The Data Behind Australia’s Battery-Led Grid Shift

As coal and gas retreat, grid-forming batteries step up to anchor stability across Australia’s evolving power system

2 Dec 2025

Australia’s electricity system is beginning to rely on grid-forming batteries to maintain stability, as ageing coal and gas plants continue to retire and renewable generation expands across the country.

Grid-forming battery energy storage systems are being deployed across the National Electricity Market to provide services such as frequency control, voltage support and system strength. These functions were once delivered almost entirely by synchronous generators, including coal- and gas-fired power stations.

Rather than replacing fossil fuel plants outright, batteries are gradually reducing the system’s dependence on them, particularly in regions with high levels of wind and solar generation. The shift reflects the changing needs of a grid with lower inertia and more variable power supply.

The Australian Energy Market Operator has said about 10 grid-forming battery projects are either operating or firmly committed, with close to 1 gigawatt of capacity across the market. The growing portfolio has increased confidence among planners that reliability can be maintained as conventional generators withdraw.

Public funding has played a role in accelerating deployment. Projects backed by the Australian Renewable Energy Agency have shown that grid-forming batteries can operate at scale and integrate with existing networks. Lessons from these trials have informed AEMO’s planning assumptions, which increasingly place batteries at the centre of future system strength and stability.

Private developers are also incorporating grid-forming capability into new projects, although progress is uneven. Many large batteries still operate in grid-following mode, with upgrades planned as technical standards develop and market signals become clearer. Some operators, including Neoen, have adopted grid-forming operation early, while equipment suppliers such as SMA are refining control systems to support wider adoption.

Grid-forming batteries also alter the economics of storage projects. Beyond buying and selling electricity, they can earn revenue from stability services that were previously tied to fossil fuel assets.

Challenges remain, including how multiple grid-forming assets interact and how system services should be priced. Regulators and system operators continue to work through these issues as deployment accelerates.

Australia’s experience is being closely watched by other power systems managing the same transition, as batteries move from supporting roles toward core infrastructure within a lower-carbon grid.