How Australia Plans a Stable Grid With Renewables, Big Batteries and Innovation—Without Coal?

At a time when many countries, including India, continue to worry about the potential instability caused by a “high penetration of renewables” in their grids, Australia has demonstrated how a national electricity system can remain stable even when the majority of its generation comes from renewable sources—supported by storage, smart inverters and other enabling technologies.

But before getting into the details, it is important to understand how the Australian electricity market operates. Unlike India, which has a single unified national grid, Australia’s National Electricity Market (NEM) is managed by the Australian Energy Market Operator (AEMO) and covers only the eastern and southeastern states. It excludes Western Australia and the Northern Territory, which have sparse populations and run their own independent electricity systems.

Five Regions Under NEM

Geographical distribution of different regions in Australia. Source: Saur Energy

The NEM primarily serves five major regions with high population density and distinct energy characteristics: New South Wales (NSW), Queensland (QLD), Victoria (VIC), South Australia (SA) and Tasmania (TAS).

Each region has its own fuel mix advantages. NSW and QLD continue to rely heavily on black coal, though the share of renewables and storage is steadily rising. In Victoria, brown coal still accounts for around 58% of generation, while renewables and BESS make up roughly 35%.

The two standout examples, however, are South Australia (SA) and Tasmania (TAS). In SA, the majority of electricity generated in the last three months came from renewables (including BESS), while gas now serves mainly as backup rather than baseload supply. Tasmania, on the other hand, is often called the “Battery of the Nation” because 100% of its electricity over the last three months came from non-fossil sources—primarily hydro and wind.

Unique Regional Energy Landscape Virtues. Source: Saur Energy

How Australia Managed High Renewable Energy Integration

South Australia, with strong wind and solar resources, has emerged as a global case study. Over the past three months, wind, solar and BESS together accounted for about 72% of actual generation—indicating the dominance of green energy in its supply mix. Gas contributed 28%, but largely as a backup source.

Generation from different fuel sources in the last 3 months in South Australia. Source: NEM

Higher shares of variable renewable energy naturally posed grid-stability challenges. SA managed these through large-scale deployment of battery energy storage systems (BESS) and enabling technologies such as grid-forming inverters, which allow renewables and storage to provide services previously delivered by fossil fuel plants. The combination of storage, advanced inverter capabilities and gas backup helped SA operate safely even at extremely high renewable penetration.

This transition became possible after coal power exited the state in 2016, opening the door to new technologies. SA also hosts the Hornsdale Power Reserve (the Tesla Big Battery), which has significantly enhanced frequency control and helped “firm” variable renewable energy. Today, SA has around 1.2 GW of installed battery capacity and boasts one of the highest per-capita rooftop solar penetrations in the world—further accelerating the shift to distributed renewable energy.

Tasmania’s Giant Hydro Storage Advantage

Tasmania, located just off Australia’s southern coast, offers another powerful example of renewable-grid stability. Over the last three months, the state generated 100% of its electricity from non-fossil sources—73% hydro and 27% wind.

Generation from different fuel sources in the last 3 months in Tasmania. Source: NEM

Hydro power provides Tasmania with natural large-scale storage, enabling rapid ramp-up during peak demand or when renewable output fluctuates. Through the Basslink interconnector, Tasmania can help stabilise the mainland grid by exporting firm hydro power. The state also hosts small pumped-hydro facilities, giving it even greater long-duration storage capability.

How Australia Is Planning for a Greener Grid

AEMO and several energy companies are now building on the models demonstrated by South Australia and Tasmania. With coal-fired power plants scheduled for retirement between 2026 and 2035, Australia is preparing to reshape its grid around renewables, BESS, grid-forming inverters, synchronous condensers, gas turbines and other stabilising technologies.

AEMO’s latest energy transition framework states that a hybrid system combining renewables, storage and gas backup offers the least-cost, most reliable path to a 100% renewable grid by 2050.

The roadmap for energy transition For NEM In Australia. Source: AEMO Report

“Renewable energy, connected by transmission and distribution, firmed with storage and backed up by gas-powered generation presents the least-cost way to meet both consumer needs and government policies through to 2050,” AEMO notes.
The report adds that renewables already supply over 40% of annual NEM demand, with 30-minute peaks nearing 80%. In South Australia, renewables often exceed 100% of demand.

AEMO also highlights that grid-forming BESS is progressing rapidly, enabling services such as frequency control, voltage stability and system strength—traditionally provided by thermal generators.

The roadmap also outlines the urgent need to prepare replacement capacity as coal plants retire, ensuring the grid remains stable.

Developments Already Underway

The transition is not just theoretical. In a recent development, energy company Stanwell signed a deal with Quinbrook to develop a 6 GWh energy storage project at the proposed Gladstone State Development Area (GSDA) Energy Hub in Queensland. The hub is expected to integrate renewables, BESS, gas turbines and other technologies—strengthening the region’s ability to absorb more renewable energy while maintaining firm, reliable supply.