Australian Battery Revenue Under Pressure as NEM Spreads Hit Record Lows
What makes the NEM different - and why it matters for storage
The Australian National Electricity Market is unusual by global standards. It is one of a small handful of energy-only electricity markets, sitting alongside ERCOT in Texas, Alberta in Canada, New Zealand, and Singapore.
In these markets, investment signals are intended to come primarily through wholesale energy prices rather than from a separate capacity market. This design leads to higher volatility and more extreme price spikes by nature - and it means the wholesale price is the primary signal indicating whether additional generation, load, and storage can be economically sustained over time.
Over the past few months, there have been signs that this signal is getting weaker.
Intraday spreads in 2026: what the data shows
2026 has so far delivered record-low intraday spreads across the mainland NEM:
Average autumn afternoon peak prices reached only around $70/MWh, while midday troughs fell to roughly $12/MWh - a year-on-year fall in 2-hour spreads of over 70%.
Year-on-year comparisons are never perfectly clean - weather, demand, outages, fuel prices, and broader macroeconomic conditions all shape price outcomes. But beneath that noise, a more structural shift is becoming clear.
Why spreads are compressing: renewables, storage, and the Cheap Home Batteries Programme
Two forces are working in tandem. Growing volumes of low-marginal-cost renewable generation are compressing daytime prices, while increased storage capacity is beginning to smooth the evening peak that batteries have historically relied on for revenue.
The scale of battery market participation has grown dramatically. Evening peak battery discharge rose by 275% while daytime charge increased by 300% in Q1 2026, with batteries accounting for over 32% of all price-setting intervals according to AEMO's Q1 2026 Quarterly Energy Dynamics report.
Alongside that, over 2.5 GWh of new residential battery capacity was deployed in Q1 2026 alone, driven by the Federal Cheap Home Batteries Programme. The combined effect on spreads - and on battery operator revenues - has been material across all mainland NEM regions.
The chart above showing annualised Autumn battery revenues in each mainland NEM region highlights just how material this structural change has been. On average, batteries earned over 60% less compared to last year’s Autumn, and over 80% less when compared to 2021.
What falling spreads mean for flexible asset owners
For flexible asset owners, the challenge is no longer just capturing volatility - it is understanding how that volatility is being reshaped. Increased renewable and BESS capacity, coal retirements, weather variability, and new sources of demand such as data centres will all reshape spreads in different directions across regions and timeframes.
A single revenue forecast is no longer sufficient. Asset owners need to test how location, merchant exposure, contracting options, and co-location economics perform under different assumptions about future price formation - and to do that across a range of scenarios, not just a central case.
Model the moving pieces with Gridcog
Gridcog helps asset owners understand where flexibility still stacks up - combining location, contracting, and price formation assumptions in one model. If you are thinking through battery investment or optimisation strategy in the NEM, get in touch.
