“Global proof point:” Big batteries overtake peaking gas generators in Australia’s biggest state grids

Australia has emerged as a “global proof point” of a major structural change in electricity grids around the world, with grid scale batteries overtaking peaking gas plant output in its three biggest state grids, according to a major new report.

“Battery storage is no longer just enabling renewables – it is actively replacing gas generation,” the report from Norway based energy consultants Rystad Energy says.

It notes that in 2025, battery generation in Victoria overtook peaking gas-fired output for the first time, which it describes as a major milestone for the Australian power system. It says the same occurred in NSW and Queensland in December and is expected to be the case for the whole year in those states.

Utility-scale batteries are no longer a complimentary technology in Australia’s power system,” Rystad writes. “They are actively displacing gas generation across multiple states.”

“Australia has emerged as one global proof point, alongside California, that large-scale battery energy storage can assume a central role in resource adequacy and peak supply in grids with high solar penetration.”

The observation is interesting because NSW, Queensland and Victoria still have a high percentage of coal-fired generation, whereas states like South Australia have none.

In South Australia, as in California in the US, the share of battery storage in the evening peaks has hit 30 per cent of demand at certain times, although gas has a higher but rapidly declining share of overall generation as it heads towards its target of 100 per cent net renewables by 2027.

“These outcomes mark a structural change in the generation mix rather than a short-term operational anomaly,” Rystad says.

“As utility-scale storage grows in parallel with solar capacity, batteries are increasingly fulfilling the flexibility and adequacy functions historically assigned to gas-fired generation.

“This trend is not unique to Australia. Similar dynamics are likely to emerge in other regions where solar generation is relatively stable and predictable across seasons — including parts of the Middle East and Southern Europe.

“In these markets, solar paired with BESS is becoming cost competitive for an expanding range of applications, while also freeing up gas for higher value uses outside the power sector.”

Globally, battery storage passed an “historic inflection point” in 2025 as more than 100 gigawatts and 280 gigawatt hours was added, taking total capacity to more than 250 GW, and the compound annual growth rate between 2020 and 2025 to more than 100 per cent.

“This rapid expansion positions BESS among the fastest growing energy technologies of the decade, driven by the urgent need for fast, flexible capacity to support power systems with rising renewable penetration,” the report says.

And deployment momentum is expected to growth further in 2026, with another 130 GW, 350 GWh installed this years – led by China, the US, the UK, Australia, and Germany, but with Italy, Saudi Arabia and the Middle East, Chile, and Eastern Europe also becoming important.

Lower costs are a major driver, as are technology improvements. System lifetimes are now extending beyond 20 years and 10,000 cycles, and at capital cost of around $US200 per kWh, Rystad says this translates into a levelized cost of storage of approximately $US50 per MWh — or leven ower in favorable conditions.

“In regions with stable solar resources, co-located solar-plus-BESS projects are increasingly emerging as the most competitive source of new power generation.”

See Renew Economy’s Big Battery Storage Map of Australia for more information.

If you would like to join more than 29,000 others and get the latest clean energy news delivered straight to your inbox, for free, please click here to subscribe to our free daily newsletter.