The Power of Solar: A Game-Changer in Australia's Energy Landscape
In a remarkable turn of events, Australia's electricity market navigated a scorching heatwave with an unprecedented level of ease. As temperatures soared across the nation's southern regions, the electricity grid remained remarkably stable, showcasing a new era in energy management.
A Quiet Revolution
Spot prices, a critical indicator of supply-demand balance, remained subdued during the heatwave. The Australian Energy Market Operator, responsible for maintaining the National Electricity Market (NEM), issued few warnings about potential supply disruptions. Even the electricity system experts and commentators, usually quick to sound alarms, were relatively quiet.
A Striking Absence
Geoff Eldridge, an electrical engineer and consultant, noted the significance of what wasn't happening. "Hot summer days have always been a test for electricity systems," he wrote. "This week's heatwave pushed demand to record levels, yet the system's response was noticeably different. There were no emergency calls for reserves, and prices remained stable throughout the day."
A Turning Point
Eldridge believes this week's events mark a pivotal moment in Australia's energy transition. In the past, extreme heat placed continuous pressure on supply, with coal and gas plants running at full capacity throughout the day. However, this week's heatwave, with underlying demand peaking at over 40,000 megawatts, suggests a fundamental shift. The sun, once a liability, has become an asset, with solar power carrying much of the heat-driven load during the day.
The Solar Revolution
Indeed, at its peak on Wednesday, solar provided over 60% of the power used in the NEM. Approximately two-thirds of this came from rooftop solar installations. Combined with wind and hydropower, solar met up to 76.6% of the day's demand. Renewable sources accounted for almost half of the supply over the 24-hour period.
This is a remarkable transformation from just seven years ago, when renewable energy never exceeded 26% of supply during a separate heatwave. The abundance of renewable energy, particularly solar, in 2026 is such that it could have produced even more if not for "curtailment" - the practice of throttling back or switching off generators due to insufficient demand or technical requirements.
The Winter Challenge
Bruce Mountain from the Victoria Energy Policy Centre highlights the significance of this shift. The explosive growth of solar power has diminished the risk of blackouts during heatwaves, but the risks are now more severe in winter when solar output is lower, and demand can be extremely high. "Summer peak daily production has become a non-issue," says Mr. Mountain. "We're moving towards a winter peaking system where solar is low and demand is relatively high. Much more strain is happening in winter now."
Risks Remain
Despite the improved summer outlook, Mr. Mountain cautions that significant risks persist. Solar power alleviates daytime supply concerns but is less effective in the evening. Additionally, the critical time for power grids during summer in Australia is typically late January, when schools resume and industry returns to full operation. "After the 25th of January, if you have several days of 40-degree temperatures, that's when to watch," he advises.
The Role of Coal
Mr. Mountain also highlights the continued importance of coal plants. While they are desperately needed during periods of high demand, their retirement in the coming decade, as forecast by the AEMO, could pose significant challenges. "As long as we have the existing coal generators, it's not a problem," he says. "Take them out of the equation, and the pressure on supplies and system security would bear down once again."
A New Balance
Geoff Eldridge from Global Energy Power agrees that the stresses on the system have not disappeared but have shifted. Most pressure on the electricity system, including during heatwaves, comes during the evening peak when the sun has set, and coal remains indispensable. Eldridge writes, "Coal provides scale and firmness, remaining essential overnight and into the evening."
The Role of Batteries
Both Eldridge and Mountain highlight the role of batteries in bridging the daily gap between abundance and scarcity. On Wednesday, for example, batteries met about 10% of the evening peak demand. As their number and capacity grow, batteries will increasingly dominate evening supply. Many will be profitable, buying cheap power during the day and selling in the evening when prices are higher. Others, needed as backup during periods of stress, may require public support, similar to the current system where backup supply has always had public backing.
A Glimpse into the Future
For Eldridge, this week's events are momentous, offering a glimpse into Australia's energy future. While the transition is far from complete, this week's stability provides an early indication of a grid shaped less by fuel scarcity and more by timing, coordination, and flexibility. "Sometimes the most important transitions are visible not in moments of crisis, but in moments where crisis quietly fails to appear."
And this is the part most people miss...
The events of this week showcase the potential of a renewable-dominated energy landscape. While challenges remain, particularly in evening supply and winter demand, the stability of the grid during a record-breaking heatwave is a testament to the power of solar and the potential for a sustainable energy future. What do you think? Is Australia on the right track with its energy transition? Let us know in the comments!
