Australia
Australia's energy transition is moving from generation to the grid.
Australia is rapidly expanding renewable generation, supported by solar, wind and storage. The next phase of the transition will depend on building the transmission, storage and firming capacity needed to integrate more renewable electricity while maintaining reliability and supporting growing electricity demand.
From renewable resources to a renewable energy system
Australia has some of the world's strongest solar and wind resources, and renewable generation is becoming an increasingly important part of its electricity system.
In 2025, renewables supplied 39.5% of Australia's total electricity generation. Solar accounted for 19.6%, wind 14.0% and hydro 4.7%. Fossil fuels still supplied 60.5%, including 42.7% from coal and 16.2% from gas.
The policy direction is clear: Australia is targeting 82% renewable electricity by 2030 and net-zero emissions by 2050.
The challenge is increasingly shifting from building renewable generation to building the infrastructure around it across transmission, storage, dispatchable capacity and flexible demand.
Policy is pushing the transition forward
Australia's energy transition is being supported by a combination of emissions targets, renewable-energy investment mechanisms and electricity-market reforms.
The country has legislated a 43% reduction in emissions below 2005 levels by 2030 and net zero by 2050. In September 2025, Australia announced its next national target: a 62–70% reduction below 2005 levels by 2035.
For electricity, the headline target is 82% renewable generation by 2030. The government is using mechanisms including the Capacity Investment Scheme (CIS) to encourage investment in renewable generation and clean dispatchable capacity such as batteries.
The government is also progressing Renewable Energy Transformation Agreements with states and territories, linking national policy with regional renewable-energy development.
Solar, wind and batteries are reshaping the electricity mix
Australia's electricity mix is changing rapidly.
Solar was the largest renewable source in 2025, contributing 19.6% of total generation. Wind supplied 14.0% and hydro 4.7%.
At the same time, coal remained the largest individual source of generation at 42.7%, although its share continued its long-term decline. Gas contributed 16.2%.
This creates a major transition challenge: renewable generation must grow quickly enough to replace retiring fossil-fuel capacity while the electricity system maintains reliability during periods of low wind, low solar output or limited hydro availability.
The grid is becoming the critical piece of the transition
Australia's renewable build-out is creating a parallel need for transmission and energy storage.
The Australian Energy Market Operator's 2026 Integrated System Plan provides a long-term roadmap for generation, storage and network investment across the National Electricity Market through to 2050.
Batteries and other forms of dispatchable capacity are becoming increasingly important as the share of variable renewable generation rises.
The Capacity Investment Scheme is designed to reduce investment risk and accelerate new renewable generation and clean dispatchable capacity, including battery storage.
The transition is therefore becoming less about whether Australia has enough renewable resources, and more about whether the grid can connect, move and balance them.
From energy transition to industrial opportunity
Australia's energy transition extends beyond electricity generation.
The country's large renewable resources and reserves of critical minerals are creating opportunities across clean-energy manufacturing, batteries, hydrogen, minerals processing and electrification.
The government's broader Net Zero Plan is built around reducing emissions across the economy while supporting households, businesses and industry through the transition.
Electrification is also connecting the electricity transition with transport, buildings and industrial energy demand. EVs powered increasingly by renewable electricity are expected to contribute to Australia's broader emissions-reduction pathway.
What We're Watching
01 — Grid expansion
Can transmission infrastructure keep pace with Australia's renewable build-out and changing electricity demand?
02 — Battery deployment
How quickly will grid-scale and distributed batteries expand to provide flexibility and firming?
03 — Coal transition
How will the electricity system manage the retirement of ageing coal-fired generation while maintaining reliability?
04 — Renewable investment
Will the Capacity Investment Scheme and state-level initiatives deliver enough new renewable and dispatchable capacity to stay on track for 2030?
05 — Clean industry
Can Australia's renewable resources and critical minerals translate into new domestic manufacturing and clean-energy industries?
06 — Electrification
How quickly will EVs, industrial electrification and other new electricity loads reshape demand?
Energy Insider View
Australia's next energy challenge isn't building more renewable resources. It's building the system around them.
The country has the solar, wind and minerals to become a major clean-energy player. The decisive questions now are whether transmission, storage, investment and policy can move at the same pace.
Sources
Australian Government — Department of Climate Change, Energy, the Environment and Water
Australian Government — Department of Energy
Australian Energy Market Operator (AEMO)