Wind and solar have eaten most of the coal industry’s lunch, and batteries are hoeing into its dinner

Wind and solar provided an average of nearly 70 per cent of power demand in the middle of the day on Australia’s main grid in the last quarter of 2025, consuming the bulk of the fossil fuel industry’s lunch that had sustained its “base-load” business model for decades.

And now big batteries – and likely small ones too – are starting to take big chunks out of the coal and gas industry’s juicy dinner treats.

The latest power quarterly survey from BloombergNEF highlights the rapidly changing shape and nature of the country’s main grid, which is just a foretaste of what’s to come as the federal government seeks to reach its 82 per cent renewables target, which seems inevitable whether on schedule in 2030 or a few years later.

The new report notes – as others already have – that renewables supplied 50 per cent of power demand in the National Electricity Market (NEM) in the fourth quarter of 2025, with wind and solar alone providing 45 per cent. For the first time, renewables beat coal, whose share fell to 47 per cent.

But that tells just a part of the fundamental shift that is occurring in the grid, and the full frontal assault on the coal industry’s decades-long business plan – chug along through the day and night and cash in on the lucrative evening demand peaks.

The BNEF data shows that wind and solar supplied an average of 69.7 per cent of the NEM’s midday power demand over the quarter, peaking at 76.2 per cent on October 11.

Midday demand is now dominated by rooftop solar systems, forcing coal generators to ramp down at midday and back up to meet morning and evening peaks. Some coal generators are even testing systems to turn off units entirely during the middle of the day, hopeful they can still cash in on the evening peaks.

However, even the profitable dinner-time generation plans are being disrupted by other new technologies, with utility-scale batteries increasing their share of evening demand, eating into coal and gas generators’ remaining profitable hours.

BNEF says grid-scale batteries, supplied an average of 4.4 per cent of power demand at 7pm, nearly triple their market share of 1.5 per cent a year earlier, and peaked at 9.9 per cent on December 3.

This graph above illustrates the change over the last five years – and this is expected to accelerate as the rate of installations for wind, solar and battery storage increase in coming years.

The clearest demonstration of this transition is seen in South Australia, now the country’s – and the world’s – most advanced renewable grid with an average share of renewables of more than 75 per cent and a target of reaching 100 per cent net renewables by the end of next year.

According to BNEF, the average minimum demand levels have plunged to minus 138 megawatts over the fourth quarter, underlying its needs to export or store surplus output.

Fortunately, the last of its coal generators were shut a decade ago, and the system security issues which are supposedly preventing the early closure of Eraring in NSW have largely been addressed in South Australia thanks to its mix of synchronous condensers and grid forming batteries.

Coal generation still operates in four states – NSW, Queensland, and Victoria in the NEM, and Western Australia on the separate WEM grid. W.A. is closing the last of its coal generators at the end of the decade, while the final closure dates in the other states remain uncertain.

But the business case for coal is getting difficult. BNEF notes that the average utilisation rate of coal fired generators has fallen to just 51.3 per cent, which makes it hardly “base-load” (particularly given their tendency to fail in a crisis) and is below the best performing wind farms.

In NSW, the average capacity factor of its remaining coal generators was just 47 per cent in the latest quarter. The best performing wind farm, Diapur in Victoria, had a capacity factor of 67 per cent.

“Coal plants must operate profitably for a large portion of the year to recoup their fixed and maintenance costs,” the BNEF analysis notes.

“This is becoming challenging as wind and solar generation squeeze coal out of the midday merit order, while batteries gradually increase their share of demand in the evenings.

Still, curtailment remains a big issue for wind and solar farms, and will remain the case until grid congestion issues are addressed and more storage added to the grid. Wind curtailment hit 16 per cent in the December quarter and was highest (25.8 per cent) in Victoria.

Large scale solar farms fare worse, with their own lunch eaten by rooftop solar, and in South Australia the average capacity factor of its handful of big solar projects stood at just 13 per cent, as more than half (59 per cent) of their potential output was curtailed by negative prices.

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