Hot weather and hungry datacentres lift Australia’s energy demand to record highs but batteries quell prices | Renewable energy

More data centers and warmer conditions helped push electricity demand to record levels in the first three months of the year, according to the Australian Energy Market Operator, while battery growth kept average wholesale prices low.

Electricity demand – from households, businesses and industry – reached record levels of 25 GW in the first quarter of 2026, an increase of 1.2% compared to the same quarter last year. Across the network, this growth was offset by record rooftop solar production.

But in New South Wales, where data center demand rose 18% in a year, grid electricity demand rose 1.8%, despite the rise of rooftop solar.

Previous forecasts from Aemo suggested that data center energy demand could triple in five years, to overtake the energy used by electric vehicles by 2030.

Network demand also increased in Victoria, following a near doubling of data center demand, according to Aemo’s quarterly report. The state also set a new record for all-time maximum energy demand on January 27, when temperatures exceeded 43C in parts of Melbourne amid an extreme heatwave.

Two extreme heatwaves in January led to increased cooling needs in most cities, including Adelaide, where air conditioning demand more than doubled compared to 2025.

In the National Electricity Market, which supplies the Eastern States and South Australia, renewables accounted for 46.5% of total generation – a new record for the first three months of the year.

Batteries have more than tripled their day-to-night energy transfer, Aemo said, thanks to 4,445 MW of large-scale battery capacity added over the past 12 months, more than double the total installed capacity.

Violette Mouchaileh, Aemo’s executive general manager of policy, said this significant increase in utility-scale and household battery capacity was changing the way electricity was produced, consumed and priced throughout the day.

“Grid-scale batteries increasingly absorb excess renewable energy during the day and transfer it to the market during evening peak hours, helping to moderate prices during periods of high demand. »

By reducing reliance on gas and hydropower at peak times, batteries have also contributed to lower average wholesale electricity prices, down 12% compared to the first quarter of 2025, she said.

Dr Dylan McConnell, an energy systems researcher at the University of New South Wales, said batteries were “one of the highlights of the energy transition right now”.

“We’ve seen a lot of capacity come online over the last 12 months,” he said. “We are now seeing the impact of this as it contributes significantly to peak demand in the evening and replaces gas.”

Gas production was the lowest in a quarter since 1999 – dating back almost to the start of the national electricity market, according to the Aemo report. Gas production decreased by 24% compared to the same quarter last year. Coal-fired electricity generation has also declined.