The real backbone of Australia’s energy future

For two days in late June, a cold and almost windless system dropped across south-eastern Australia. Heaters ran high, wind farms idled, and on the evening of June 21, South Australia’s grid-scale batteries discharged nearly everything they had to carry the state through the peak. By the next day, with wholesale prices climbing and interstate transmission at its limits, gas-fired generators across the national grid lifted to their highest hourly average of the quarter, 3328 megawatts.

Across the same quarter, renewables supplied a record 42.1 per cent of generation in the National Electricity Market, and gas-fired output fell to its lowest June-quarter average since 2003, according to the Australian Energy Market Operator (AEMO). Two scenarios, one system. Australia’s grid now increasingly relies on wind, water and sunshine for long stretches, then leans on stored and standby power when the weather stops cooperating.

What replaces coal when it closes

Engineers call that standby layer “firming”, and it’s becoming the central question of the energy transition. AEMO expects two-thirds of the remaining coal fleet to close by 2035, while demand for electricity roughly doubles by 2050 as transport, industry and data centres electrify. Its 2026 Integrated System Plan concludes the lowest-cost replacement is renewable energy firmed with storage and backed up by gas, connected by upgraded transmission.

The two backup technologies do different jobs. Batteries excel at hours: this year they more than tripled the energy shifted from generated during the day into the evening peak. Gas plants cover the rarer, longer gaps, multiple days of cold, still weather when batteries drain faster than they can recharge. CSIRO chief energy economist Paul Graham said in July that “batteries are increasingly becoming the preferred flexible generation technology in the near term”, while the agency’s GenCost report projects that gas will continue to supply a small but important share of firming out to 2050.

Supply on the still days

None of it works without fuel and investment. AEMO’s 2026 gas outlook found near-term supply has improved, but flagged that as Bass Strait production declines, new gas supply will be needed in most scenarios from 2030. Even with demand for gas forecast to fall out to 2045 as households and businesses electrify and the federal Capacity Investment Scheme is underwriting 40 gigawatts of new renewable generation and storage by 2030 to speed the build-out, gas is still required to provide backup generation and power industry that cannot readily electrify.

Shell, which supplies about 15 per cent of the east coast gas market, is among those helping to balance reliability as the system rapidly changes. “We have been supplying Australians with energy for the past 125 years and what we supply will keep evolving along with what the market needs,” Shell Energy Australia Trading and Supply vice president David Guiver says. “Right now, that’s renewable and firming power, batteries and gas-fired generation to match supply with demand under all different market conditions, while being one of Australia’s major suppliers of gas to generators in the grid.”

The trajectory both AEMO and CSIRO map is one in which gas runs less and less often, but matters more on the days it does run. For households, the measure of success is simpler: power that stays on, delivered at the lowest cost the system can manage, while the generation mix changes underneath it.

Shell has supplied energy to Australian homes, businesses and industry for 125 years. For more information, visit shell.com.au