Australia's big battery build-out passes 2 GW in 2025, shifting the NEM's evening peak economics
Australia's utility-scale battery fleet grew 233% in 2025, pressuring gas peaker margins and reshaping how the grid meets evening demand.
Australia added a record 2 gigawatts of utility-scale battery capacity during 2025, a 233% increase on the prior year that makes the country the world's third-largest big battery market behind only China and the United States, according to the Clean Energy Council's latest tally.1
That matters for gas-fired generators on the National Electricity Market because batteries are increasingly being dispatched in the evening peak window that has historically been the most profitable period for gas peakers. The CEC report notes another 4.3 GW and 13.5 GWh of big battery capacity was financially committed over the year, worth $4.8 billion of investment, a 67% increase on 2024 levels.1
The fleet's composition is telling. AGL Energy's 500 MW, 1000 MWh Liddell Battery began commissioning its first 250 MW stage, while Equis and Victoria's State Energy Corporation pushed the 600 MW and 1600 MWh first stage of the Melbourne Renewable Energy Hub through development.1 Akaysha Energy's Ulinda Park battery near Millmerran in Queensland brought its 55 MW, 298 MWh first phase online and trading on the NEM by December.1
Behind the meter, the picture is just as striking. The Australian Energy Market Operator reports 2.8 GW of price-responsive behind-the-meter batteries now operating on the system, equivalent to the capacity of the 2.8 GW Eraring coal plant.2 These units are not centrally dispatched but respond to price signals, adding a layer of flexible demand that complicates forecasting for both AEMO and incumbent generators.2
Traders who have watched intra-day volatility compress across the NEM say the pattern is shifting. Intra-day volatility appears to be narrowing in some periods while inter-day and event-driven volatility is becoming more significant, a dynamic that reflects the growing battery fleet's ability to arbitrage the daily solar trough and evening ramp.2
The national science agency's GenCost report, released in July, concluded that batteries are now Australia's preferred technology for flexible generation, with data centre demand driving up the costs of gas-fired generation in comparison.4 That cost pressure is one reason the pipeline of committed battery projects continues to grow despite falling wholesale prices in some regions.4
Data centres are the demand-side wildcard. Average data centre demand in the NEM through Q1 was nearly 600 MW, AEMO's chief executive said at Australian Energy Week in June, with 11 data centres totalling 5.4 GW of ultimate load working through transmission connection agreements.3 That pipeline of new load is concentrated in regions where the grid is already tight, arriving just as AEMO's planning documents weigh demand-side responses more heavily in both the Electricity Statement of Opportunities and Gas Statement of Opportunities.3
The evening remains the system's biggest challenge. Solar generation peaks around midday, depressing prices, but when the sun drops, the grid must ramp quickly. Analysts describe the classic duck curve pattern, and batteries are now the primary tool for flattening it, increasingly competing with each other rather than with gas peakers for the evening arbitrage.6,1
South Australia's day-ahead spot price settled at A$255.00/MWh on Thursday (2026-08-13), reflecting the state's high solar penetration and heavy reliance on storage and interconnectors to bridge the evening transition.6 Wallumbilla gas held at A$10.55/GJ at Thursday's close (2026-08-13), giving gas generators in Queensland a cost base that batteries are now undercutting in the peak window.6
The unresolved risk is the pace of coal retirements against new dispatchable capacity. AEMO's earlier projections warned that renewable and storage projects were lagging behind coal plant closures, with supply shortage risks escalating in the later years of the decade.5 The 2 GW added in 2025 narrows that gap, but the 4.3 GW committed but not yet built will need to land on schedule while data centre connections multiply.1,3
As more storage chases the same evening price spike, the arbitrage window narrows. The CEC expects this dynamic to continue as batteries compete more with each other than with gas peakers.1 For gas-fired asset owners, the margin erosion is a matter of pace, not direction.1
AEMO's updated forward planning documents, due later this year, will show how the operator's demand forecasts have shifted with data centre growth and how much additional storage it assumes is needed to replace retiring coal.3 The gap between committed battery capacity and projected requirements will indicate whether the evening peak stays tradeable for gas.1,3