The investment case for long-duration storage in the NEM is becoming a choice between capital efficiency, revenue scale, and contract eligibility.

Six and eight-hour batteries produce similar forecast IRRs in this analysis, but suit different strategies. Six hours requires less upfront capital, whilst eight hours maximises the grid connection. Assets at eight hours or longer can also access long-duration support schemes that shorter assets cannot.

The BESS pipeline is already moving in that direction. Two-hour systems account for most operating capacity, at 5.2 GW of 7.3 GW installed. The future pipeline includes 24.4 GW of four-hour-or-longer capacity, including 2.6 GW at eight hours.

This analysis uses the Modo Energy NEM Central July 2026 forecast to compare the business case of 100 MW 4, 6 and 8-hour batteries commissioning in 2029 across four regions.

For analysis of the investment case for shorter-duration merchant assets, read the article here.

Executive summary

• Six and eight-hour batteries reach similar merchant IRRs. The duration choice depends on capital efficiency, risk appetite, and government contract eligibility, rather than just IRR.
• High-price events are getting longer. Price events above $300/MWh lengthen from around 1.5 hours today to 5-10 hours by the 2040s, increasing the value of scarcity and duration.
• Eight-hour batteries are traded differently from shorter-duration assets. They rely less on single-day optimisation and more on holding charge for scarcity events across multiple days.
• Weather sensitivity changes the duration case. Six and eight-hour returns are close in the Central scenario, but some weather years shift more value toward eight-hour storage when scarcity events last longer.

Key modelling inputs

The analysis compares 100 MW batteries with 4, 6 and 8 hours of storage, commissioning in 2029 across four NEM regions. Each asset uses the same grid connection, efficiency and cycling limits, so the comparison isolates the value of additional energy capacity.