electricity from renewables, according to state officials cited in the tender announcement.5 The Australian Energy Market Operator warned in February 2023 that supply gaps could emerge as coal plants exited faster than new capacity arrived.7 This tender's outcome suggests the replacement pipeline has shifted decisively toward batteries rather than gas peakers, with developers showing little appetite to take on fuel cost uncertainty and carbon liability under a fixed-revenue underwriting structure.
The storage numbers are large. Acen Australia's Birriwa solar farm, rated at 600MW, is paired with 2,400MWh of battery storage in New South Wales. Lightsource bp's Gundary project adds 320MW of solar with battery capacity alongside.4 Spark Renewables, owned by Malaysia's state-linked energy group, secured two NSW hybrid projects: Dinawan at 300MW solar plus 1,200MWh battery, and Wattle Creek at 180MW solar plus 720MWh battery.4
Malaysia's Gamuda Renewables took a Tasmanian slot with the 200MW Weasel Solar Farm, developed alongside Melbourne-based Alternate Path.4 In Queensland, Spanish infrastructure group Cobra's subsidiary Zero-E won two projects — Moranbah at 171MW solar with 100MWh battery, and Gunning at 290MW solar with 542MWh battery.4 Almost 2.5GW of total generation capacity across the full tender will be delivered by solar projects.4
The CIS mechanism helps explain why batteries outcompeted gas. The scheme underwrites revenue floors for dispatchable capacity, allowing developers to reach financial close without relying on merchant power price exposure.4 That structure favours assets with predictable cost curves. Gas peakers carry fuel cost and carbon exposure that erodes the value of a fixed floor; batteries do not.
Origin Energy holds the largest single award in a related CIS round — the 1.45GW Yanco Delta wind farm in south-west New South Wales — though that is a wind-only development, not a firming play.1 Origin has said it hopes to reach a final investment decision by end-2026 or early 2027, subject to state approvals.1
Grid-scale storage projected online by 2027 across the NEM is already reshaping dispatch dynamics.6 South Australia's day-ahead power price sat at A$170.44/MWh on Wednesday (2026-07-29), while Wallumbilla gas traded at A$11.50/GJ, up 2.59% on the session. [LIVE PRICES] Gas at that level could theoretically support peaker dispatch, but the CIS results signal that the regulatory and investment pathway for new gas capacity is narrowing regardless of spot economics.
The Capacity Investment Scheme explicitly allowed gas bids. None won. If future CIS rounds follow the same pattern, Australia's remaining coal exits — several plants scheduled to close before 2030 — will be backfilled primarily by batteries and renewables.4,2 Gas would be left as a diminishing peaking resource with shrinking growth prospects, not the firming backbone some producers had anticipated.
The next CIS tender timetable and any adjustment to the firming criteria are now the key things to track. A government decision to recalibrate eligibility rules to favour dispatchable thermal generation would change the calculus; an unchanged framework would confirm the direction this round has set.4