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

Daniel Davi-Arderius (), Rabindra Nepal and Tooraj Jamasb
Additional contact information
Daniel Davi-Arderius: University of Barcelona and Chair of Energy Sustainability Barcelona Institute of Economics (IEB), Spain

No 5-2026, Working Papers from Copenhagen Business School, Department of Economics

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.

Keywords: Electricity; Storage; Batteries; BESS; Australia; Arbitrage; GARCH (search for similar items in EconPapers)
JEL-codes: L50 L94 Q28 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2026-02-23
New Economics Papers: this item is included in nep-ene and nep-reg
References: Add references at CitEc
Citations:

Downloads: (external link)
https://hdl.handle.net/10398/450f8364-75e6-4f07-af84-a691cd187b54 Full text (application/pdf)
Full text not avaiable

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hhs:cbsnow:2026_005

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Working Papers from Copenhagen Business School, Department of Economics Copenhagen Business School, Department of Economics, Porcelaenshaven 16 A. 1.floor, DK-2000 Frederiksberg, Denmark. Contact information at EDIRC.
Bibliographic data for series maintained by CBS Library Research Registration Team ().