Australia's south-eastern states experienced a severe heatwave between 23 and 27 January 2026, with temperatures across major cities peaking at 44.7°C in Adelaide on January 26. The high temperatures drove increased demand across all states, resulting in extreme price volatility in South Australia and, to a lesser extent, Victoria.

South Australia saw prices hit $20,300/MWh on 26 January as supply scarcity drove prices to the market price cap. South Australia's 921 MW battery fleet earned $19,100 per MW on this single day, more than 10x the revenue rate of batteries in other NEM regions.

This article briefly reviews the conditions that led to the price spikes and how batteries subsequently responded and generated revenue from these events.

How did batteries respond to extreme prices during the heatwave in South Australia and Victoria?

Temperatures in Adelaide climbed to 44.7°C on January 26, driving demand to a peak of 3.1 GW. As solar generation fell during the evening, prices rose, with 77 intervals exceeding $300/MWh and 33 above $10,000/MWh. Prices in South Australia averaged $2,457/MWh across the entire day.

South Australia's 921 MW battery fleet discharged an average of 169 MW during the high-price intervals, with peak discharge reaching 613 MW (67% utilization). Battery output fell to almost zero for the last hour of the price spike as the fleet ran out of energy, and gas peakers subsequently stepped in as extreme prices continued. Despite the decline in output, battery earnings in the state averaged $19.k/MW on the day, equivalent to 11.2% of statewide revenues in 2025.

Further price spikes followed later in the evening and the following morning as high temperatures persisted. However, the battery fleet remained low on energy, and output was minimal across these periods. South Australia battery earnings averaged just $269/MW on 27 January.

Record power demand in Victoria saw prices spike on 27 January

The extreme temperatures spread east to Victoria a day later, reaching 42.7°C in Melbourne. This drove a new record for power demand in the state of 10.8 GW. This subsequently triggered a spike in prices to over $3,000/MWh; however, price volatility remained more subdued than in South Australia.

Output from Victoria’s battery fleet reached a peak of 897 MW (61% of capacity) during the highest prices, but was able to continue discharging until prices declined. Lower prices and less targeted output resulted in battery earnings in the state averaging $889/MW on the day, well below the level reached in South Australia the day before.

Isolated price spikes led to significant differences in battery revenues between states

South Australia batteries earned $20,200 per MW across the week, achieving 11x the revenue rate of Victoria ($1,760 per MW), 13x Queensland ($1,550 per MW), and 26x NSW ($790 per MW). 95% of this value came from 26 January alone.

Over the seven-day period, NSW recorded no intervals above $300/MWh. Queensland recorded one high-price interval. Batteries in both states earned value through consistent market participation during normal price periods rather than extreme volatility capture.

At the individual battery level, there was even greater disparity in revenues, with the highest-earning battery outperforming the lowest by nearly 100x. Within South Australia alone, the top-performing battery earned almost 10 times as much as the lowest-performing battery.

Duration plays major role but optimisation led to 38% difference in earnings

Duration accounts for most of the variation in performance across regional markets. In South Australia, batteries with a duration of two hours or more earned over $25,000 per MW (with Lake Bonney as the exception), over 2x those with shorter durations. The lowest performer, Dalrymple, with only 18 minutes of storage, could not participate effectively during the price spike and earned just $3.5k/MW.