| | | “Extraordinary:” Battery storage prices plunge again, as wind and solar curtailment levels soar
Koorangie battery and grid-forming inverter Image: Edify Energy
Giles Parkinson
Sep 8, 2025
Battery, Storage
Key Takeaways- Plunging costs of battery storage are being achieved globally, with record-low contracts in Saudi Arabia for massive battery projects.
- The significance of these prices extends beyond just China, suggesting further cost reductions in energy storage economics.
- Curtailment of wind and solar energy in Australia is driven by economic reasons, and the current battery fleet is helping mitigate this issue.
Two new developments highlight some of the extraordinary changes that are occurring on Australia and global electricity systems: One is the plunging cost of battery storage which continues to shock and surprise, and the other is the high level of curtailed wind and solar, which has been more or less predicted.
The new lows for battery storage were achieved in a recent Saudi Arabia tender, when two massive 500 MW and 2,000 MWh battery projects attracted firm and record-low contracts for just $US73-$75 a kilowatt installed.
Why is this important?
According to Marek Kubik, a co-founder of US-battery supplier Fluence and now a director of the ambitious Saudi green energy venture Neom, the significance is two fold.
Firstly, it is the first time such “extraordinary” prices had been achieved outside of China, which produces the overwhelming majority of the world’s battery storage. “This is some big news for energy storage economics outside of China,” Kubik writes.
Even allowing for the excess capacity installed to allow for battery degradation, the cost is still below $US80/kWh. The fully installed cost, including EPC construction (labour, foundations etc), is likely around the $US120 to $US130 a kWh mark, or less than $A200/kWh.
That compares to the most recent cost in Australia announced by AGL for the similar-sized 500 MW, 2000 MWh Tomago battery in NSW of $A400/kWh, which was half the cost per kWh of AGL’s nearly complete Liddell battery that was contracted two years ago.
Both Australian batteries are using Fluence technology, and the recent Chinese and Saudi prices – even allowing for lower labour and financing costs – point to more cost reductions ahead.
Secondly, Kubik notes, the Saudi battery bids, underline the stunning progress made by solar and battery storage technologies over the last couple of years, and the multiple claims now that the two technologies can deliver “round the clock” power at a lower cost than any other technology.
As we reported a few months ago, the UK climate and energy think tank Ember suggested that solar and battery storage – modular and easily deployable – could deliver cheaper round the clock power for cities and industries, in what it hailed as a “turning point” in the clean energy transition.
“Around-the-clock solar is no longer just a technical possibility and distant dream, but an economic reality,” said lead analyst Kostansta Rangelova. See: “It changes everything:” Plunging costs of PV and batteries mean 24-hour solar a growing reality
Kubik says the latest contracts in Saudi Arabia deliver a price one half less of that assumed in the Ember report.
“At <$80/kWh turnkey ESS, how many more markets will beat baseload fossil fuel and nuclear economics in high-solar markets,” Kubik writes on LinkedIn.
Australian renewable and storage developers have been pushing a similar line, highlighting the promise of solar and battery storage as wind projects remain stuck in the queue for planning, finance and contract approvals.
Quinbrook Infrastructure Partners, which is building what will eventually be the biggest battery project in the country, Supernode in the outskirts of Brisbane, outlined plans in March for a series of giant solar and battery projects, arguing it was the best way to provide cheap and reliable power for industry.
Quinbrook co-founder and managing partner David Scaysbrook says the plan to build large scale solar farms with eight hour batteries will get the country one step closer to the “holy grail” of 24/7 renewable power.
“This is the ‘dam busting’ moment for this country’s decarbonisation,” Quinbrook’s David Scaysbrook said. “Solar teamed with battery storage is the engine room of the energy transition. It is the anchor technology combination to deliver low cost power.”
Of course, the plunging cost of battery storage also has positive implications for one of the challenges facing the existing wind and solar projects in Australia, and those under construction, which is the growing levels of curtailment.
Several new curtailment records were set over the weekend, according to GPE NEMLog’s
Geoff Eldridge, with wind curtailment reaching a new record of 4,714 megawatts (MW) at 3pm on Sunday afternoon, and a new high (2,154 MW) and a record share of demand (134.6 per cent) in South Australia.
(The curtailment record came a day after South Australia posted a new wind share record of 147 per cent, at 4.20am. The difference between the two records being that the curtailment happened during the day, when rooftop solar output was strong and accounting for more than 80 per cent of state demand).
According to Eldridge, the level of wind and solar curtailment in the main grid, the National Electricity Market, reached 194.6 GWh. with wind accounting for 107.8 GWh and solar 86.7 GWh. (44.6%). That’s nearly 20 per cent of the 1,100 GWh that was actually delivered to the market by wind and solar over the week.
The curtailment is mostly driven by economic reasons – wind and solar project owners dodging negative prices – but some also arises from network curtailment.
“Over the same week, NEM battery charging reached 39.6 GWh,” Eldridge notes. That’s equivalent to just 20 per cent of curtailed wind and solar. Put another way: without the current battery fleet, curtailment could have been 40 GWh higher.
“Batteries are already helping, but the numbers highlight how much more storage — or flexible demand — will be needed to soak up available generation.”
The good news is that battery storage is easily the healthiest part of the energy transition at the moment, both at grid scale and at the household level, thanks to the federal rebate that has now reached more than 50,000 installations.
A lot of big battery storage is being delivered across the grid. In South Australia, the number of big batteries will double over the next 12 months and the storage capacity will triple, and there are several dozen being built elsewhere in the grid, including Supernode, and the next biggest, the 700 MW and 2,800 MWh Eraring battery in NSW.
Most new solar projects are also being built with a big battery nearby, or behind the same meter as a true “solar battery hybrid” that allows the excess power to be stored on site at times of low demand and negative prices, and sent into the grid at times of high demand and higher prices.
The Cunderdin solar hybrid in Western Australia, the first such project at this scale in the country, is showing how this is being done, and on occasions is delivering significant amounts of power into the grid after midnight.
See: The solar farm that winds down at dusk, charges up for dinner and is still generating at midnight
The falling battery storage costs is also good news for federal and state government tenders seeking to add to their battery fleets and firming capacity.
The federal government recently upped the “dispatchable” component of its Capacity Investment Scheme to a minimum 13 GW and 42 GWh, and the first tender under a new fast-tracked process has been opened in Western Australia, seeking 4 GWh.
The South Australia and NSW governments have also announced different tenders for “firm capacity, with battery storage expected to play a significant role, particularly given its falling costs, its flexibility, and its ability to provide critical grid services.
See also: Tesla says battery inverters can do the job of spinning machines at a fraction of the cost
reneweconomy.com.au |
|
