Molly Ayala
Australia's energy system is undergoing a significant transformation, with a shift from traditional energy sources to renewable sources of electricity generation. In 2023, fossil fuels contributed 65% of Australia's electricity generation, with coal being the primary source at 46%, followed by gas at 17% and oil at 2%. However, the share of renewable energy in total electricity generation has been increasing, with solar, wind, and hydro contributing 35% in 2023. This transition is driven by economic, engineering, and environmental factors, as well as consumer preferences for more sustainable options.
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Solar power
In 2024, solar energy accounted for 19.6% of Australia's electrical energy production in the National Electricity Market and the South West Interconnected System. This growth is attributed to various factors, including feed-in tariffs and renewable energy targets designed to assist renewable energy commercialisation, as well as financial incentives provided by the Australian government. The government offers Small-Scale Technology Certificates (STCs), providing savings of about 25-30% on the cost of installing solar systems.
Australia leads the world in residential solar uptake, with over 20% of free-standing households with a PV system. By 2021, Australia had 13 GW of rooftop solar, and it is projected that more than 70 GW will be connected by 2050. This expansion has been driven by the decreasing cost of solar technology, increasing cost of fossil fuel electricity, and a growing awareness of climate change.
The growth in solar power has had a significant impact on the country's energy landscape. In 2024, homes with rooftop solar contributed 11.6% of electricity to the National Electricity Market, outpacing contributions from wind farms, large-scale solar farms, hydro plants, and gas-fired power. This shift towards solar energy has reduced Australia's reliance on fossil fuels and contributed to a decrease in CO2 emissions.
Additionally, Australia has the potential to further harness solar energy. According to the Institute for Sustainable Futures, the country could install up to 179 GW of solar power on roofs nationwide, with a theoretical annual output of 245 TWh. This potential, combined with ongoing advancements in solar thermal technologies and storage solutions, positions solar power as a critical component of Australia's renewable energy future.
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Wind power
Wind turbines use the energy of the wind to spin an electric generator, producing electricity. Wind turbines are commonly located on hilltops or near the ocean, as wind speeds are higher in these locations. In some countries, wind turbines have also been built in the ocean, either floating on the surface or using giant pylons extending to the sea floor. These offshore wind farms generate more electricity than onshore wind farms because winds over water are typically stronger and more constant. Additionally, offshore wind farms use larger and more powerful turbines.
In Australia, wind farms are more commonly found in coastal areas, especially in the southern coastline, which lies in the Roaring Forties. Sites in these regions have average wind speeds above 8-9 m/s at turbine hub height. The southern and western coastal regions of Australia are considered to have some of the best wind resources in the world. The Victorian Wind Atlas shows that the highest average wind speeds in Victoria are found in coastal, central, and alpine regions, with an average speed of 7m/s.
The Australian government has been working to increase wind power projects and establish an offshore wind industry. In 2019, South Australia supplied 29.2% of Australia's wind power, fulfilling 41% of the state's electricity requirements. Victoria is also a leader in wind energy production, generating approximately 11.8 thousand gigawatt hours of electricity from wind energy. In December 2022, the Federal Government designated the Bass Strait off Gippsland as Australia's first offshore wind zone. The Victorian government has also legislated targets for offshore wind power, aiming for 2GW by 2032 and 9GW by 2040.
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Hydroelectricity
There are three main types of hydropower stations in Australia: impoundment plants, which store and release water to generate electricity; diversion plants, which force water to flow through canals to produce electricity; and pumped storage plants (also known as PHES systems), which store water and electricity to release when demand is high. PHES systems are an important part of hydroelectricity production as they allow excess electricity to be stored and used when needed, similar to solar storage batteries.
Hydropower is the most advanced and mature renewable energy technology, providing electricity generation in more than 160 countries worldwide. In Australia, it is an important source of renewable energy, with a share of 6% in 2020 and 2023, making it the third-largest source of renewable energy after solar and wind. Hydroelectricity has the advantages of low greenhouse gas emissions, low operating costs, and a high ramp rate, making it suitable for both base and peak load electricity generation.
