The recent spring/summer has proved how much batteries are becoming their own competitor. NEM battery revenues had their weakest October–March on record, falling 38% year-on-year (YoY). Energy arbitrage, the main revenue driver, fell 25%.

BESS capacity grew 2.7x YoY, and coal and gas prices fell. Together, these pushed BESS to set peak prices twice as often as last year, cannibalising their own revenues. Meanwhile, a mild summer cooled demand that drives volatility.

For investors, this summer is a look at what a saturated, low-volatility NEM looks like, and a prompt for how to think about duration, location, and entry timing from here.

​FCAS now makes up only 9% of total BESS revenue and is structurally saturated. This article focuses on energy arbitrage as the meaningful metric to track.

Executive Summary

• NEM-wide BESS revenues fell 38% YoY to $73k/MW/yr, the weakest October–March window in the analysed period from July 2022 onwards.
• Revenues were down 73% in Queensland and 51% in New South Wales, as the states hit hardest by BESS saturation. South Australia saw rising volatility, and revenues grew 49%.
• BESS set evening prices twice as often as the previous year (up to 50% of the time), limiting their own arbitrage opportunities.
• Gas prices fell 9–17% YoY, while coal dropped 12%, also lowering the evening-peak ceiling.
• 2025–26 summer temperatures normalised after 2024–25's heat, reducing demand volatility.

This report compares Oct-Mar 2025-26 against the same window in prior years. Summer is structurally lower-earning than winter, so the seasonal frame controls for that.

State revenue divergence indicated structural drivers

The states that built BESS fastest cannibalised revenues the most. Queensland went from the NEM's top earner to its worst in a single year, with energy-only revenues dropping 73%. New South Wales energy revenues halved, and Victoria held flat. South Australia’s climbed 49%, driven by January weather-based volatility and lower capacity additions.

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Longer-duration batteries entering the fleet partially offset the decline, as they capture more revenue per MW. New South Wales nearly doubled its average duration to 3.2 hours, which is why the 74% drop in $/MWh was limited to 49% on a $/MW basis. Meanwhile, Queensland saw the same drop across both metrics, as its average duration barely moved (+4%). Duration is becoming increasingly critical for holding project value.