Batteries are pushing gas out of the market rather than being squeezed out
In a nation of 27 million people, Australia has quietly engineered one of the most significant shifts in residential energy in modern history — not through grand industrial policy alone, but through the accumulated choices of hundreds of thousands of households choosing to store the sun. As the chimneys of Liddell coal station fell to rubble, electricity prices dropped 10 percent, gas generation declined by nearly a quarter, and the world's battery manufacturers began treating Australia as their most important market. The transformation raises an enduring question: when a society changes faster than its politics can account for, who benefits, and who is left behind?
- Nearly 415,000 household batteries were installed in a single year — more than 1,000 per day — pushing Australia to hold almost 60% of all new residential battery capacity added globally this financial year.
- The surge has fundamentally disrupted electricity pricing: batteries now flood the grid at 6 p.m., undercutting the gas peaker plants that once dictated evening prices and driving a 24% drop in gas-fired generation over one summer.
- Government subsidies slashed upfront battery costs by 30%, but the rollout has overwhelmingly favoured homeowners in wealthier cities, leaving renters and rural communities largely outside the revolution's reach.
- Australia's 2030 renewable target of 82% is now in doubt as transmission infrastructure lags and new renewable energy commitments hit a decade low, even as the battery boom accelerates and the country continues approving new fossil fuel projects.
The chimneys of Liddell, once one of Australia's largest coal-fired power stations, came down this week in a cloud of dust. The timing felt almost deliberate. As global energy markets convulsed, Australia's energy minister announced electricity prices had fallen by as much as 10 percent in parts of the country — a drop directly connected to the quiet revolution unfolding on suburban rooftops and in backyard sheds across the continent.
Australia was already a solar nation — one in three homes carries panels — but it is batteries that have changed the calculus entirely. In the past year, nearly 415,000 household battery systems were connected, representing close to 60 percent of all residential battery capacity installed globally. Despite a population of just 27 million, Australia now ranks third in the world for new battery capacity additions, behind only China and the United States. The reason is consequential: batteries solve the oldest problem in renewable energy. When the sun sets and gas plants would normally ramp up to meet evening demand, batteries now surge in instead — at lower cost. Gas-fired generation fell 24 percent over one summer. The market has been structurally altered.
The government's A$2.3 billion subsidy program, cutting upfront battery costs by 30 percent, was designed to support one million installations by 2030. The pace of uptake made that target obsolete almost immediately. Total funding has since been raised to A$7.2 billion, with the goal doubled to two million batteries by decade's end. For households like that of Emma Hewitt, a single parent south of Perth who combined solar panels, an electric car, and a subsidised 16-kilowatt-hour battery to dramatically cut her power bills, the program has been transformative — practical and moral at once.
Yet the revolution carries fault lines. Researchers have found the subsidies have disproportionately reached wealthier homeowners in major cities, while renters remain effectively excluded. The energy minister argues that falling prices benefit everyone, even those without batteries — but critics contend a more equitable design was possible and was missed.
Australia's paradox runs deeper still. Even as households embrace batteries at record pace, the federal government has approved 36 new fossil fuel projects since taking office. Transmission infrastructure needed to connect large-scale wind and solar to the grid is falling behind. The national target of 82 percent renewable electricity by 2030 is now uncertain. And yet, what has happened in Australian homes is being watched closely by energy analysts worldwide — a genuine proof of concept for how electricity systems can be reorganised, faster and more radically than almost anyone predicted.
The two massive chimneys of Liddell, one of Australia's largest coal-fired power stations, came down this week in a cloud of dust and rubble. The timing felt almost too perfect. As Europe and Asia sweltered under record heatwaves and global oil markets convulsed, Australia's energy minister stood before cameras announcing that electricity prices had fallen by as much as 10 percent in parts of the country. The demolition and the price drop were connected, though few outside Australia seemed to notice. The nation is quietly remaking its energy system in a way that has no real precedent elsewhere in the world.
Australia was already a solar powerhouse—one in three homes now has panels on the roof, a status achieved almost by accident through uncoordinated policies, simple permitting rules, and genuine public enthusiasm. But it is batteries that have accelerated everything. In the past year alone, nearly 415,000 household battery systems were connected to homes. That single figure represents roughly one battery for every 25 Australian households. More strikingly, almost 60 percent of all residential battery capacity installed globally this financial year went into Australian homes. Industrial-scale batteries are being built at a similar pace. Despite having only 27 million people, Australia now ranks third in the world for new battery capacity additions, trailing only China with its 1.4 billion residents and the United States with 350 million.
The reason this matters is simple: batteries solve the central problem that has haunted renewable energy since its inception. Solar panels and wind turbines are intermittent. The sun sets. The wind stops. For years, this meant that grids needed expensive backup power sources—typically natural gas plants that could fire up quickly when demand spiked. In Australia, those gas plants were most needed in the evening, when people came home from work and turned on their air conditioning. Gas is not cheap. Every evening, electricity prices would spike as these plants ramped up. Now, batteries are taking that job instead. Across three months this past summer, gas-fired generation dropped 24 percent compared to the year before. The shift is so pronounced that it has fundamentally altered how electricity prices are formed. Where gas used to dominate the evening market, batteries now surge in at 6 p.m., and they cost less to operate than gas plants. As demand for electricity continues to rise, batteries are pushing gas out of the market rather than being squeezed out themselves.
