Extract from ABC News
Record heatwaves saw power use soar, but rooftop solar dealt with the added demand. (ABC News: Andrew Seabourne)
In short:
The summer heat sparked record power use, but renewable energy was able to meet that additional demand.
In its first-quarter snapshot for 2026, Australia's market operator also showed that rising battery capacity was eating into gas use.
What's next?
Power prices are expected to drop with the energy market regulator due to release its power price guidelines at the end of May.
A hot summer saw Australians use record amounts of electricity, but the growing share of renewable energy continues to push fossil fuels out of the grid, driving gas generation to its lowest level in 25 years.
The latest overview of the national electricity market (NEM), which supplies power across the eastern seaboard, showed that rooftop solar generation was more than capable of meeting soaring power demand as the country sweltered under extreme heat.
Output from grid-scale solar and wind farms was also firing, reaching new records for this time of the year.
But the stand-out story for the first quarter of 2026 from the Australian Energy Market Operator (AEMO) was the effect grid-scale batteries had on the grid in shifting renewable energy from the day into the evening peak.
Wholesale electricity prices have dropped from this time last year, but risen compared to final quarter of last year off the back of increased demand in January, before declining in February and March.
Summer, particularly during the record energy surges that accompany heatwaves, is traditionally when the grid is placed under the most stress, but the influx of solar is shifting that dynamic and moderating price spikes.
Batteries eat into gas demand
Most notable, though, was the effect of added battery capacity to the grid, which has doubled from this time last year.
That growth in battery capacity managed to shift about three times as much power from the daytime, when solar power is plentiful, into the evening, when demand is high.
It's caused the need for gas-fired generation to drop by more than a quarter from the same time last year, recording the lowest average for any quarter since 1999.
Program director of energy and climate change at the Grattan Institute, Alison Reeve, said the report showed batteries were overtaking gas as the main energy source for users at peak times.
"What that's doing is actually mopping up a lot of that spare solar energy that we've got in the middle of the day and shifting that to the evening when we're all switching on our heaters and cooking dinner," she said.
"From the consumer's perspective, what we're seeing is that because batteries are able to meet that evening peak cheaper than gas, that has the effect of depressing the wholesale price of electricity, which is about 30 per cent of your bill.
"Even though there have been delays in renewables projects, we are starting to see them coming through, providing more and more energy," she said.
Renewable share grows
Coal-fired power generation was also down over the year, lifting the renewable share of power generation in the NEM to a new high of 46.5 per cent for quarter one, up from 42.5 per cent last year.
Total emissions dropped by almost 5 per cent.
In Western Australia, which operates its own grid, the share of renewables jumped more than 5 per cent from this time last year, to hit 46 per cent, with coal use down 18 per cent, and gas down 2 per cent. The West continues to lead the way on the battery installations, with grid-scale batteries regularly supplying more than 20 per cent of electricity for periods.
Batteries, both big and small, are increasingly reshaping Australia's power systems. (ABC News: Glyn Jones)
Despite the war in Iran driving up gas prices internationally, domestic gas prices remain lower than they were this time last year, which, along with reduced use of gas, has resulted in lower prices.
Grid withstands heat stress
Average wholesale spot prices averaged at $73/MWh, down from the same time last year but up from the previous quarter. The price hike was attributed to above-average temperatures for most of Australia and a record heatwave in South Australia, Victoria, and parts of New South Wales.
Prices tapered off from January through to March as temperatures eased.
The summer's heat was a stress test for Australia's biggest grid, but there were no major supply issues or outages.
Spot prices — a key sign of the balance between supply and demand — were subdued.
Experts said the fact that the grid sailed through the heatwaves marked a turning point for Australia's energy transition, with the pounding sun now an asset, rather than a liability.
Bruce Mountain from the Victoria Energy Policy Centre said the explosive growth of solar power had diminished the risks of blackouts during heatwaves caused by supply shortfalls.
"I think summer peak daily production, other than in evening hours, has become a complete non-issue," Mr Mountain said.
Lower power prices are expected to flow through to consumers in the coming months. In March, the Australian Energy Regulator (AER) released its draft for the default market offer (DMO) for 2026-27, which acts as a safety net for consumers in south-east Queensland, New South Wales, the ACT, and South Australia.
It is the maximum price power retailers can charge consumers who are not otherwise on a competitive market offer, and it works as a benchmark for comparing prices across energy providers.
The draft DMO proposes that annual prices for households should fall by between 1.3 and 10.1 per cent, while small business prices would decrease by between 7.6 and 21.2 per cent, depending on the region.
The final DMO will be released on May 26 and will come into effect from July 1.
With additional reporting from Daniel Mercer.
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