In June 2025, I laid the groundwork for this argument on EV Curve Futurist: the energy transition is not just about replacing fuels — it is about rewriting system architecture. That piece explored how storage, scale, and learning curves were beginning to reshape grid economics.
This article builds directly on that foundation. It is also a direct response.
Over the past year, a growing narrative has argued that the rapid expansion of renewables and battery storage has “failed” because retail electricity prices in jurisdictions such as Australia have not yet fallen materially.
That argument conflates transition-phase pricing with long-term system economics.
It also overlooks a structural reality: in energy-only markets where fossil generators set the marginal clearing price, fuel-dependent assets can continue to influence retail outcomes even as renewable generation costs collapse.
This is not a conspiracy. It is market design.
Where marginal pricing remains dominated by gas or coal, wholesale price floors reflect fuel exposure. Where regulators actively reshape market rules or constrain scarcity pricing, the translation of falling renewable costs into retail tariffs can occur faster.
China provides a useful contrast.
There, rapid deployment of solar, wind, and storage has coincided with downward pressure on industrial power prices. Between 2015 and 2024, China added hundreds of gigawatts of solar and wind capacity while average industrial tariffs in several provinces — including major renewable hubs such as Qinghai and Inner Mongolia — trended downward in real terms.¹ Regulators have been far less permissive of persistent fossil-fuel price floors when lower-cost generation is available. The result is a faster pass-through of manufacturing-driven cost declines.
Australia’s National Electricity Market operates differently. Gas frequently sets the marginal price, particularly during peak demand periods. During recent fuel shock events, gas has set the clearing price a significant share of the time, amplifying wholesale volatility.² Network upgrades, legacy asset recovery, and transition capex are embedded in retail bills. These structural factors delay visible consumer relief.
It is also important to acknowledge that these cost allocations are not purely technical — they are political. Decisions about stranded asset recovery, network cost socialisation, and market rule changes directly influence how quickly consumers experience price compression. The energy transition is therefore both an economic and governance challenge.
The question dominating public debate is not whether renewable generation is cheap. It demonstrably is.
The real question is how quickly market design allows those declining generation costs to displace fuel-set pricing power.
Framed correctly, the answer is not ideological. It is structural.
This is not simply a generation swap; it is a system architecture rewrite.
What we are witnessing is the replacement of a fuel-based energy economy with a manufactured-electron economy. That shift changes the price physics of the entire system.
Australia vs China: A Structural Comparison
While both Australia and China have deployed renewables at extraordinary scale, their market structures differ significantly — and that difference shapes retail outcomes.
Australia (National Electricity Market):
- Energy-only market design
- Gas frequently sets the marginal clearing price
- High exposure to global LNG-linked fuel pricing
- Network upgrade costs embedded in retail tariffs
- Retailers exposed to wholesale volatility
China:
- Strong state-directed market oversight
- Rapid renewable and storage deployment at national scale
- Regulated fossil generation margins
- Industrial tariffs actively managed
- Faster pass-through of declining generation costs
The contrast illustrates a crucial point: renewable cost declines are real in both systems. The speed at which consumers feel relief depends on how marginal pricing power is structured and regulated.
The Transition Phase Distortion
During the build-out phase, three forces temporarily mask the deflationary nature of Bettrification:
- Parallel Systems: Fossil infrastructure remains online while renewable infrastructure scales, meaning consumers fund both simultaneously.
- Grid Modernisation: Transmission expansion, interconnectors, and digitalisation require upfront capital.
- Fuel Price Shock Residue: Recent global gas price volatility has flowed directly into marginal pricing markets.
These are transition costs, not steady-state characteristics.
As renewable penetration rises and storage duration deepens, fossil utilisation falls. Once fossil generators operate at lower capacity factors and lose consistent marginal-setting power, price compression accelerates.
The Storage Inflection Point
Battery Energy Storage Systems (BESS) are central to this shift.
In 2025 alone, global grid-scale battery installations are estimated to exceed 300 GWh, with project pipelines for 2026 already substantially higher. Solar additions continue to break annual records, and wind deployment remains structurally strong despite regional permitting constraints. The scale effect is no longer theoretical — it is visible in deployment data.
As storage scales:
- Peak price spikes are arbitraged
- Negative pricing events are absorbed and shifted
- Gas peakers lose scarcity leverage
- Wholesale volatility declines
At sufficient storage penetration, fuel-based marginal pricing weakens structurally.
his is the inflection point where wholesale compression begins translating into durable retail relief.
