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Australia is at risk of under-building long-duration energy storage as governments back batteries that last hours, not days.

APA Group’s chief executive officer, Adam Watson, is now warning it is “scientifically incorrect” to think the grid can remain stable without significantly more gas.

Australia has seen an explosion in battery installations — both in homes, driven by generous federal subsidies, and in grid-scale projects.

Industry executives are increasingly concerned current investment settings are not aligned with the physical demands of a renewables-heavy system, where extended periods of low wind and solar output remain a persistent risk.

Coal, once the dominant source of Australia’s electricity, is waning rapidly, though it still accounts for about half of supply.

While renewable energy advocates have cheered its steady exit, the shift is creating a widening gap in firm capacity.

Gas, which currently plays a much smaller role, is expected to expand as a backstop to intermittent renewables.

“We’ve got about 5 per cent of our generation from gas today,” Mr Watson said. “To think we can keep the grid stable at that level is just scientifically incorrect.”

Batteries, by design, are optimised for short-duration support — smoothing peaks and stabilising frequency over hours. But their economics deteriorate rapidly as duration increases, with longer storage requiring multiple systems layered together.

“An eight-hour battery is two four-hour batteries. A 12-hour battery is three,” Mr Watson said.

That has prompted a more cautious reassessment within parts of the market about how far batteries alone can carry the grid through the transition.

The issue is most acute during so-called “renewable droughts”, when wind and solar output falls simultaneously and remains low for days at a time — conditions that demand sustained, dispatchable supply.

Gas proponents argue that without a significant build-out of gas-fired generation and storage, the system risks reliability shortfalls as coal exits faster than replacement capacity is delivered.

New gas plants are already being developed, often paired with dedicated storage to guarantee fuel supply during peak demand periods. Some are expected to operate more frequently than initially forecast as renewable penetration deepens.

Yet investment remains uneven.

Policy uncertainty — particularly around gas reservation schemes and market intervention — is complicating decision-making, with producers and large energy users wary of committing capital amid shifting regulatory signals.

Labor is pressing ahead with its long-awaited reservation scheme but is struggling to build consensus — a dynamic Mr Watson said risks paralysing the market.

“You get 10 different answers from 10 producers on what policy should look like,” Mr Watson said. “That noise deters both producers and customers from making long-term decisions.”

Executives warn that hesitation now could translate into tighter supply and higher risks later in the decade, particularly on the east coast where domestic demand is rising alongside continued LNG export commitments.

The result is a system increasingly dependent on gas for reliability, but without a clear framework to ensure it is built in time.

Mr Watson said Australia had ample capacity to boost domestic production while also making better use of existing storage.

He pointed to a disused gas reservoir in Western Australia that can store enough energy to supply about 800,000 homes for roughly 27 days.

By contrast, a $1.6bn grid-scale battery would power the same number of homes for about four hours before needing to recharge.

“That’s about $300bn worth of battery capability sitting there,” Mr Watson said.

The comparison is increasingly being used by infrastructure and energy players to argue that while batteries are critical for managing short-term volatility, they cannot yet provide the multi-day reliability once delivered by coal-fired generation.