Fast read
As coal power stations retire and solar and wind take centre stage, Australia’s grid faces new stability challenges. Batteries—both household and grid-scale—are central to the solution, storing excess renewable energy and stabilising the grid during fluctuations. While blackouts aren't imminent, the pace of investment in energy storage needs to accelerate. Programs like the federal Cheaper Home Batteries Program launching in July 2025 will play a vital role in bolstering our grid’s reliability and supporting Australia's renewable energy future.
Will the Australian electricity grid be unstable soon without more batteries in the system?
Australians are right to ask: will our electricity grid cope as we rapidly switch from coal to renewables? It’s a pressing concern. Coal-fired power stations, which have long provided consistent and stabilising energy, are phasing out. Meanwhile, solar and wind, while clean, are inherently variable. Without robust energy storage and grid upgrades, this mismatch between supply and demand could compromise grid reliability. But here’s the key: instability is not inevitable. It’s a risk we can manage with foresight, investment, and technology.
How the grid is changing—and why that matters
Australia’s National Electricity Market (NEM) is undergoing one of the world’s most ambitious energy transitions. Over 60% of our coal fleet is projected to retire by 2033. Meanwhile, rooftop solar is booming, and large-scale renewables are coming online fast. But this cleaner energy mix brings technical challenges:
Loss of inertia and system strength
Coal and gas generators provide inertia—a buffer against sudden frequency changes—and system strength, which stabilises voltage. As they retire, these essential stabilising forces diminish. Inverter-based renewables, like solar and wind, don’t inherently provide these services—unless paired with advanced technologies like grid-forming inverters or synthetic inertia systems.
The intermittency problem
Solar generation peaks at midday, but demand often peaks after sunset. Wind output varies unpredictably. This misalignment requires energy shifting, turning daytime generation into evening supply.
Transmission bottlenecks
Many renewable projects are built far from urban centres. Without adequate transmission capacity, clean energy can’t always reach where it’s needed, leading to curtailment (wasted energy). Rising intervention frequency, AEMO increasingly steps in to maintain grid security, a sign that traditional systems are straining under new conditions.
Why batteries are critical to grid stability
Battery energy storage systems (BESS) have emerged as a cornerstone of Australia’s future energy strategy, for good reason:
- Smoothing renewable output – Batteries soak up excess solar and wind power when it’s abundant, then discharge it when demand rises, particularly during the evening peak.
- Instant frequency control – Unlike traditional generators, batteries can respond within milliseconds to stabilise frequency or voltage. They’re ideal for delivering Frequency Control Ancillary Services (FCAS).
- Grid-forming capabilities – Some batteries use advanced inverters to provide synthetic inertia and voltage support, essentially replicating the stability once delivered by coal plants. Projects like Hornsdale Power Reserve in South Australia have proven these capabilities.
- Reducing curtailment – In areas with limited transmission, local batteries allow renewable generators to continue operating instead of throttling back.
- Deferring costly upgrades – Localised storage can reduce stress on poles and wires, potentially delaying the need for expensive infrastructure projects.
What’s the federal “Cheaper Home Batteries Program”?
From 1 July 2025, the Australian Government will offer a significant battery rebate, aiming to accelerate battery adoption across homes, businesses, and community facilities.
- Up to 30% off upfront battery costs, translating to ~$370–$372 per kWh of usable capacity.
- Applies to batteries from 5 kWh to 50 kWh, including systems paired with new or existing solar.
- Available nationwide, and likely stackable with state rebates (e.g,. in NSW, WA, NT).
- Supports grid-connected and off-grid systems, with most batteries needing to be VPP-capable (though joining a VPP won’t be mandatory).
This rebate will help build a more distributed energy ecosystem, where thousands of small batteries work together, particularly via Virtual Power Plants (VPPs), to stabilise the grid.
Is the grid about to become unstable?
Let’s be clear: the threat of grid instability is real but manageable. AEMO projects a need for at least 22GW of dispatchable storage by 2030—up from about 3GW today. Without accelerated investment, reliability risks could rise, especially during summer peaks or as ageing coal plants retire unexpectedly. However, instability isn’t guaranteed. Australia is taking action across multiple fronts:
- Grid-scale batteries: Dozens of major projects are under construction, backed by initiatives like the Capacity Investment Scheme.
- Pumped hydro: Projects like Snowy 2.0 will provide large-scale, long-duration storage.
- Synchronous condensers: These machines provide inertia without burning fuel, replacing some services lost from coal.
- Gas peakers: Still playing a transitional role, gas turbines can quickly meet demand surges.
- Demand-side solutions: Smart meters, dynamic pricing, and energy efficiency are helping consumers reduce peak demand.
- Transmission upgrades: AEMO’s Integrated System Plan (ISP) outlines strategic upgrades to connect renewables and reduce congestion.
What can you do?
Batteries aren’t just good for the grid—they’re a smart move for many homes and businesses. With generous incentives arriving soon, it’s an ideal time to:
- Assess your current solar setup: Is it ready to pair with a battery?
- Compare battery options: Look for CEC-approved products like Sungrow or Tesla Powerwall, and ensure compatibility with VPPs.
- Get advice from trusted experts: Battery systems are a significant investment—tailored guidance is key.
Final thoughts
Australia’s path to a clean energy future is clear—but not without its challenges. Batteries are a central part of the solution, providing the flexibility and fast response that our evolving grid needs. While the system isn’t on the brink of collapse, it does require continuous and coordinated investment to stay stable. The upcoming Cheaper Home Batteries Program is a welcome catalyst for change. By supporting battery uptake, it empowers households to store their solar, reduce reliance on the grid, and strengthen system reliability for all.
If you’re considering a battery, now is a smart time to plan ahead. Your Energy Answers can connect you with accredited local professionals who’ll provide honest, practical advice—free of charge.
