Australia’s gas-fired power falls to a 25-year third-quarter low

By Priya Raman

Gas-powered generation across Australia’s National Electricity Market (NEM) fell 34% in the July-September quarter, reaching its lowest third-quarter average since 2000, the Australian Energy Market Operator (AEMO) said.

AEMO’s Quarterly Energy Dynamics (QED) report, released Friday, linked that drop to record renewable output and a surge in grid-scale battery capacity. The result does not remove gas from the power system. It shows how the evening peak changed in a quarter with stronger demand and more solar generation.

“Electricity use continues to grow, but more solar and storage is changing when energy is produced, drawn from the grid and shifted across the day,” said Violette Mouchaileh, AEMO executive general manager for policy and corporate affairs.

Takeaway: Australia used much less gas while electricity demand still grew.

What drove the 34% drop?

AEMO reported a broad shift across the NEM:

• Renewables supplied a record 44.3% of generation in the third quarter.
• Grid-scale solar generation increased 30%.
• Hydropower rose 15%.
• Grid-scale battery capacity more than tripled year over year.
• Gas-powered generation fell 34%, hitting its lowest third-quarter average since 2000.

Those figures did not accompany falling electricity demand. Demand rose 1.3% during the July-September winter quarter despite lower heating requirements. AEMO attributed the increase to electrification, higher industrial demand and growing data-center consumption.

The combination of higher load, more renewable supply and faster battery deployment points to changing plant dispatch, rather than a simple decline in electricity use. The figures do not show how much gas capacity was retired, idled or kept on standby. A lower generation share also does not establish the operating status of individual gas plants.

Takeaway: More renewable supply and storage displaced gas, even as load increased.

When did batteries overtake gas?

Between 4 p.m. and 9 p.m., grid-scale batteries supplied 8% of evening-peak generation. Gas supplied 5.1%. AEMO said this was the first quarter in which batteries exceeded gas during that period.

Grid-scale solar rose 30% during the quarter, while battery capacity more than tripled, giving batteries a much larger presence at the hours when gas previously supplied more of the system’s output.

AEMO’s sample data offered a household-level indication of that shift. Households with rooftop solar and batteries drew around three-quarters less electricity from the grid during the evening peak than households with rooftop solar alone. The published summary gave no sample size or uncertainty measure, so the result should not be read as a national household average.

Takeaway: Storage supplied more evening-peak power than gas for the first time in a quarter.

Did wholesale prices follow?

AEMO tied lower evening-peak prices to battery activity. Mouchaileh said: “Increased battery charging and discharging contributed to significantly lower evening peak prices, with batteries setting prices in almost half of dispatch intervals, up from 18% a year ago.”

Dispatch intervals are the short periods used to match electricity supply with demand and establish prices. Batteries’ near-half share was well above the 18% recorded a year earlier. That market role matters because storage now influences the price signal across nearly half of those intervals.

Across the full NEM, average wholesale electricity prices fell 27% year over year. They also fell 15% from the June quarter to $63 per megawatt-hour (MWh), the lowest September-quarter average since 2021. Wholesale prices contribute to retail prices, but the figures do not show how much any retailer passed through.

Takeaway: Lower wholesale costs tracked heavier battery participation, without proving a fixed retail-price effect.

What does the quarter prove?

Gas remains important to Australia’s energy and electricity system, AEMO said. Renewables and grid-scale batteries are changing the power mix by shifting when electricity is generated, drawn from the grid and stored for later use.

The quarter establishes a change in generation and pricing. It does not establish a full-year trend, nor does it quantify gas-plant closures or capacity additions. The report summary identifies no sanctioned gas project, retirement schedule or new-build timetable. Claims about either a gas expansion or a closure program need evidence beyond these figures.

That distinction matters because a quarterly dispatch shift can reflect renewable conditions, battery availability and demand patterns, while a single quarter cannot establish a full-year gas or storage trend.

Takeaway: The data confirms a quarterly shift, not the end of gas generation.

Watch item: AEMO’s next QED will show whether batteries again exceed gas between 4 p.m. and 9 p.m., how battery capacity develops, and whether the $63/MWh September-quarter comparison holds.