Western Australia Proposes New Capacity Price to Accelerate Long-Duration Battery Storage
WA’s energy regulator the Economic Regulation Authority (ERA), has released a draft proposal recommending a significant rise in the Benchmark Reserve Capacity Price – the annual payment rate for capacity providers in the state’s electricity market in recognition of the evolving role of battery energy storage.
Under the draft determination the ERA is proposing a Benchmark Reserve Capacity Price of $491,700 per megawatt (MW) per year for the 20289/29 capacity year (a 36% increase from the current figure).
So what’s driving the change? At the heart of the increase is a shift in the benchmark technology ued to set capacity prices. The ERA’s draft now assumes a 200MW battery energy storage system with 1,200 MWh of storage, reflecting the growing industry focus on long-duration storage capable of delivering six hours of energy or more – a step up from the previous 800MWh reference.
This change acknowledges that as the grid integrates more renewables, longer duration battery systems will be essential for reliably balancing demand & supply. In addition to the expanded storage requirement pressure from higher labour, materials & connection costs also contribute to the upward adjustment in pricing.
So what does this mean for energy storage? The proposed price forms the basis for the capacity payments that battery storage and other dispatchable resources receive through the Reserve Capacity Mechanism in WA’s Wholesale Electricity Market (WEM). By providing a strong revenue signal, the ERA’s approach aims to support investment in larger and more capable battery projects – including systems that can store and discharge energy for extended periods, providing grid stability & helping manage the variability of renewable generation.
The draft determination in open for public feedback, with submissions due in mid-February 2026 before a final price is set.
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