The rapid expansion of grid-scale battery storage is poised to fundamentally disrupt the profitability of coal-fired power generation. As capacity reaches 19 gigawatts and 55 gigawatt-hours, coal generators face mounting economic pressure due to their high fixed costs and inability to cycle output efficiently. While batteries have already significantly reduced gas reliance and peak spot prices across the National Electricity Market, the upcoming second wave of storage projects will further erode coal’s market share. This shift underscores the growing necessity for additional wind and solar investment to support a transforming energy grid.
The transition is already evident in market data, where peak spot prices have plummeted from $345/MWh to $104/MWh. With gas’s contribution to the evening peak market halved, the focus is shifting toward coal. Unlike gas plants, which are designed for flexible operation, coal facilities struggle to compete with the rapid response of battery storage. As these batteries increasingly target morning and overnight peaks, coal generators will find it difficult to maintain revenue, especially as household battery adoption continues to suppress overall demand.
Looking ahead, the market is bracing for a doubling of battery capacity and volume across mainland states. Unlike the initial wave of projects, which often focused on transmission and system support, this second wave is largely driven by trading opportunities. This influx of storage will create new demand during the day, potentially stabilizing lunchtime prices and providing a home for previously curtailed wind and solar output. As coal generation becomes increasingly uneconomic, the role of bulk energy supply will shift, cementing the long-term viability of a renewable-heavy grid.