From JoNova

By Jo Nova

Big Battery prices on fire in Australia last quarter

The Renewable Crash Test Dummy suffers yet another nasty price surprise. We have more batteries than last year but the average price per megawatt hour has doubled.

In June there were a few hellfire price spikes where the prices on the National Energy Market launched up to an obscene $10,000 a megawatt-hour and then levitated there for hour after hour. These spikes had a width like we rarely see. Now, with the latest AEMO Quarterly Report we know that the spikes were due to the batteries.

On the left, the price spike of June 26th. On the right, the timing of the battery discharging…

And just so everyone can see how much energy the batteries provided — note the patch marked “Battery” below in the daily load curve of June 26th.  The black line across the top is “total demand”. Most of the area under that curve was provided by the evil, but reliable, fossil fuels. Batteries contributed just 0.7% of total NEM generation.

These spikes were so bad they moved the quarterly average costs

The average daily price for June 26th was 24 long hours at $1,408/MWh. It was the fourth highest price day in NEM history.

Quarter two used to be the sleepy shoulder season for grid managers, now it’s a white-knuckle ride. Below are the winning bids on the national market graphed by their fuel type. In Quarter 2 last year when batteries won bids the whole market earned, on average $245/MWh. But in Quarter 2 this year, batteries won a higher percentage of the time (because we ran out of cheaper options), and the average winning bid was $478/MWh.

If only we’d built another gas plant instead of buying big batteries and then burning money on $600 million dollar price spikes.

The gas plants saved the day (somewhat) with prices of $170/MWh — or nearly a third of the price of the Big Batteries.

Note that brown coal prices also jumped from $12/MWh last year to $59/MWh this year — showing that even after the price quadrupled, brown coal is still cheap. (Ignore the negative prices on solar and wind power, which just show how subsidized they are.)  We could run the whole grid on brown and black coal if we wanted to — with a peaking gas plant or two — just like we did for decades when electricity bills were cheap.

Can you afford to set up an AI Data centre in Australia — it depends on the weather

Quarter 2 is now the most expensive quarter of the year, and very weather dependent. Things were warm and sunny in April and May and prices were only three times what they used to be twenty years ago. The real bonfire was in June when a few cold fronts were followed by chilly windless days. Look at the difference in those monthly prices!

Poor Giles Parkinson at Reneweconomy thought batteries would reduce the price spikes, not exacerbate them. The big hope, of course, is that batteries will save the forced transition, and make solar and wind power more useful. He is baffled and disappointed that market players are doing what market players do, and are trying to maximize profits. (Don’t they realize that thousands of renewable grifters depend on the illusion that batteries are cheap?)

Bad bidding behaviour: Big batteries the dominant force as daily electricity prices pushed to record highs

Reneweconomy

Australia’s growing fleet of big batteries are now entrenching themselves as the major force behind the huge price spikes that have become a regular feature of Australia’s National Electricity Market, and which were the dominant factor in soaring wholesale prices in the June quarter.

Big batteries had been expected to be a softening influence on price spikes on the grid, given their cost of fuel (charging) is significantly lower than peaking gas stations, and based on the assumption that they would bring new competition to the market.

But market power is market power, whatever the technology that is deployed. The costs of battery storage may well have fallen, but their market power has grown, and so has their asking price.

It’s perhaps proof, if any was needed, that the owners of big batteries will not behave any differently from the owners of peaking gas and pumped hydro.

And that’s largely because they are one and the same group, the same oligopolists who have dominated the grid for decades, and they are not about to break their addiction to unchecked market power.

Dear Giles, those same oligopolists gave us cheap electricity for decades until we screwed up the free market and tried to turn it into a socialist weather-control machine. That’s the point of free market competition. It makes greedy people work for the greater good. 

You cheered on the oligopolists when they drove cheap coal fired plants out so they could profit from subsidized wind and solar plants in a rigged market. Reap what you sow, eh? Did you think they would be nice?

Once the government started to pick winners, subsidize losers, and allow predatory giants (and foreign interests) to have cross ownership of competing generators there is no free market and the whole country gets screwed.

REFERENCE

AEMO Quarterly Report 2, 2025.