In Western Australia, a wind farm stands still on a sunny afternoon, despite the strong breeze. The turbines, which can power thousands of homes, are not generating electricity. This situation highlights a growing issue in Australia’s energy landscape: curtailment. This occurs when energy production exceeds demand, leading to a throttling of excess power generation.

The phenomenon is becoming more common as renewable energy sources surge in Australia. In October, clean energy surpassed fossil fuels for the first time in supplying electricity to homes and businesses on the eastern seaboard. The gap between energy supply and demand has prompted the Commonwealth to mandate that retailers provide households with free electricity for at least three hours a day starting next July. Experts warn that without increased energy storage, much of the renewable power generated will continue to be curtailed.

Pete Tickler, co-founder of Gridcog, explains that curtailment occurs when an energy asset produces less power than it is capable of generating. There are two main types: capacity curtailment, which happens when the transmission network is at its limit, and economic curtailment, where low market prices lead generators to halt production. Tickler notes that economic curtailment has traditionally affected gas plants but is now increasingly impacting renewable energy sources due to low or negative spot prices.

The federal government’s initiative to provide free power aligns with peak solar production times, particularly in spring and autumn when demand is often lower. Dylan McConnell, a senior research associate at the University of New South Wales, points out that curtailment levels vary by region and season, with southern states like Victoria and South Australia experiencing significant curtailment.

Australia's national electricity market (NEM) has seen a dramatic increase in renewable energy, rising from 5% to over 40% in 27 years. While hydropower was the primary renewable source in the late 1990s, solar and wind now dominate. Unlike hydropower, which can store water for later use, solar and wind energy generation is dependent on weather conditions, leading to fluctuations in supply.

Recent records indicate that renewable energy met 78.6% of demand in the NEM on October 11. In New South Wales, renewable sources briefly supplied nearly 86% of demand on October 3. However, coal-fired generators, which have historically stabilized the market, can only reduce output to a certain extent before needing to shut down completely. This limitation, combined with the overabundance of renewable energy, contributes to curtailment.

Tickler highlights the rapid adoption of rooftop solar as a significant factor in this trend. Approximately one in three small-use customers in Australia has solar panels, generating up to half of the country’s electricity at times. This growth, with around 300,000 new installations annually, often leads to excess supply that the market cannot absorb, pushing down prices and squeezing out other generators.

As a result, some solar farms are losing up to 30% of their potential production due to curtailment. Tickler predicts that future solar farm developments will likely include battery storage to mitigate these losses. He emphasizes that batteries can effectively store excess energy generated during the day for use at night, reducing curtailment for solar owners.

With over three gigawatts of batteries already installed and more in development, Australia is poised to address curtailment challenges. David Dixon from Rystad Energy notes that significant grid-scale storage is on the horizon, which could eliminate much of the current energy spillage. He estimates that eight gigawatts of utility batteries will be operational within the next 12 to 18 months, potentially offsetting the energy currently curtailed.

As global leaders prepare for the COP30 climate summit in Brazil, Australia’s advancements in small-scale solar and battery storage may attract international attention. Tickler also emphasizes the role of consumers in managing energy use, suggesting that smart technology can help balance supply and demand, further reducing the need for curtailment.