Australia’s energy landscape is undergoing a profound transformation, with renewables poised to dominate the country’s power generation and capacity mix by 2035. This shift, driven by robust government policies, abundant solar and wind resources, and ambitious net-zero targets, is reshaping the sector’s dynamics and presenting new challenges and opportunities.
The rapid growth of renewables, forecast to account for 73.3% of Australia’s total power generation by 2035, is a testament to the effectiveness of policies such as the Renewable Energy Target (RET), the Capacity Investment Scheme (CIS), and the Rewiring the Nation initiative. These measures, coupled with strong rooftop solar adoption and large-scale wind and solar development, are propelling record growth in renewable capacity additions. However, this transition is not without its hurdles. Grid connection delays, permitting bottlenecks, and community resistance to new transmission infrastructure are slowing the pace of large-scale renewable rollout. Additionally, insufficient firming and storage capacity to integrate rising rooftop solar generation has led to congestion and curtailment risks in several regions.
The implications for markets are significant. The rapid build-out of renewable capacity is expected to drive down wholesale electricity prices, benefiting consumers but potentially squeezing the margins of traditional generators. This shift may also accelerate the retirement of coal assets, further altering the market dynamics. However, the pace of coal retirements may be slower than anticipated due to transmission constraints and planning uncertainty, which could put further pressure on the 2030 renewable electricity target.
The rapid growth of solar PV and wind power, both onshore and offshore, is also driving regional investment and grid diversification. This trend is expected to continue, with solar PV remaining the leading renewable technology, supported by high penetration rates. The expansion of wind power, particularly in designated Renewable Energy Zones, is also expected to play a crucial role in the country’s energy transition.
To sustain this momentum, continued policy alignment, accelerated infrastructure delivery, and greater investment in firming and transmission will be critical. The government’s Rewiring the Nation and Capacity Investment Scheme remains central to ensuring renewable projects can connect efficiently and deliver firm, reliable power. Moreover, initiatives such as the Solar Sunshot programme, Hydrogen Headstart, and the Critical Minerals Production Tax Credit are promoting investment in solar photovoltaics (PV), hydrogen, and battery storage, further supporting the country’s net-zero emissions target by 2050.
In conclusion, Australia’s energy transition is a complex, multifaceted process that presents both challenges and opportunities. The rapid growth of renewables is reshaping the sector’s dynamics, driving down prices, and accelerating the retirement of coal assets. However, the pace of this transition is not uniform, and significant hurdles remain. To navigate this complex landscape, continued policy alignment, accelerated infrastructure delivery, and greater investment in firming and transmission will be critical. The decisions made today will shape the future of Australia’s energy sector and its ability to meet its ambitious net-zero targets.