Australia's NEM Battery Fleet Erodes Price Spreads as Wholesale Power Hits Five-Year Low
Record renewable output and surging battery storage drove NEM wholesale prices down 47% year-on-year in the June quarter, compressing intraday spreads that storage operators depend on.
Australia's wholesale electricity market recorded its cheapest June quarter since 2020, with average NEM prices falling 47% year-on-year to $74/MWh, according to AEMO's latest Quarterly Energy Dynamics report. NSW spreads collapsed 90% to $41/MWh, Victoria fell 88% to $50/MWh. For battery storage operators who depend on intraday price arbitrage, those are numbers that concentrate the mind.5
Renewable energy supplied a record 42.1% of NEM generation in the quarter, up from 37.1% a year earlier. Wind generation rose 20%, grid-scale solar climbed 12%, and rooftop solar added 6.9%. Coal output slipped 5%. Gas-fired generation dropped 30% to its lowest second-quarter level since 2003, AEMO data show.5
Victoria saw the steepest regional price decline at 60%, followed by NSW at 53%, Queensland at 44%, Tasmania at 39%, and South Australia at 38%. The concentration of the falls in the mainland states reflects where the new renewable capacity is heaviest and where the battery buildout has been most aggressive.5
Grid-scale battery capacity more than doubled over the past year to exceed 9 GW across the NEM. Household battery capacity increased 41% to 3,283 MWh. In Western Australia alone, more than 1 GW of grid-scale battery capacity was added over the twelve months to June. The pace of that buildout is material.5
The WattClarity analysis from July (2026-07-08) captures what that growth rate implies for economics: price spreads across every mainland NEM region have roughly halved, a decline that tracks almost precisely with the period of fastest BESS fleet expansion through 2025 and into 2026. More batteries chasing the same arbitrage window narrows the spread available to each unit.4
May data from RenewEconomy illustrates the dynamic in operation. On May 15 (2026-05-15), batteries charged for a total of 18,585 MWh in a single day, 26% above the prior record. Since December 2025, 5.4 GWh of storage capacity has been added to the NEM. The June 2024 to May 2025 period saw batteries generate 860 GWh against 3,274 GWh from open-cycle gas turbines; the gap has been closing fast since.3
The gas displacement is the more immediate story for fuel markets. OCGT output fell sharply, with Queensland accounting for 500 GWh of the 593 GWh decline across the NEM in that period, RenewEconomy data show. Gas peakers in Queensland are being squeezed from both ends: renewable output that reduces the midday trough requiring fill, and batteries that capture the evening ramp that OCGTs once owned. Wallumbilla gas was trading at A$10.55/GJ as of August 9 (2026-08-09).3
Rystad Energy data published in June (2026-06-03) add texture to the supply side. Utility-scale solar and wind assets generated a combined 4.6 TWh in May 2026, up 10% from 4.2 TWh in May 2025, with records falling in three states that month. David Dixon, Rystad senior analyst, noted the continuation of a consistent year-on-year growth run.2,1
The AEMO demand picture complicates a straightforwardly bearish read. By end of June, 17 proposed data centre projects with a combined maximum connection capacity of 9 GW were progressing through the transmission connection process, AEMO said. If even a fraction of that capacity materialises on the grid, it represents load growth that the current price trajectory assumes away.5
But data centre timelines are long. The battery fleet is growing now. The arithmetic of spread compression is already working against storage revenue in NSW and Victoria, and there is no obvious mechanism to reverse it absent a prolonged renewable drought or unexpected thermal retirements ahead of schedule. Eraring, the country's largest coal plant, was again the biggest single coal contributor in May but accounted for only 10% of total NEM generation — a share that will fall further as more wind and solar commission.3
The question storage developers and their lenders are running is whether merchant revenue from compressed spreads can still service the capital deployed at the build rates seen over the past year. The WattClarity analysis from July (2026-07-08) frames it plainly: the NEM battery fleet may already be competing with itself. Whether the data centre load pipeline materialises fast enough to widen spreads again, or whether the grid simply absorbs the next wave of renewables at prices that erode storage returns further, is the variable that grid-scale battery investors in NSW and Victoria will be tracking most closely through the second half of 2026.4,5