​Modo Energy's July 2026 forecast reflects the continued deployment of utility-scale and household batteries across the National Electricity Market (NEM). As storage capacity grows, spreads continue to compress, reshaping how batteries earn revenue and softening the investment case for merchant-exposed projects.

Developers can improve the investment case by optimising for market conditions. Longer durations, optimal site selection, capture of high-price events, grid-forming capability and contracting strategies that reduce merchant revenue exposure all support the outlook.

The April investment case is available here.

Executive Summary

• Four-hour battery IRRs (9.4%) sit above two-hour IRRs (5.5%) by four percentage points. Four-hour BESS generate almost twice the revenue for 44% extra capex.
• Storage build-out drives spread compression through the 2030s. Household and grid-scale batteries reduce arbitrage opportunities before spreads ease post-2040.
• Victoria and South Australia offer the strongest investment case for batteries commissioning in 2029. Higher capture prices reflect stronger near-term spreads, greater renewable-driven volatility and lower battery saturation.
• Additional cycling delivers diminishing value as spreads compress. Cycling above once per day creates value until 2033. After that, batteries prioritise less degradation.
• Siting within states shifts returns by up to 3.7 percentage points. Modo Energy’s new nodal forecasting capabilities help optimise site selection.

Key modelling inputs

The assumptions below underpin every IRR in this report. Full methodology is documented in the July 2026 release notes.