Australia's Transition to Renewable Energy: A Challenging Transformation
Australia is setting ambitious targets for renewable energy and is on the path to transitioning away from its coal dependency toward cleaner energy alternatives. Having long relied on coal, the current government aims to build a more diversified energy structure to ensure Australia can self-sufficiently provide energy in the coming years while supporting the green transition.
The Changing Energy Economy
This shift is reflected in market forces, as energy companies are heavily investing in a diverse range of energy sources. Australia currently has an aging fleet of coal-fired power stations, forcing the government to decide between increasing coal production or diversifying the energy mix to enhance national energy security.
| Year | Energy Component | Electricity Production (%) |
|---|---|---|
| 2000 | Black Coal | 80 |
| 2025 | Black Coal | 37.5 |
| 2025 | Brown Coal | 12.1 |
In 2024, the government launched the Renewable Energy Target (RET) program, aimed at reducing greenhouse gas emissions in the electricity sector and increasing electricity output from renewable sources. The RET sets a target to provide an additional 33,000 gigawatt-hours (GWh) of electricity from renewable sources each year from 2020 to 2030.
The Transition in Progress
Daniel Westerman, CEO of the Australian Energy Market Operator (AEMO), believes the time has come for Australia to transition from coal to renewable energy alternatives. "Our aging coal-fired power plants are deteriorating; they are being replaced by the lowest-cost energy, which is renewable energy, supported by storage, connected to transmission," he stated.
By 2025, 42.7% of Australia's electricity output comes from renewable sources, up from 38.9% in 2024. Approximately 15.7% of this output comes from wind energy, 13.9% from rooftop solar, 7.7% from large-scale solar, and 5.3% from hydropower. Total new renewable energy capacity reached 5.9 GW in 2025, marking a 28.3% increase from the previous year.
The Booming Energy Storage Industry
The energy storage industry is also experiencing rapid growth, with a 260% increase in home battery sales and a 233% increase in large-scale battery capacity from 2024 to 2025, making Australia the world's third-largest large-scale battery market. Nearly 270,000 home batteries were purchased in 2025.
| Indicator | 2024 | 2025 | Growth (%) |
|---|---|---|---|
| Home battery sales | - | 260% | --- |
| Large-scale battery capacity | - | 233% | --- |
Australia accounted for 10% of new global battery capacity in March, as this trend continues. The country is benefiting from falling battery prices from China in recent months, following the trade war between Beijing and Washington. Australia is now the third-largest importer of Chinese batteries, behind only Germany and the United States.
The Future of Clean Energy
"Australia won't remain in third place forever, but it is growing strongly," said David Dixon, a senior analyst at Rystad. He also emphasized that "we've never seen anything on this scale before." Australia surpassed 2 GWh of battery storage per million people after what he called an "unprecedented" construction boom.
Rooftop solar is extremely popular in Australia, with about four million households generating this type of energy, making Australia the country with the highest rate of rooftop PV installations in the world. For large-scale solar, 3.3 GW of new capacity was brought online in 2025.
The government has also approved seven wind projects totaling 1.4 GW, significantly more than the 775 MW deployed in 2024. In March, the government approved 16 projects worth a total of $22.1 billion in New South Wales (NSW) through the newly established Investment Australia Authority (IDA). The IDA has approved 14 energy projects worth $24 billion, including pumped hydro storage, battery storage systems, wind farms, solar power plants, and gas infrastructure.
While Australia is playing catch-up after decades of coal dependency, the government is making every effort to accelerate the deployment of renewable energy. Market forces are also supporting the green transition, as energy companies and other industries seek to improve energy security and reduce carbon emissions, a trend expected to continue in the future.