Battery storage shields Australian households from global energy price shock
Australian electricity users have been spared the worst of a global price shock rattling energy markets overseas, with new international analysis showing wholesale power prices here have fallen sharply while households in Europe and Japan face steep increases.
The International Energy Agency’s Electricity Mid-Year Update 2026, released on Thursday, tracks the fallout from the Strait of Hormuz crisis, which has driven up LNG prices and, with them, the cost of gas-fired power generation in markets that remain heavily reliant on gas. In the European Union and Japan, average spot wholesale electricity prices climbed by more than 30 per cent in the second quarter of 2026 compared with the year before.
Australia has moved in the opposite direction. As reported by Renew Economy, the IEA found that average wholesale prices in the National Energy Market fell by 30 per cent year on year in the first half of 2026, dropping to USD 49 per megawatt hour.
“The market continued to be shaped by strong renewable output and rapidly expanding battery storage,” the report states.
Battery installations have played a direct role in easing pressure on power bills, according to the report. “Installation of new battery capacity contributed to a tripling of daytime-to-evening energy shifting in Q1 2026, which in turn helped mitigate price surges by reducing the amount of expensive gas and coal generation used during these hours.”
The IEA’s outlook suggests the relief is set to continue, with futures for the second half of 2026 pointing to prices roughly 5 per cent lower than the same period last year.
The report also flagged Australia’s unusually high rate of negative pricing, with South Australia and Victoria recording wholesale prices below zero in more than 20 per cent of trading hours during the first half of the year, among the highest rates of any market analysed alongside California. In South Australia, the IEA noted the number of negatively priced hours has held steady since 2025, a trend it linked to the state’s expanding battery capacity helping to smooth out swings between oversupply and shortage.
Globally, the report found electricity demand is forecast to grow by 3.6 per cent in 2026 and 3.8 per cent in 2027, driven by industrial expansion, electric vehicle uptake, air conditioning use and growing data centre capacity. Total global electricity consumption is expected to reach 30,700 terawatt hours by 2027, up from 28,600 terawatt hours in 2025.
For Australian households and businesses already grappling with cost-of-living pressures, the figures suggest the local energy market’s structure has, for now, provided a buffer that many comparable economies currently lack.