Batteries are getting cheaper while gas gets pricier. Here’s why

Last summer, Australia’s electricity grid underwent a quiet but consequential shift. Across the east coast, gas-fired power stations – long viewed as the only way to keep the grid functioning on our hottest or coldest days – barely ran. The amount of energy generated by fossil gas this year dropped to its lowest point in 25 years. Batteries are now filling this gap, as a cheaper, cleaner alternative at peak times. And wholesale electricity prices are 47% lower than this time last year, thanks to record renewable and battery generation. This shift sits at the heart of the CSIRO’s latest GenCost report, which tells a story of two technologies heading in opposite directions: batteries getting cheaper and gas getting more expensive. The steady shift away from coal In Australia, most of our electricity historically came from coal. But each year we’re becoming less reliant on this finite and polluting resource. Coal usage has dropped by 25% in the past decade. In the first three months of 2026, renewables supplied a record 45% of electricity in Australia’s east coast grid. This matters because electricity generation produces 32% of Australia’s carbon emissions. These emissions are worsening climate change, leading to more extreme weather and leaving many Australians physically and financially vulnerable. Our coal power stations are also ageing. Like an old car, these stations are now breaking down more often and becoming more expensive to fix. When coal plants suddenly go offline, it pushes electricity prices up. The federal government is aiming for 82% renewable energy by 2030 nationally. To meet that target, we must develop new wind and solar projects. But we also need new “firming” technologies, such as batteries and pumped hydro, to make sure we always have energy available. Batteries are getting cheaper The latest GenCost report confirms that renewables, backed by batteries, are the cheapest source of new electricity. Critically, the cost of big, grid-scale batteries fell by 11–16% in 2025. And the CSIRO expects costs to keep dropping each year. This is because we get better at building these technologies as we build more of them. More batteries Across power grids, electric vehicles, computers and phones, we’re installing more and more batteries each year. Between 2024 and 2025, global battery storage capacity jumped by 40%. Australia is leading the charge, ranking third in the world for battery installations. Plummeting costs Battery costs have fallen more than 99% since 1991. More streamlined supply chains and economies of scale have made this battery boom possible. Research shows each time global battery storage doubles, the cost of manufacturing battery cells drops by 21%. In the future, this may boost the development of new battery technologies. This self-supporting cycle means the cheaper batteries get, the more ways we can use them. And the more we use them, the cheaper batteries are to make. Gas is getting more expensive Gas plants rely on gas turbines. Unlike batteries, gas turbines are produced in relatively small numbers by only a handful of global manufacturers. This is because they are complex machines that often require specialised materials. Demand for new gas turbines was low for the past decade. But it’s now increasing, largely due to the data centre boom in the United States. Power demand for data centres is already pushing up prices. Major gas turbine manufacturers are warning it will now take four years just to make and deliver a new turbine. Gas plants also face other challenges. Gas is not always available at critical times. Australia’s newest gas turbine, Kurri Kurri in New South Wales’ Hunter Valley, only has enough available gas to run for about ten hours at a time and reportedly takes more than 24 hours to refuel. This makes it less flexible and more expensive than new eight-hour batteries. Another challenge is the high cost of gas sourced from fossil fuels. As Australia’s gas exports grew, domestic gas prices surged to international levels. To date, this has been the main factor driving up household electricity prices. Together, these challenges mean the cost of gas generation is unlikely to drop anytime soon. A balancing act To be clear, gas turbines may still be valuable in future. As Australia makes its clean energy transition, batteries will increasingly do the heavy lifting. But my research shows the grid will likely need stored fuel for backup power generation, for example if a stretch of cloudy, windless days coincides with high demand. This may even involve building extra gas turbines, but using them less often as emergency generators for the grid. However, these turbines cannot run on fossil gas going forward. Over the next 10–20 years, global carbon constraints will require us to transition from fossil fuels. Instead we can use alternative fuels such as biodiesel, a biodegradable fuel made from vegetable oils or animal fats. Green hydrogen from renewable energy or green methanol produced from agricultural and forestry waste are other options. This transition makes further investment in fossil fuel infrastructure, such as gas pipelines or gas fields, much riskier. In the meantime, the incredible surge of batteries in our homes, cars and broader network means our grid is already shifting away from gas. That’s promising news, both for our planet and our hip pockets.