AEMO flags 2.8 GW of hidden batteries as NEM volatility shifts shape
Behind-the-meter batteries now match Eraring's capacity, and AEMO says they are reshaping how the National Electricity Market prices scarcity.
Australia's National Electricity Market entered the 2026-27 planning season carrying a number that complicates every supply-demand forecast: 2.8 GW of behind-the-meter batteries that respond to prices but are not centrally dispatched. AEMO reported the figure at industry conferences in late May 2026, noting it is the equivalent power capacity of the retired Eraring Power Station.2
The significance lies in how it changes volatility's shape. AEMO's analysis points to intra-day price swings compressing in some periods, while inter-day and event-driven volatility grows more important. For a market historically defined by sharp afternoon peaks, the storage build is flattening the very price curves traders have learned to trade.2
The fleet's growth is not speculative. The Clean Energy Council's tally shows Australia added a record 2 GW of utility-scale big battery capacity in 2025, a 233 per cent increase on 2024, making the country the third-largest big battery market in the world behind only China and the United States.1 Another 4.3 GW, or 13.5 GWh, was financially committed over the year, worth $4.8 billion of investment — a 67 per cent rise on 2024's level.1
But the more consequential number is the one AEMO cannot fully dispatch. The 2.8 GW of behind-the-meter storage responds to price signals without central coordination, and AEMO's own presentation acknowledged the uncertainty that introduces into supply-demand forecasts.2
Effects are already visible. WattClarity's analysis of South Australian and Tasmanian price events described a "break in the volatility drought" after months of subdued prices, including through the 2025-26 summer, with the rise of battery storage widely cited as a contributing factor to the calm.4
That calm does not run deep. AEMO CEO Daniel Westerman, speaking at Australian Energy Week in June 2026, described the previous year's conditions as "one of the most challenging periods that AEMO has ever experienced," after the operator issued around 500 directions to over 5 GW of generation plant and suspended the entire National Electricity Market to keep supply reliable.3
The fleet backing that system is ageing. Nearly 40 per cent of the NEM's coal fleet has retired since market start, and the average age of remaining stations is 38 years.3 Consumer resources are filling part of the gap: AEMO says more than 4 million generators sit on the rooftops of one in every three Australian homes, and their combined generating capacity now exceeds that of the remaining coal-fired fleet, at times meeting more than 60 per cent of all NEM demand.3
The GenCost report from Australia's national science agency adds a cost dimension. Rising demand from data centres is driving up the costs of gas-fired electricity generation, and the report finds batteries are increasingly becoming the preferred technology for flexible generation. That puts direct pressure on the economic case for new gas peakers, against assets that now undercut them on response time and, increasingly, on cost.5
The commissioning pipeline reinforces the trend. AGL Energy's Liddell Battery, rated at 500 MW and 1,000 MWh in full build, started commissioning its 250 MW, 500 MWh first stage during 2025.1 Equis and Victoria's State Energy Corporation contributed the first 600 MW, 1,600 MWh stage of the Melbourne Renewable Energy Hub to the grid in the same year.1 Akaysha Energy's Ulinda Park project near Millmerran, Queensland, brought its 55 MW, 298 MWh first phase into NEM trading by December 2025.1
For traders, the pattern shift is already underway. If inter-day and event-driven volatility replace the old solar-driven afternoon peak as the dominant price-setting mechanism, strategies built around that peak may not transfer. Batteries competing against batteries, rather than against gas, changes who sets the marginal price and how often.1
AEMO can direct centrally dispatched assets in a stress event. The 2.8 GW of behind-the-meter capacity responds only to price, and a cold snap or sudden generator outage will be the first real test of whether that uncoordinated fleet stabilises the system or amplifies the stress.2,4