Why grid-forming batteries are becoming central to Australia’s energy transition

As coal generation retires, Australia’s power system needs more than new energy capacity. It needs assets that can help maintain system strength, support frequency and keep the grid stable as more inverter-based generation connects.

Australia’s energy transition is often described in terms of capacity: how many gigawatts of solar, wind, storage and transmission will be needed as coal-fired power stations leave the system.

That is only part of the story.

The National Electricity Market is not simply replacing one set of generators with another. It is moving from a system built around large synchronous machines to one increasingly supplied by inverter-based resources. That changes the technical foundations of the grid. Energy still needs to be generated, stored and dispatched, but the system also needs voltage control, frequency response, system strength and operational flexibility.

This is where large-scale battery storage is taking on a more complex role.

For years, batteries were often discussed mainly as arbitrage assets: charge when prices are low, discharge when prices are high. That role still matters. But as coal units retire and renewable penetration rises, the market is asking more from storage. The next generation of BESS projects will not be judged only by megawatts and megawatt-hours. They will also be judged by how well they support the grid.

The system strength question

Coal, gas and hydro generators use heavy rotating machinery. Those machines provide inertia and other stability services as a physical consequence of how they operate. When a disturbance occurs, they help resist sudden changes in frequency and voltage.

Solar, wind and most conventional battery systems connect through inverters. They can respond quickly, but they do not behave like synchronous machines unless they are designed and controlled to provide those capabilities. As more synchronous generation leaves the system, maintaining system strength becomes a more deliberate engineering task.

AEMO has made this issue increasingly visible through its planning, engineering and connection work. The challenge is not that inverter-based resources cannot support the grid. It is that the technical requirements must be specified, modelled, tested and integrated properly.

Grid-forming battery systems are part of that answer.

Unlike grid-following inverters, which rely on the existing grid waveform as a reference, grid-forming inverters can establish their own voltage and frequency reference. In practical terms, that allows a battery system to behave more like a stabilising asset, rather than simply following the conditions around it.

That difference matters as the network becomes more dependent on inverter-based generation.

From storage asset to grid asset

A grid-forming BESS can provide services that are increasingly important in a changing power system. Depending on the project design, location and connection conditions, these may include fast frequency response, voltage support, synthetic inertia and, in some cases, black-start or islanding capability.

These capabilities should not be described as a cure-all. Grid-forming technology does not remove the need for transmission investment, careful connection studies or broader system planning. It does, however, help address some of the stability challenges that emerge as the generation mix changes.

The Dalrymple battery in South Australia is often cited because it demonstrated how a grid-forming battery can support a local network during disturbances. Its performance during islanding events showed that batteries can play a more active role in maintaining supply under difficult operating conditions.

That example matters because it moves the discussion away from theory. The question is no longer whether batteries can provide stability services. The more practical question is how those capabilities should be designed, valued and procured at scale.

Why early design decisions matter

For developers, the technical direction is clear: grid-forming capability needs to be considered early.

It is far harder to redesign a project late in development than to plan for these requirements at the outset. Inverter selection, control systems, connection studies, modelling, balance of plant and commissioning strategy all need to work together.

This has direct commercial consequences.

A project that is well located, technically robust and aligned with emerging connection standards is more likely to be bankable. It may also be better positioned for offtake, tolling or system services arrangements where counterparties want confidence that the asset can perform under real market and grid conditions.

By contrast, projects that treat system strength as a late-stage compliance issue risk longer connection timelines, higher costs and weaker investor confidence.

As Australia’s BESS pipeline grows, this distinction will become more important. The market does not simply need more announced capacity. It needs projects that can reach financial close, secure connection agreements, be commissioned successfully and operate as expected.

Storage in a more demanding grid

Australia’s power system is becoming more decentralised, more variable and more digitally managed. Large loads, including data centres and industrial facilities, are also placing greater emphasis on reliable, high-quality power.

Battery storage has a role here, but the language needs to be precise. A BESS does not make a weak connection strong by default. It must be properly specified, connected and operated. Where grid-forming capability is appropriate, however, it can support voltage stability, improve operational flexibility and help reduce reliance on some traditional stabilising infrastructure.

That is why grid-forming BESS is moving from a specialist technical topic to a mainstream market issue.

The next phase of storage development in Australia will be about quality as much as quantity. Duration will matter. Location will matter. Contract structure will matter. So will the ability of a battery to support the system around it.

For developers, investors and energy users, this is the practical lesson: battery storage is no longer just an energy-shifting asset. In the right configuration, it is becoming part of the operating fabric of the grid.

Pacific Green’s work in Australia sits within that shift. As the NEM moves through coal retirement, transmission constraints and rising renewable penetration, the value of BESS will increasingly depend on whether projects are technically credible, commercially bankable and ready for the grid Australia is actually building.