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Impact of Dispatchable Battery Energy Storage on Electricity Prices in the Australian NEM: An Exploratory Analysis

Author

Listed:
  • Davi-Arderius, Daniel

    (University of Barcelona and Chair of Energy Sustainability Barcelona Institute of Economics (IEB), Spain)

  • Nepal, Rabindra

    (School of Business, Faculty of Arts, Society and Business University of Wollongong, Australia)

  • Jamasb, Tooraj

    (Department of Economics, Copenhagen Business School)

Abstract

Empirical studies of whether merchant arbitrage acts as a countervailing force to the "merit order effect" of solar and wind is important but unexplored in the Australian National Electricity Market (NEM). This study fills in this gap by studying the actual impacts of charging and discharging Battery Energy Storage Systems (BESS) on the day-ahead electricity spot prices. Australia is a global leader in BESS and the findings of this study are not only relevant to the ongoing reform of the NEM but also to other countries on the path to decarbonizing their energy mix. We use hourly data between 2024 and 2025, and a methodology based on an Autoregressive Moving Average (ARMA) model with Generalized Autoregressive Conditional Heteroskedasticity (GARCH) features. We find that BESS impacts on the spot-prices, but its impact is asymmetric: charging BESS has decreased the spot price, while discharging them has increased the spot price. We find positive welfare impacts from BESS when diesel generators are replaced, but not for other generation technologies. Some policy recommendations are provided based on the findings.

Suggested Citation

  • Davi-Arderius, Daniel & Nepal, Rabindra & Jamasb, Tooraj, 2026. "Impact of Dispatchable Battery Energy Storage on Electricity Prices in the Australian NEM: An Exploratory Analysis," Working Papers 5-2026, Copenhagen Business School, Department of Economics.
    • Handle: RePEc:hhs:cbsnow:2026_005
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    JEL classification:

    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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