Modelled base case (not best case) using my energy generation and storage models extending to 2035.
The chart above illustrates the structural mechanism discussed throughout this article. In this base-case trajectory, global storage depth rises steadily through the early 2030s, crossing ~2 hours of effective coverage. From that point, gas generation declines materially. The implication is not elimination, but weakening marginal influence. As storage scales, gas sets the clearing price less frequently. The squeeze is economic, not political — and it emerges from system architecture, not mandate.
It is important, however, to acknowledge emerging constraints. Storage deployment depends on global supply chains for lithium, LFP cells, inverters, transformers, and grid connection equipment. Short-term bottlenecks — particularly in critical minerals processing, high-voltage equipment manufacturing, or shipping logistics — can slow rollout temporarily. These risks do not reverse the cost curve, but they can affect deployment velocity.
The direction remains structural. The pace depends on execution.
What Changes Beyond 2030
As renewable penetration exceeds critical thresholds and storage coverage expands, the system transitions from fuel-influenced pricing to capacity amortisation economics.
In a mature, Bettrified system:
- Generation is predominantly zero-marginal-cost
- Storage smooths volatility
- AI optimises demand response
- Fuel imports become marginal rather than foundational
Energy pricing increasingly reflects industrial productivity rather than commodity scarcity.
That is a fundamentally different economic regime.
The Five-to-Ten Year Retail Inflection
If renewable and storage deployment continues along current trajectories — and if policy settings remain broadly supportive of grid integration and storage scale-up — Australia, like most advanced grids, is highly likely to begin experiencing sustained downward pressure on retail electricity prices over the next five years.
This outcome depends on several conditions:
- Continued rapid deployment of multi-hour storage
- No major policy reversals that reinforce fossil marginal pricing
- Timely grid connection of new renewable capacity
- Gradual roll-off of legacy fuel hedging contracts
This does not require perfection. It requires scale and continuity.
As renewable penetration deepens and storage duration expands:
- Gas sets the marginal price less frequently
- Wholesale volatility compresses
- Capacity factors of fossil generators decline
- Fuel exposure weakens structurally
Retail pricing is a lagging indicator. Wholesale structure shifts first. Retail relief follows once hedging cycles, contract rollovers, and network cost recovery stabilise.
Looking toward 2035, if high renewable penetration, deep storage coverage, electrified demand flexibility, and declining fossil utilisation materialise as projected, retail margins in competitive markets are likely to compress toward minimal levels.
In such a system, electricity increasingly resembles a utility service built on amortised capital rather than a commodity exposed to fuel scarcity.
That is the trajectory implied by cost curves, deployment velocity, and market evolution — provided structural momentum is maintained.
Conclusion: Architecture Determines Price Direction
The debate is not about whether renewables are cheap — they are.
The debate is about how quickly legacy market design allows manufacturing-driven cost declines to displace fuel-set price floors.
Energy systems dominated by fuel burn are structurally inflationary. Energy systems dominated by manufactured assets on learning curves are structurally deflationary.
Bettrification is the migration from one regime to the other.
The process involves transition friction. But the direction is governed by cost curves, scale, and system design.
Cost curves compound, while fuel volatility persists.
Over time, the architecture that compounds wins.
That is why renewables and storage, when allowed to scale and when market design aligns with their economics, lead to lower structural energy prices.
Sources
- International Energy Agency (IEA), Renewables 2023: Analysis and Forecast to 2028 (Paris: IEA, 2023) and Renewables 2024: Analysis and Forecast to 2029 (Paris: IEA, 2024).
https://www.iea.org/reports/renewables-2023
https://www.iea.org/reports/renewables-2024
See also National Energy Administration (China) renewable capacity statistics releases (2015–2024):
http://www.nea.gov.cn
and Ember, Global Electricity Review 2024:
https://ember-climate.org/insights/research/global-electricity-review-2024/ - Australian Energy Market Operator (AEMO), Quarterly Energy Dynamics (Q3 2022; Q1 2023; 2024 editions):
https://aemo.com.au/energy-systems/electricity/national-electricity-market-nem/data-nem/quarterly-energy-dynamics-qed
See also Australian Energy Regulator (AER), Wholesale Electricity Market Performance Reports and NEM data portal (2022–2024):
https://www.aer.gov.au/wholesale-markets/wholesale-statistics