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Coal-fired plants
Australia currently has 19 coal-burning power plants in operation, and coal-fired plants play a vital role in the country's electricity generation capabilities. Coal-fired power stations burn coal—a fossil fuel—to generate electricity that supplies power to homes and businesses. Thermal coal in Australia is either black or brown coal, both of which are flammable sedimentary rocks formed over millions of years from decomposed vegetation that has been compressed under layers of sand and sediment.
The process of generating electricity from coal involves burning the coal to generate heat, which turns water fed into the power station into steam. This high-pressure steam then passes through turbines, spinning them due to the pressure. Inside the generator are magnets that turn copper wire coils, creating an electrical current that generates electricity.
According to Energy Networks Australia, the average lifespan of a coal-powered plant is 29 years, although some power stations are designed to last between 40 and 50 years. Many of Australia's coal-fired power stations are aging and are due for decommissioning, with most having an expected closure date. However, they can cease operating earlier due to factors such as being replaced by renewable energy sources or a reduction in performance. The declining cost of renewable energy sources, such as solar power, wind power, and battery storage, makes it unlikely that new coal-fired power stations will be built in Australia.
The retirement of coal-fired plants has had an impact on the energy sector in Australia. In recent years, wholesale prices have spiked to maximum levels when loads were high, and intermittent renewable sources were unable to meet the demand. The situation is further impacted by the retirement of coal-fired plants, which were previously relied upon for dispatchable power. However, the shift towards renewable energy sources is in line with Australia's goal to transform its energy system and achieve net-zero emissions by 2050.
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Oil consumption
Oil production in Australia peaked in 2000 and has been declining since, due to the decline of oil-producing basins and the lack of new fields coming online. Net oil imports increased significantly from 2000 to 2006, rising from 7% to 39% of total consumption. In 2021, oil comprised 52% of the Total Final Consumption (TFC) and 32% of the Total Energy Supply (TES). Oil is the second-highest energy source in Australia, after coal.
While oil consumption remains significant, there has been a recent shift towards renewable energy sources in Australia due to the increasing effects of global warming and climate change. In 2022, renewable energy, including solar power and wind power, accounted for 39.4% of the total electricity generated in Australia. This shift towards renewables is part of Australia's commitment to reducing its emissions and transitioning to low-carbon energy sources.
In 2021, oil contributed 1.8% of Australia's electricity generation, while natural gas accounted for 18.8%. Coal remained the dominant source of electricity generation, contributing 52.9%. However, there is a growing trend towards renewable energy, with wind and solar photovoltaics (PV) becoming the cheapest forms of new electricity generation.
Australia's energy system is undergoing a significant transformation, driven by economic, engineering, and environmental factors. The government has implemented initiatives such as the Rewiring the Nation program, which aims to upgrade and modernise electricity grids to accommodate more renewable energy sources and storage capacity. These changes are necessary to meet Australia's targets of reducing emissions by 43% by 2030 and achieving net-zero emissions by 2050.
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Frequently asked questions
The main sources of electricity in Australia are coal, natural gas, solar, wind, hydro, oil, bioenergy and waste.
In 2023, renewable energy sources contributed 35% of Australia's total electricity generation. This is an increase from 27% in 2021 and 19% in 2010.
The National Electricity Market (NEM) interconnects the five eastern and southern states and the ACT of Australia, delivering around 80% of the country's electricity. Western Australia and the Northern Territory have their own electricity systems.
Australia's energy system is undergoing its greatest transformation since the 1950s, driven by economic, engineering and environmental factors. There has been a shift towards renewable energy sources, with wind and solar photovoltaics (PV) now being the cheapest forms of new electricity generation.
Renewable energy has significant potential in Australia. The country has abundant sources of wind, solar, hydro, geothermal and wave energy. Australia has the highest adoption rate of solar photovoltaic (PV) systems worldwide, with approximately 30% of households installing these systems.
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