Battery Arbitrage in Australia: Buy Power at Negative Prices, Sell at Peak

At 1pm on a sunny Tuesday in South Australia, wholesale electricity hits minus $67 per megawatt-hour. Generators are paying the grid to take their power. By 6pm that same day, the price is $14,500/MWh. That's a swing from being paid to consume, to paying the equivalent of $14.50 per kilowatt-hour, roughly 50 times the normal retail rate.

Most Australians don't see any of this. Their retailer smooths it all out into a flat 30-something cents per kWh, and they pay the same whether they use power at midday or midnight. But a growing number of households, the ones with a battery in the garage, are riding that daily wave like surfers who found the break nobody else knows about.

This is battery arbitrage. Charge when power is dirt cheap (or free, or when you're paid to take it). Discharge when it's expensive. The concept is simple. The daily savings are real. And the window to benefit from the most extreme swings is open right now, but it won't stay this wide forever.

Australia's wholesale electricity market runs on 5-minute auctions. Every five minutes, AEMO (the market operator) matches generation with demand. When supply exceeds demand, prices drop. When everyone's cranking the aircon after sunset and there's no solar, prices spike.

That midday trough exists because of three things colliding at once. We covered the full breakdown in our negative pricing explainer, but the short version: rooftop solar floods the grid, coal plants bid negative prices rather than shut down (restarting coal costs millions), and there isn't enough storage yet to absorb the surplus.

As one Reddit commenter put it: “Negative spot prices are not a good thing. They're actually an indication that there's a severe mismatch between generation and consumption/storage. If you've got negative spot prices, something is going wrong!”

They're right that it signals a problem. But for a household with a battery? That problem is an opportunity sitting in your garage.

Not every battery owner needs to be on a fancy wholesale plan. There are two distinct ways to play this, and both deliver real savings. Which one suits you depends on how hands-on you want to be and how much risk you're comfortable with.

Most battery owners in Australia are on a standard retail plan. And that's perfectly fine. You don't need to watch spot prices or manage charging schedules. The battery does the arbitrage for you automatically.

Here's how the daily cycle plays out:

Nothing fancy. No apps to check. No prices to monitor. The battery and your inverter handle the switching automatically. You just watch your electricity bill shrink.

The hidden value here is that it doesn't matter what happens on the wholesale market. Your retail rate is fixed, your solar is free, and your battery stops you buying at peak. As we explained in our guide to why bills stay high, wholesale generation is only about 30% of your retail bill. The other 70% (network charges, supply fees, retail margins) stays the same regardless. A battery cuts your exposure to all of it by simply using less grid power.

This is where it gets interesting. Retailers like Amber Electric pass the raw wholesale price through to you. Instead of a flat 30c/kWh, you pay whatever the NEM spot price is at that exact 5-minute interval, plus a monthly subscription fee (around $15-$25) and a flat network charge.

For most people without storage, this is a risky proposition. But add a battery and the equation flips entirely.

One Reddit user shared their real-world result after switching to Amber with a battery: “My bill went from $140 with Sumo to $50 with Amber including their $25 monthly fee.” That's a $1,080 annual saving just from changing retailer and letting the battery do its thing.

Let's compare both strategies for a typical Sydney household with a 6.6kW solar system and a 10kWh battery.

Those negative net costs aren't a typo. Once you factor in VPP earnings, avoided peak purchases, and feed-in credits, both battery strategies can push your annual electricity cost below zero. You effectively stop being a customer and start being a micro power station.

Want to run the numbers for your household? Our battery calculator uses your actual usage data and postcode to model the savings. You can also track how battery prices have moved over the past year on our battery price tracker.

The extreme daily price swings that make battery arbitrage so profitable are a transitional feature of the grid. Two forces are about to compress them.

Grid-scale batteries are absorbing the surplus

Australia has 14 GW of grid-scale battery capacity under construction. When those come online, they'll do exactly what your home battery does (charge at midday, discharge at peak) but at industrial scale. That means less midday oversupply pushing prices negative, and less reliance on expensive gas during the evening.

As one Redditor noted: “Grid scale batteries will increase power demand during the day”, soaking up the cheap solar that currently has nowhere to go.

Coal is shutting down

A big driver of negative pricing is coal plants bidding below zero to avoid costly shutdowns. When those plants close (and they are closing, steadily) their negative bids disappear with them. As another commenter explained: “Coal shutting down will eliminate their daytime negative bids just to keep running (as it's expensive to stop and start coal powered generators).”

The combined effect: the daily price rollercoaster will flatten out. Still some waves, but nothing like the wild swings we see today. Battery arbitrage will still work. Self-consumption savings don't depend on wholesale prices, but the spot-price windfall will be smaller.

Battery arbitrage isn't complicated, but the right setup matters. Here's the checklist depending on which strategy you're going for.

Don't negative prices mean the grid is broken?

Kind of. Negative prices signal a mismatch between generation and storage. As that Reddit commenter said, “something is going wrong.” But the fix is more storage, and your battery is part of that fix. Every home battery absorbing midday solar is one less kilowatt pushing prices negative. You're not gaming the system; you're helping balance it.

Does running a battery this way wear it out faster?

Daily cycling is exactly what home batteries are designed for. A typical battery is rated for 6,000-10,000 cycles (one cycle = one full charge and discharge). Cycling once per day uses about 365 cycles per year. Over a 10-year warranty, that's 3,650 cycles, well within the rated lifespan. Adding VPP events (10-30 per year) adds minimal extra wear. The bigger threat to battery longevity is heat, not cycling.

My battery isn't big enough to last the whole evening. Now what?

A 10kWh battery typically covers 4-5 hours of evening usage. If your household draws more than that, you'll fall back to grid power for the tail end of the night. On a standard plan, that's fine. You're just paying your normal rate for those extra hours. On a spot-price plan, make sure prices have settled by then (they usually drop after 9pm). Sizing the battery correctly upfront avoids this. Use our calculator to match battery size to your actual evening consumption.

Is this only worth it in South Australia?

SA has the most dramatic price swings, but the strategy works anywhere in the NEM. Queensland, NSW, and Victoria all see regular midday oversupply and evening peaks. The self-consumption savings (avoiding 30c+ peak power) apply everywhere. The spot-price bonus is just bigger in SA because the swings are wilder.

Battery arbitrage isn't a hack. It's not a loophole. It's exactly what the electricity market needs more households to do: absorb cheap midday energy that would otherwise go to waste, and use it when the grid is under stress. You get paid for doing what the system needs.

The people profiting from it right now aren't doing anything complicated. They have solar panels. They have a battery. Some of them switched to a spot-price retailer. Most of them joined a VPP. And their electricity bills are either laughably small or genuinely negative.

The window for the wildest arbitrage returns is open now, while the grid is still adjusting to the solar flood and coal is still bidding negative. Once 14 GW of grid batteries come online and the last coal plants retire, the daily price swing will narrow. Self-consumption savings will endure, but the spot-price windfall will shrink.

If you already have solar, a battery is the single best upgrade you can make. Take the rebate quiz to see what incentives you qualify for, or jump straight to the battery calculator to model the payback for your household. The numbers speak for themselves.