​Batteries are the fastest-growing asset class in the NEM, but commercial and industrial (C&I) storage has remained absent from the build-out. Modo Energy estimates that C&I batteries account for just 1.5% of installed storage capacity as of August 2026.

C&I batteries have historically lacked the subsidies, market access, and commercial structures available to residential and utility-scale batteries. New South Wales is the first state to address these barriers through the Peak Demand Reduction Scheme starting September 2026. Federal solar subsidies and reforms to increase wholesale market access for C&I also improve the investment case.

For utility-scale BESS owners, successful C&I uptake is a downside risk to merchant revenues with further peak price reduction and pressure on spreads.

For C&I battery developers and aggregators, the subsidy unlocks a new wave of investment. As more batteries gain access to wholesale prices, Modo Energy's forecast can help value asset revenues and benchmark future NEM prices available to battery operators.

Executive summary

• C&I storage is an underdeveloped market. It accounts for an estimated 1.5% of NEM storage capacity, despite businesses accounting for 40% of electricity consumption.
• Policy is beginning to remove barriers for C&I. New South Wales will subsidise 20 to 40% of C&I battery costs from 1 September 2026. Expanded federal solar support can also improve the economics of solar-plus-storage projects.
• The next 6–12 months will show how responsive businesses are to the new subsidy, solar incentives and changes in Flexible Trading Arrangements.
• Modo’s NEM forecast benchmarks the prices available to C&I batteries. For a BESS, a 1 MW, four-hour BESS able to access the wholesale market, NSW’s subsidy can halve the payback period from 14 to 7 years.
• Grid-scale BESS owners should consider C&I uptake as downside risk. More storage could further compress NEM spreads, particularly with increased market access.

C&I batteries are the NEM's “missing middle”

C&I batteries sit between residential and utility-scale, and have historically lacked the support available to either. Modo Energy estimates that C&I batteries make up 1.5% of NEM storage capacity. By comparison, C&I accounts for around 11% of solar generation.

Where businesses consume around 40% of the NEM’s electricity, C&I batteries present an opportunity for energy independence and cheaper electricity. Factories, shopping centres, hospitals and other large sites can use batteries to shift demand, reduce network costs and make better use of on-site solar.