Australian electricity system and market: Energy storage

Through the National Electricity Market (NEM), Australia operates one of the world’s longest interconnected electricity networks, stretching over 5,000 kilometres. The electricity system is undergoing a profound transformation to renewable energy, driven by exceptional solar and wind resources and ambitious policy targets: 82 per cent renewables in the electricity mix by 2030. The momentum of this transformation is already evident: Australian households are global leaders in rooftop solar and the uptake of battery storage, and in the fourth quarter of 2025 renewables met more than half of electricity demand in the NEM for the first time. At the same time, grid expansion, security of supply and affordability remain key challenges. This briefing series offers an overview of the key structures and central debates surrounding Australia’s electricity system and market.

The fourth briefing explores the evolution of Australia’s energy storage market, with a particular focus on battery storage. It outlines the main revenue streams – from energy trading to Frequency Control Ancillary Services (FCAS) – and the role played by auto-bidding software. It also presents pathways that can secure minimum revenues for battery operators, including contractual structures such as hybrid power purchase agreements (PPAs) and revenue swaps, as well as government support mechanisms such as the Capacity Investment Scheme (CIS). Another key focus is the regulatory framework. In addition, the briefing discusses the role of storage technologies for system security and security of supply in an electricity system increasingly dominated by inverters. Particular attention is paid to grid-forming inverters – an area in which Australia is taking an international lead – as well as emerging technologies such as vanadium redox flow batteries.

The briefing is available as a PDF in German.

Further publications in this series

• First briefing: Market design and regulatory framework

• Second briefing: Electricity grid

• Third briefing: Renewable energy expansion