Australia is quickly becoming a renewables first economy. In this new energy mix, combined solar and battery projects are taking the lead over utility-scale wind generation.
Construction and transmission costs for new wind farms are rising. Conversely, batteries are becoming more technologically advanced and affordable, prompting developers to increasingly choose firmed solar instead. In a recent article published by Infralogic on 9 May 2025 titled “Firmed Solar Overtakes Australian Wind”, Rob Clow, Senior Reporter, observed that “Australian developers are turning to solar and batteries after rising turbine, building and transmission costs have made new wind projects uneconomical”.
Key insights:
- Wind costs have nearly tripled in recent years – From $1.5-2 million per MW to around $4 million per MW in total construction costs. This does not account for the “need to build new transmission” for unexploited windy areas. These transmission costs have increasingly blown out in recent years making wind an expensive and time-intensive option for developers.
- Solar and battery costs have fallen dramatically – From $2 million per MW in 2017 to just over $1 million per MW as of 2024 for utility-scale solar. Further, battery costs have fallen from $2 million to $500,000 per MW; Brad Hopkins of AGP Sustainable Real Assets noted that “there has been an extraordinary drop in battery prices…for the energy sector that flips a lot of things on its head.” This cost shift is pointed to as a key reason behind the surge in investor appetite for large-scale storage projects, which now deliver attractive arbitrage returns.
- Cheaper and more efficient batteries drive demand – The economic advantage of developing battery and solar projects, over wind, is a key driver for the changing electricity generation market. Whilst the battery market share remains modest, the Clean Energy Council recently counted 52 storage projects in development, representing 10.5 GW / 26.3 GWh of capacity, with continued development of small- and large-scale battery projects predicted over the next decade.
- Complications with batteries – As battery arbitrage becomes more crowded, the long-term profitability of utility-scale battery projects remains uncertain. Clow observes that “Arbitrages are meant to disappear from a market as more players crowd in to take advantage of them”. This presents a long-term hurdle for parties to address early in the development.
- Wind isn’t out of the picture – Despite solar’s momentum, wind still has a place in Australia’s energy mix. With power demand expected to grow by 90% over the next 25 years, the industry will need every green electron it can get. Despite long wait times for wind approvals and many regulatory hurdles, now is the time to buy wind development projects in Queensland because they will need those projects to come online.
Looking ahead
An example of how battery technologies are evolving is the emergence of DC-coupled configurations, which allow solar farms to store power without first converting it to AC. As noted by Giles Parkinson in Renew Economy on 27 April 2025, the Cunderdin Hybrid Facility in Western Australia pairs a 128 MW solar farm with a 55 MW / 220 MWh battery. This setup enables the facility to shift solar output from midday into the evening peak, delivering steady “baseload-like” power between 5:30 pm and 9:30 pm.
The energy transition presents many opportunities both for consumers and producers. Firmed solar has emerged as a key technology in Australia’s transition from fossil fuels to renewables. It is expected to form a significant share of the generation mix alongside wind, hydro, and hydrogen. This area is worth watching closely, particularly as battery technologies become even more efficient, cheap and capable.”
The Hamilton Locke team advises across the energy project life cycle – from project development, grid connection, financing, and construction, including the buying and selling of development and operating projects. For more information, please contact Matt Baumgurtel.
