NEM spot prices surged 43.4 per cent week-on-week to average $121.58/MWh, capping a period of significant market volatility. The price spike coincided with an abrupt fluctuation in NSW market demand on Wednesday. WattClarity analysis flagged a significant frequency drop on Wednesday evening, noting the event is under investigation to determine if it was a data glitch or a physical grid disturbance. The instability provides a sharp backdrop for the federal government’s renewed focus on grid reliability and the integration of new, large loads.
Energy Minister Chris Bowen has rejected state-led proposals to use gas for powering data centres, declaring Australia’s ageing coal fleet is “unreliable” and no longer constitutes baseload power. Speaking at the National Press Club, Bowen signalled data centres should instead support renewable energy deployment, floating a guarantee of origin scheme to ensure their energy consumption is verifiably green. The intervention aims to steer one of the fastest-growing sources of electricity demand away from fossil fuels and towards firm renewable contracts.
In a parallel move to boost supply, the government will widen its rooftop solar scheme to include projects up to 1MW. The expansion of the Small-scale Renewable Energy Scheme targets the commercial and industrial sector, often called the “missing middle” of solar deployment. By raising the capacity threshold for federal incentives, the policy aims to unlock generation potential on factory and warehouse rooftops, offering businesses savings of up to 20 per cent on energy costs.
The policy push comes as the project pipeline continues to advance. The NSW Independent Planning Commission approved the 250MW Goulburn River Solar Farm and its associated battery in the Upper Hunter. In South Australia, AMPYR Australia received AEMO's 5.3.4 letter for its 270MW grid-forming Northern Battery near Port Augusta, a critical step toward commissioning. These developments follow a record-breaking July for utility-scale solar generation, where increased battery capacity helped absorb midday surpluses and reduce curtailment across the NEM.
Australia’s focus on storage mirrors a major strategic shift globally. China’s updated five-year renewable strategy puts battery storage at the centre of its plans to integrate 2.8 TW of wind and solar by 2030. The Chinese plan introduces new market-based revenue streams and grid-forming technology requirements for batteries. This international precedent underscores the critical role storage must play in enabling high penetrations of variable renewable energy on national grids.
Looking ahead, AEMO’s updated reliability forecasts in the 2026 Electricity Statement of Opportunities are scheduled for release later this month. This will provide a more detailed outlook after the latest MT PASA run flagged potential supply gaps in Victoria and South Australia. Meanwhile, submissions on AEMO’s Gas Market Parameters Review discussion paper close tomorrow.