2025 has been a transformative year for battery energy storage in the NEM. Deployment has reached the scale required for the energy transition, with the fleet already reshaping market outcomes. New players, contract types and system durations have entered the sector. And all the while, the business case for new projects is evolving rapidly.

Here are six charts that tell the story of battery energy storage in 2025.

​2025 was the year the battery energy storage industry proved it can deliver at scale

The NEM began the year with 2 GW of commercially operational BESS - and will end with more than double this. This has risen to 4.6 GW and could hit 5 GW by the end of the year. Meanwhile, a further 3.6 GW of capacity has been constructed and is in commissioning.

All in all, the BESS industry has added a total of 4.8 GW and 12 GWh of battery capacity to the grid this year. This is proof that it can deliver at the pace and scale required by AEMO’s latest ISP. This sees BESS capacity continuing to grow at the level for the next five years.

2025 marked a shift in battery ownership away from large players

The increase in the capacity of the battery energy storage fleet has been fuelled by the addition of big batteries, built by some familiar companies and some new. Despite selling its Victorian assets, Neoen has continued to grow its BESS portfolio. However, newcomers Akaysha and Equis have jumped straight into second and third place, respectively, with the commissioning of large batteries in the final quarter of 2025.

This looks to continue next year, with the likes of Origin Energy and Quinbrook set to see large systems come online. Ultimately, this diversification means increased competition, helping to bring construction costs down and reduce price volatility in the market.

2025 was the year that derivative-based offtakes overtook the physical toll

Offtake contracts remain crucial to the investment case for BESS in the NEM, but the market has shifted away from the traditional physical toll. This is driving the development of new contracting products based on financial derivative contracts. Virtual tolls, revenue and capacity swaps, and firmed PPAs formed the majority of off-take contracts for BESS in 2025.

These contracts all require owners to retain a stake in the operations of their assets and how they are traded. This means it's more important than ever before to keep up to date with what's actually happening in the market.

2025 proved FCAS saturation is here to stay

FCAS revenues, especially from the Contingency service, have driven the accelerated payback for older batteries in the NEM. However, this value has declined year-on-year since 2020, reaching its lowest point in 2025. This shows that the effects of saturation, driven by increases in BESS and DSR capacity, are here to stay.

Importantly, this effect has not been the same across all states. For big batteries in New South Wales and Victoria, FCAS revenues are now negligible, with energy trading dominating the revenue stack. However, Queensland and South Australia continued to see value during FCAS Contingency islanding events. Some batteries in South Australia saw over 50% of their annual revenue coming from FCAS. But with the continued growth of the battery energy storage fleet, it is unlikely this will be repeated in 2026.

2025 showed the BESS fleet is already suppressing volatility

Prices spiked across the NEM on three separate days in June, reaching a climax on 26 June, when prices remained above $3,000/MWh for 4 hours. However, prices would have been even higher without the actions of the battery fleet. Batteries began to run out of energy after 8pm, and as BESS exports fell, prices spiked to over $15,000/MWh as gas peaking assets took advantage of tight supply.

This shows how BESS is beginning to outcompete traditional peaking technologies and reduce price volatility in the NEM. The event also showed how the market is showing signals of the need for longer-duration storage, of 4 hours and above.

2025 showed that the transition to 4-hour battery energy storage has begun

Prior to December, all batteries coming online in the NEM have been two hours or less in duration. However, with the commissioning of Melbourne Renewable Energy Hub A3, the NEM’s first 4-hour BESS unit began trading. On 9 December, it showed how significantly the operational profile of these longer-duration systems can differ from that of the existing fleet, with exports from the system continuing into the evening for more than twice the duration of its neighbouring two-hour systems.

This unit is the first; however, more 4-hour systems are set to follow. Origin’s first Eraring BESS unit is due online by the end of 2025: a 4-hour, 460 MW battery. And the development pipeline has shifted significantly towards 4-hour systems. In 2026, 2 hours will still be the dominant configuration for projects coming online, from 2027 and beyond, this is now expected to be 4 hours.