Beyond efficient

Curtailment of utility scale wind and solar energy in the National Energy Market hit record levels in the December quarter, and the queue of those offering to solve it grows ever longer.

Yesterday The Energy featured the Australian Energy Market Operator’s assessment of how much latent capacity there is for rooftop solar and other consumer energy resources in existing distribution networks, and some of the networks’ efforts to meet this.

But these efforts can quickly get eaten up by new solar installations, and they could make things worse “upstream” (elsewhere in the distribution or transmission networks), consumer advocates say.

Neither do they address the increasing curtailment of utility solar and wind farms. Until recently, many of these projects were built in the windiest and sunniest places — such as northwestern Victoria and Southern NSW — not where demand was greatest or transmission lines had spare capacity.

Utility scale clean generation faces two types of curtailment. “Economic offloading” is (usually) where prices are negative, meaning the operators of the plants have to pay to send power to the grid, and many choose to sit pat and await better prices.

“Network curtailment” is where distribution networks or AEMO ask generators to switch off or withhold their power (for example, by storing it in co-located batteries) because the network has become too congested, which can destabilise networks.

As these charts from AEMO’s latest Quarterly Energy Dynamics show, average economic offloading of utility wind and solar farms in the NEM hit record levels in the December quarter, and network curtailment of utility solar farms also hit a record level. Average network curtailment of utility wind farms was broadly in line with previous quarters, but combined curtailment was also a record.

In October The Energy reported a new record spontaneous curtailment of 10.9GW had been set. At the time, UNSW senior research associate Dylan McConnell said this was already at levels expected in 2030, and beyond the efficient or optimal level of curtailment. (He now says this is confirmed for the December quarter and calendar 2025 periods.)

The worst states for curtailment of wind and solar are South Australia and Victoria, which invested in these technologies at grid scale early and often. These two states also share weather patterns, making it more likely that at some point new projects will cannibalise each other. (NSW and Queensland also suffer from solar curtailment.)

The next charts, from Bloomberg NEF's latest Australian Energy Transition Outlook (H1, 2026), show quarterly curtailment by state for utility-scale solar and wind.

Investment signals

What is the efficient or optimal level of curtailment (and network congestion) is a big unanswered question.

Billions of dollars worth of transmission projects have been proposed to deal with the problem of curtailment, but developers have struggled to get them off the ground, with costs and timelines blowing out and Victoria in particular facing community hostility.

Even so, excessive curtailment is also an investment signal for batteries large and small.

Some consumer advocates argue batteries — orchestrated or not, behind the meter or in the network — are a better solution to curtailment and network congestion than tweaking networks. This is because they give the network a break when generation is greatest (and prices are low or negative) by soaking up surplus energy locally, and inject it back into the grid when it is in short supply.

Indeed, AMEO’s Draft 2026 Integrated System Plan noted that rising costs for transmission lines and falling costs for solar panels and batteries were pushing developers towards big battery investments as well as solar + battery hybrids at the expense of transmission.

This is borne out by AEMO’s latest NEM Connections Scorecard. It shows a bulging pipeline of stand-alone utility batteries and solar+battery hybrids — about 27GW — at all stages from application (90% conversion) and proponent implementation (99% conversion) to registration and commissioning to full output (both 100%).

Consumers are also responding to the signals (in their case, slashed feed-in-tariffs) — behind the meter battery installations have exploded under the spell of the Albanese government's wildly successful Cheaper Home Batteries Program.

More than than 184,000 systems with total storage of 4.3GWh were installed in the six months to December 31, according to Green Energy Markets, with average system sizes vaulting to 28.3kWh.

Big batteries are already making their presence felt in the NEM, and behind the meter batteries should also begin to make their presence felt in the coming year. According to the latest QED, batteries are already pushing costly hydro and gas generators out of the evening peaking market, and helping to lower wholesale prices during peaks and overall.

The states' development of Renewable Energy Zones with dedicated transmission should also help reduce curtailment over time, subject to the transmission getting built, by limiting the free-for-all in project location.

Demand response and virtual power plants (which deploy batteries and other consumer energy appliances) can also help, as can coal closures (assuming they don't get postponed repeatedly); inflexible coal plants continue generating even when prices are negative, pushing out (or curtailing) more spontaneous generators.

Another solution used in some overseas markets — locational marginal pricing — has been rejected here, including by the Nelson review of the NEM, says McConnell.

But the big questions — how can we determine, fund and accept an optimal level of curtailment, and what it is — remain unanswered.