This transformation was not accidental. The Australian government, under Prime Minister Anthony Albanese, committed A$2.3 billion over four years to subsidize household battery installations, cutting upfront costs by 30 percent. The program was supposed to support 1 million installations by 2030. Instead, more than 1,000 batteries are being installed every single day. The government quickly realized the forecast was wildly conservative and increased total funding to A$7.2 billion, doubling the target to 2 million batteries by the end of the decade. The speed of adoption has been so rapid that battery manufacturers around the world are now treating Australia as their primary market.
Yet the rollout has not been without criticism. The subsidies have disproportionately benefited wealthier households in major cities who own their homes and have the capital to invest. Renters are effectively locked out. Thomas Longden, a researcher at Western Sydney University who has studied where batteries have been installed, argues the government missed an opportunity to ensure equitable distribution across the entire country. The energy minister, Chris Bowen, acknowledges the program does not reach everyone directly but contends that even indirect benefits are substantial—when households with batteries stop drawing from the grid at night, gas plants run less, and prices fall for everyone, including those without batteries.
Emma Hewitt, a single parent living south of Perth, represents the program's intended beneficiary. She had been gradually electrifying her home—solar panels first, then replacing her gas cooktop, leasing an electric car through her employer—when the subsidy was announced. The 30 percent rebate made the difference. She took an interest-free loan to cover the remaining cost of a 16-kilowatt-hour battery system and has since cut her reliance on the grid substantially, saving hundreds of dollars on her quarterly power bills. For her, the investment was both practical and moral. She wanted to reduce the damage her family inflicted on the planet her daughter would inherit.
The battery boom has also revived the solar panel market. As households installed batteries, many replaced aging panels with larger, more efficient ones to maximize the energy they could store. In March, Australia set a record for solar installations in a single month. That record fell again in April. Meanwhile, the coal industry's decline has become visible. AGL, the energy company that operated Liddell and for years was Australia's most polluting fossil fuel generator, has commissioned a 500-megawatt battery system with a two-hour duration to replace the coal plant. It is scheduled to begin full commercial operation next month. The symbolism is stark: where coal once stood, batteries now will.
Yet Australia remains a paradox. Even as households and businesses embrace renewable energy and batteries at record pace, the federal government has approved 36 new fossil fuel development projects since taking office four years ago. Australia remains one of the world's largest exporters of coal and gas. The nation is also struggling to build the transmission lines needed to connect large-scale wind and solar farms to the grid. Industry groups warned this week that while records fell in 2025, new renewable energy commitments hit a decade low due to investment uncertainty and delays in transmission infrastructure. The national target of 82 percent renewable electricity by 2030 is now in doubt. But the battery revolution shows no sign of slowing. What has happened in Australian homes and on Australian grids is, according to energy analysts, a genuine transformation in how electricity systems can be organized—one that other countries are watching closely and beginning to replicate.
Notable Quotes
If you go big with a technology and kick it off big from the start, you can make a really significant difference. If you're a battery manufacturer focused on residential right now you really must be focused on Australia.— Tristan Edis, director at Green Energy Markets
Batteries are surging into the market at 6pm. Gas will still play a backup role but batteries are not as expensive as gas peakers and they are pushing those out even as electricity demand increases.— Tennant Reed, climate change and energy director with the Australian Industry Group
The Hearth Conversation Another angle on the story
Why does Australia's battery adoption matter beyond Australia itself?
Because it proves the model works at scale. When you subsidize the right technology at the right moment, you don't get incremental change—you get a reshaping of the entire market. Battery manufacturers are now designing for Australia. Other countries are studying what happened here.
But Australia still exports coal and gas. How do you square that circle?
You don't, not yet. The household revolution and the fossil fuel exports exist in the same country at the same time. It's a contradiction the government hasn't resolved. You can have a battery boom and still approve new coal mines. They're not mutually exclusive, though they should be.
The subsidy cost A$7.2 billion. Is that money well spent?
Ask Emma Hewitt. She saved hundreds of dollars on her power bills and reduced her family's carbon footprint. But ask the renter in the same neighborhood who can't install a battery because they don't own the roof. The money works for some people. The question is whether it should have been targeted differently.
What changes when batteries replace gas plants?
Everything, really. Gas plants had to be expensive because they were the only backup. Now they're optional. Prices fall. Households become producers, not just consumers. The grid becomes more flexible. The old arguments against solar—the sun doesn't shine at night—stop working.
Is this sustainable, or will it hit a ceiling?
The installations are accelerating, not slowing. But there are real constraints ahead. Transmission lines can't keep up. Large-scale wind and solar farms are stalled. The battery revolution in homes is outpacing the grid's ability to integrate utility-scale renewables. That's the next bottleneck.