Power Grid Weathers Heatwave as Renewable Generation Surges
A decade ago, extreme heat events often strained Australia’s power infrastructure to its limits. However, during last week’s record-breaking heatwave along the eastern seaboard, the electricity system demonstrated remarkable resilience with only isolated outages reported. This performance coincides with new data showing renewable energy and storage technologies contributed over 50% of electricity generation on the National Electricity Market last quarter—a historic milestone for the nation’s energy transition.
Renewables Expansion Drives Price Reductions
Quarterly analysis reveals wind generation increased by nearly 30%, grid solar rose 15%, and grid-scale battery output nearly tripled compared to previous periods. Meanwhile, gas-fired electricity production plummeted 27% to its lowest quarterly output in 25 years, while coal generation decreased 4.6% to record lows.
These shifts have contributed to wholesale power prices falling more than 40% year-on-year. While consumers won’t see immediate relief—given wholesale costs constitute approximately 40% of retail bills and most providers adjust pricing annually—sustained reductions could translate to lower household energy costs by mid-2026.
System Resilience Through Diverse Energy Mix
The grid’s improved performance stems from multiple factors: aging coal plants maintained critical operations during peak demand, increased hydroelectric capacity from filled reservoirs, and optimal solar and wind generation. Notably, rooftop solar installations proved particularly effective at offsetting air conditioning demand during heatwaves.
Storage Revolution Transforms Energy Management
Plummeting battery costs have spurred rapid deployment, with nearly 4,000 megawatts of grid-scale storage coming online since 2024. These installations now increasingly compete with gas-powered generation by storing surplus renewable energy for release during evening demand peaks.
At the residential level, battery rebate programs have driven unprecedented adoption rates, providing backup power during outages. Emerging medium-scale community battery projects could further enhance grid stability for towns and suburbs.
Transition Challenges Remain
Transmission Delays Extend Coal Dependence
Despite progress, critical transmission infrastructure projects face significant delays. These setbacks have prompted extensions for coal-fired plants like NSW’s Eraring facility until 2029 and South Australia’s Torrens Island gas plant. Completing new power corridors remains essential for integrating higher renewable shares.
Gas Maintains Crucial Backup Role
While gas generation has declined substantially, its rapid-response capability ensures it will remain a necessary grid stabilizer during periods of low renewable output. Governments are implementing measures to address market challenges, including potential east coast gas reservation schemes.
Victoria’s Energy Crossroads
Australia’s most gas-dependent state faces unique challenges as Bass Strait reserves decline and most domestic production gets exported as LNG. Recent approvals for new gas exploration aim to bolster supplies while renewable alternatives develop.
Victoria’s ambitious offshore wind targets—2 gigawatts by 2032—have encountered development delays, with no turbines yet installed. After recent announcements that project auctions will begin in August, questions remain about whether offshore wind can replace retiring coal plants on schedule.
Progress Amid Complexity
Energy analysts note the grid’s ability to integrate 50% renewables marks a significant achievement, particularly given earlier predictions that systems couldn’t sustain beyond 20% variable generation. While the federal government’s 82% renewable target by 2028 appears ambitious, current trends suggest Australia’s energy transition is gaining irreversible momentum—a critical development as climate pressures intensify.
