The Australian Energy Market Operator has elevated grid-forming battery energy storage systems to its highest priority for 2026, marking a pivotal shift in how Australia’s electricity grid will maintain stability as renewable energy dominates the power mix.

AEMO has made grid-forming BESS a priority for the National Electricity Market (NEM) and South West Interconnected System (SWIS) for 2026. The market operator’s latest Engineering Roadmap outlines 29 priority actions across the NEM and the SWIS for the upcoming financial year.

Grid-Forming Technology Takes Centre Stage

According to the organisation’s Engineering Roadmap – FY2026 priority actions report, many of the priorities for 2026 are centred around harnessing the potential of grid-forming batteries and tapping into consumer energy resources (CERs) such as rooftop solar PV, distributed home battery storage, and electric vehicles (EVs).

The technology represents a fundamental shift from traditional battery storage. While conventional batteries merely respond to grid conditions, grid-forming systems actively stabilise the network by providing services typically delivered by coal and gas generators.

Grid-forming BESS (battery energy storage systems) will be increasingly important, providing “frequency control, voltage stability and some aspects of system strength”.

Technical Research Priorities

AEMO’s research agenda for 2026 focuses on critical technical challenges. One of AEMO’s priorities for the next financial year is to investigate the ability of grid-forming BESS to provide synthetic inertial response and thereby displace or reduce requirements for synchronous inertia, which is typically provided by coal, gas, and hydropower plants.

The market operator will also examine how these systems handle fault conditions. AEMO will obtain and analyse fault current data from commissioned grid-forming BESS to better understand their responses during faults.

AEMO’s research concluded that further efforts are needed to understand the relationship and interchangeability between synthetic inertia and synchronous inertia and the distinction required between the two types of inertia to operate the power system effectively.

NSW Leading the Charge

Australian transmission system operator Transgrid has announced that grid-forming BESS and synchronous condensers will form the ‘heartbeat’ of the New South Wales power system, with a view to delivering 5GW by 2032/33.

Several projects are already demonstrating the technology’s potential. Neoen recently announced that its 270MW/540MWh Western Downs stage one, which has grid-forming capabilities, in Queensland, started operations. Another Neoen-owned grid-forming BESS, the 238.5MW/477MWh Blyth Battery in Western Australia, was commissioned in April 2025.

Market Momentum Building

The grid-forming push comes as Australia’s renewable transition accelerates. “Only ten years ago, just 14.6 per cent of the east coast’s electricity came from renewables; today it is close to 50 per cent,” Ms Trad said. “Energy consumers are currently installing close to 1400 batteries a day, and renewables have avoided more than 200 million tonnes of emissions in less than a decade.

The Clean Energy Council’s latest quarterly investment figures show that, while grid-scale investment remains challenging, momentum in large battery projects is building. Five new storage projects reached financial close in the quarter, totalling around 1.2 GW of capacity and 4.1 GWh of storage, the third-highest quarterly result on record.

System Security Imperative

System strength and inertia solutions must be delivered in tandem, AEMO said, and investments are necessary sooner rather than later for various reasons. “Many assets capable of providing system security services are progressing but have long lead times (five or more years) for approvals, procurement and installation,” the market operator said.

AEMO said the market must ultimately “decouple” reliance on coal generators for system security to ensure a sustainable grid for years to come. With coal generators likely to adopt more flexible operating patterns – including going offline during the day – the need for alternative stability services becomes increasingly urgent.

The 2026 engineering roadmap signals Australia’s commitment to maintaining grid reliability while accelerating the transition to renewable energy, with grid-forming batteries positioned as a critical enabler of this transformation.