AEMO charts Australia’s rooftop solar boom to 42.5GW by 2036

The report states that rooftop PV capacity will expand from 25.1GW in 2026 to 42.5GW by 2036, while non-scheduled PV generation between 100kW and 30MW will grow from 1.9GW to 4.8GW over the same period.

This expansion reflects the rapid adoption of distributed energy resources (DERs) by Australian households and businesses, driven by policy incentives, declining technology costs, and consumer demand for energy independence.

Westerman emphasised that Australian consumers continue to invest in rooftop solar “at a world-leading pace” and are now adding home battery storage systems and electric vehicles (EVs) to their energy systems.

The growth trajectory positions solar PV as a cornerstone of Australia’s renewable energy strategy, with both grid-scale and rooftop installations contributing to the energy mix.

However, the increasing penetration of solar PV presents challenges for grid management, particularly regarding the variability of solar generation during peak sunlight hours and its rapid decline during evening periods.

AEMO’s report emphasises the importance of improving the visibility and predictability of DERs to ensure both long-term planning and real-time operational stability.

The need for grid-forming inverters

Battery storage systems equipped with grid-forming inverters have emerged as essential components for maintaining system stability as renewable energy penetration increases.

AEMo said that the NEM currently operates 10 grid-forming BESS sites with a combined capacity of 1,070MW, while the development pipeline includes 94 projects comprising 78 standalone battery systems and 16 hybrid installations.

Grid-forming technology provides essential system services, including synthetic inertia, system strength, and frequency control capabilities that traditional synchronous generators have historically supplied.

AEMO’s analysis highlights the importance of grid-forming inverters in stabilising the grid, though current technology provides lower fault current contributions compared to synchronous machines.

This limitation underscores the need for ongoing technological advancements to replace conventional generation capabilities fully.

The transition to high renewable energy penetration poses challenges for maintaining system strength and inertia as coal-fired power plants retire. AEMO has identified eight key transition points related to coal plant retirements that require targeted investments in system strength solutions.

The planned exit of 1,680MW coal-fired Gladstone Power Station in 2029 exemplifies these challenges, necessitating the deployment of synchronous condensers and other system strength measures to ensure grid stability in Central Queensland.

Grid-forming BESS represents a key component of AEMO’s strategy to address these requirements through advanced inverter technology.

Type 2 Transitional Services trials evaluate grid-forming inverter performance under diverse system conditions, including assessments of protection-quality fault current, system restart capabilities under high distributed photovoltaic conditions, and operation without synchronous generation.

Trial findings will inform future standards and procurement strategies, ensuring battery systems can contribute to system security.

Embedded energy storage capacity is expected to expand from 2.2GW in 2026 to 9.8GW by 2036, driven by the adoption of residential and commercial battery systems. These DERs offer potential for grid support during periods of high demand or low renewable energy generation; however, their integration requires robust technical standards and effective coordination mechanisms.

AEMO collaborates with distribution network service providers to develop functional requirements for operating a high DER power system, with key focus areas including improving data quality in the DER Register, enhancing compliance with inverter standards, and implementing emergency backstop mechanisms for distributed PV curtailment.

The increasing penetration of DERs necessitates enhanced visibility and predictability to ensure both long-term planning and real-time operational stability.

Advanced forecasting tools and flexible grid management strategies become essential as solar generation variability impacts system operations. The integration of DERs into the grid requires coordination mechanisms that can effectively harness their potential while maintaining system security.

Policy reforms drive efficient deployment

The rapid growth of solar PV and battery systems requires reforms to the National Electricity Rules to facilitate efficient deployment of system strength and inertia resources.

AEMO submitted a rule change request to the Australian Energy Market Commission in November 2025 to address gaps in current planning and procurement frameworks.

The System Strength Impact Assessment Guidelines allow market participants to self-remediate their impacts using grid-forming technology, spurring a wave of grid-forming BESS projects.

Transmission network service providers plan to contract for over 8GW of grid-forming battery capacity by 2034, although AEMO cautions that poorly coordinated investments could create inefficiencies such as duplicative infrastructure or project delivery delays.

The proposed rule changes aim to provide greater flexibility and certainty for market participants, enabling them to make confident investments in system security solutions while advocating for integrated approaches to planning and investment coordination.

Grid-forming technology development requires continued refinement of technical standards and testing frameworks to unlock the full potential for widespread deployment.

AEMO’s voluntary specification for grid-forming inverters establishes performance benchmarks for system security contributions; however, gaps remain in current access standards, which are primarily designed for grid-following systems.

The ongoing Grid-forming Technology Access Standards Review addresses these gaps to facilitate the delivery of grid-forming services.

Parameter tuning studies suggest that grid-forming BESS have enhanced performance potential, particularly in weak grid conditions where advanced inverter capabilities prove most valuable.

Protection system design faces complications from variability in inverter-based resource behaviour, with transmission network service provider surveys revealing instances of relay maloperations and inconsistent fault current provision.

Improved modelling techniques and dynamic protection assessments become essential for maintaining grid reliability as inverter-based generation increases.

Australia’s energy transition highlights the crucial role of integrating solar PV and battery storage in achieving sustainability and reliability goals.

The 2025 Transition Plan provides a roadmap for addressing technical, operational, and policy challenges associated with this transformation. With a robust project pipeline and a focus on innovation, the NEM positions itself to lead in the global integration of renewable energy.

Technical advancement in grid-forming inverter technology, combined with appropriate policy frameworks, will determine the pace and effectiveness of Australia’s renewable energy transformation as the country moves toward its decarbonisation targets.