Batteries Take Over Australia’s Daily Peak-Demand Hours

The cost crossover follows a period of rising battery expenses in 2022 and 2023, driven by lithium prices, inflation and supply-chain disruption. CSIRO’s latest GenCost assessment finds battery costs falling again, with added storage already helping to reduce evening peak prices. Open-cycle gas costs, by contrast, are rising as demand for turbines outstrips manufacturers’ capacity. CSIRO does not expect those costs to normalize until around 2035. Reuters has reported turbine lead times can exceed five years and that larger combined-cycle project costs have more than doubled in parts of the US market.

Batteries also offer services gas turbines cannot. They can respond in fractions of a second, support frequency and voltage, absorb surplus solar power and relieve local network congestion. They can charge when electricity is cheap or prices are negative, then discharge during more expensive hours. Their economics still include charging costs, energy losses, degradation and cell replacement, but they avoid ongoing fuel purchases and exposure to carbon costs. Gas generators, meanwhile, cannot consume excess electricity or switch between charging and discharging.

The investment pipeline reflects that shift. AEMO reported in October 2025 that grid-scale batteries made up roughly half of proposed new capacity. The pipeline grew 79% in a year, from 14.6 GW to 26.1 GW; about 18.2 GW was designed with grid-forming capability. New South Wales’ Waratah Super Battery is being developed at 850 MW on a former coal plant site. Victoria’s 300-MW Big Battery supports an arrangement to increase transfer capacity between Victoria and New South Wales.

Batteries are not a substitute for every gas plant. Four-hour systems can shift afternoon solar into the evening and handle short peaks, but storing power across several windless winter days would require substantially more cells. Existing gas infrastructure can still supply electricity during prolonged renewable shortfalls, extreme weather or unexpected outages. CSIRO expects gas technologies to provide approximately 3–7% of Australian generation in 2050.

The change is primarily in how often gas runs. When batteries discharge during scarcity, they can flatten price spikes that peakers rely on, reducing both operating hours and revenue. Gas may remain necessary as backup, but new plants could depend on capacity payments or other long-term guarantees. Demand response, interconnectors, hydro and thermal storage also compete to provide flexibility. CSIRO expects wind and solar to supply as much as 93% of Australian electricity by 2050, supported by storage, transmission, hydro and limited gas or hydrogen. Gas peakers are shifting from routine evening suppliers toward a less frequently used form of reliability insurance.