In 2024, large-scale battery storage systems in Australia's National Electricity Market (NEM) reported a net income of AUD 165 million (USD 105 million) from wholesale electricity price arbitrage. This figure is more than triple the previous record of AUD 51 million in 2023. The expansion of renewable energy installations has increased market volatility, creating more opportunities for such arbitrage.
The NEM supplies electricity to over 80% of Australia's population. The rapid expansion of wind and solar assets, especially rooftop solar systems, has increased midday power generation, putting downward pressure on spot prices during this period. Conversely, dispatchable power sources have become more expensive as they ramp up production in the evening and early morning when wind and solar generation is low, driving up spot prices. Storage assets like batteries capitalize on these intraday price differences by charging when prices are low and discharging when prices rise.
In 2024, large-scale battery storage systems in the NEM also earned AUD 69 million from providing Frequency Control and Ancillary Services (FCAS), an 11% increase from 2023. FCAS operates alongside the wholesale market to address imbalances caused by intermittent renewable generation and demand fluctuations, ensuring the safe operation of the power system. However, the rapid growth of battery facilities has intensified competition, reducing the value of FCAS for individual projects.
Last year, the total net income from arbitrage and FCAS for large battery storage was estimated at AUD 234 million, more than double the previous year. As the share of renewable energy generation continues to grow, the NEM is expected to remain highly volatile in the medium term, making arbitrage a crucial revenue source for battery storage. However, with over 7 GW of battery storage under construction across Australia, competition among FCAS providers is expected to increase, further decreasing its value for individual projects.
