​On 22 October, Modo Energy presented at the Advanced Materials and Battery Summit (AMB) on where battery investment in the National Electricity Market is headed. If you missed the talk, read this article to catch up: What incentivised Australia’s battery boom, where is the investment case now, and what builds carry the next wave of investment?

The AMB audience included manufacturers, materials suppliers, policymakers, and investors. The strongest response to Modo Energy’s forecast was support for longer-duration storage and how that supports the case for emerging alternative battery technologies. Over the coming months, Modo Energy’s research will introduce and compare the battery investment case usingalternative technologies. If you have feedback on the commercial modelling of vanadium flow or sodium-ion batteries, please reach out to frances@modoenergy.com to discuss further.

Executive summary

• Australia has the most grid-scale battery capacity per capita of any other large market. This deployment, along with home batteries, has compressed spreads.
• The next wave is longer-duration batteries: as the premium of shorter-duration spreads has eroded, 4- and 8-hour batteries return more per $/MWh.
• New batteries are being built with solar and wind. By 2029, two-thirds of new battery capacity will be built hybrid or co-located, up from 10% in 2025 and 15% in 2026.
• Spreads lift alongside coal closures and rising demand, with new batteries built into each closure.

Australia leads the world in battery capacity per person

Australia's grid-scale fleet was the world's third-largest at the end of 2025. That put it a whisker ahead of the United Kingdom and behind only China and the United States. But per person, Australia leads, at more than twice the per-capita figures of the US and China.

A second fleet of similar size was also built out behind the meter. Home batteries grew from 1.4 GW to 8.8 GW in the 15 months after the Cheaper Home Batteries Program started in July 2025.

But the battery investment signals that financed the first wave have weakened

In 2024, when most of today's batteries reached a final investment decision, two-hour spreads averaged $450/MWh across the NEM.

The fleet then did what it was built to do. Grid and home batteries soaked up midday solar and supplied the evening peak. From July to September, the median midday price rose from $3/MWh in 2025 to $28/MWh in 2026, and the evening price fell from $157/MWh to $96/MWh.

Two-hour spreads in the 12 months to September 2026 fell to about a third of the year before in New South Wales and Queensland. Victoria’s halved.

Compressed spreads signal success. They also mean each new battery needs a different investment case.

Also, coal is leaving later than planned

The second signal was coal. In 2022, Origin announced that Eraring, the country's largest coal plant, would close in August 2025. That date moved to 2027, then to April 2029.

AEMO's 2022 Integrated System Plan had 60% of coal capacity gone by 2030, and expected 15.6 GW to remain by 2026. Today, 21.3 GW is still running, 37% more than planned. The 2026 plan keeps about 4.6 GW more coal in 2030 than the 2022 plan did.

In the forecast, spreads recover only as far as new batteries allow

Modo Energy's October 2026 forecast has two-hour spreads lifting as each large coal unit closes, from Yallourn at the end of 2028 to Bayswater in the early 2030s. But the forecast adds a battery wherever a new one can still earn back its cost of finance, so new capacity arrives with every closure and limits the price spikes each one introduces.

Mainland spreads settle between about $100 and $150/MWh in real 2024 dollars, the level that maintains battery investment.

By state, Victoria and South Australia lift first when Yallourn closes, supporting batteries commissioning there from late 2028. New South Wales follows with Eraring and lifts most as Bayswater closes. Queensland's coal runs longest, so it comes last.

Demand grows again, half by data centres

Coal is not the only driver. NEM operational demand has been flat for a decade, at 191 TWh in 2015 and 184 TWh in 2025, as rooftop solar and efficiency offset growth in underlying use.

But Modo Energy's forecast sees demand rising every year to 2035. Homes, transport and industry drive just over half of the increase. New data centres drive the other 46%, based on our bottom-up project forecast.

New demand for cheap renewable energy also needs firming, and batteries will provide it.

The next batteries are longer, cheaper, and co-located with renewables

The next wave of batteries will offer longer durations, lower costs, and more diverse revenue streams.

In the forecast, one- and two-hour battery investment stops after 2030. Everything added after that is four hours or longer, and eight-hour capacity keeps growing after 2035 as four-hour additions flatten.

Two trends drive the shift. First, a fleet of two- and four-hour batteries competing for the same hours has flattened the daily price curve. In 2024, the two-hour spread was $242/MWh above the eight-hour spread. From January to September 2026, the gap was down to $77/MWh. It is forecasted to continue narrowing as more 2- and 4-hour batteries saturate those spreads.

Second, high-price events above $300/MWh get longer as coal leaves. One-hour spikes stretch into whole evenings, and during winter wind droughts, into days. Each doubling of duration nearly doubles the value a battery can capture, while adding energy capacity costs less than adding power capacity.

Costs help too. CSIRO's GenCost report found battery costs fell about 15% last year, back below pre-pandemic levels. It has four-hour batteries a further 17% cheaper by 2030, and eight-hour batteries already about 20% cheaper per kWh than four-hour ones. Our long-duration investment case covers the returns in more detail.

When value lies in extra hours, the cost of each extra kilowatt-hour matters most, opening the door to alternative chemistries.

Batteries are building with solar and wind

Just 10% of the grid-scale battery capacity added in 2025 sits beside solar or wind. That rises to 43% in 2028 and an estimated 66% in 2029.

Hybrids make up most storage-plus-generation combinations. Sharing a grid connection saves time and cost on approvals, land and operations. Owning both also hedges the daily price shape: solar tends to earn more when batteries earn less, and the reverse.

Contracts add another layer of firmer revenue through offtakes, caps, and government underwriting.

What comes next

Every forward view in this article comes from Modo Energy's October 2026 nodal NEM forecast, from spreads and future demand to the shift toward longer duration, co-located batteries. You can use the forecast to model batteries, as well as wind, solar and hybrid configurations.

​Our October 2026 NEM battery investment case puts returns on these trends for two-, four- and eight-hour batteries.

We are also building out our research and modelling of alternative battery chemistries. If you can help inform the commercial modelling of vanadium flow or sodium-ion batteries, please reach out to frances@modoenergy.com.