Australia’s energy system is undergoing its greatest transformation since the 1950s. These changes are driven by economic, engineering and environmental factors. Consumer preferences are also changing, with an increasing desire for independence and control over electricity supply and use.
Wind and solar photovoltaics (PV) are now the cheapest forms of new electricity generation in terms of electricity produced. To meet our net zero targets, we will need to accelerate and effectively double the level of renewable generation each decade from now to 2050.
The Australian Government is committed to delivering our future energy system through Powering Australia — the government’s plan to create jobs, put downwards pressure on electricity prices and contribute towards reducing Australia’s emissions to 43% of 2005 levels by 2030.
The government’s Rewiring the Nation will invest $20 billion in low-cost finance to unlock investment in our electricity grid. The program will build the transmission projects we need for our renewable energy future. This will provide a reliable electricity grid for all Australians.
See more about what the government is doing in a number of areas including:
- Capacity Investment Scheme
- Clean energy and the electricity market
- Energy data
- Energy programs
- Growing Australia's hydrogen strategy
- Offshore renewable energy
- Pumped hydro
- Renewable Energy Target
Where our energy comes from
Most of Australia’s energy relies on traditional sources — non-renewable fossil fuels. Coal and gas accounted for around 70% of electricity generation in 2021.
Over the last decade, the share of electricity generated by renewable energy in Australia has increased significantly, rising from around 10.5% in 2010 to 29% in 2021.
Most of our electricity is produced from burning black and brown coal at large power stations.
Natural gas is the third highest energy source in Australia (after oil and coal). It is used by power stations for electricity generation, factories for manufacturing, and homes for heating and cooking. It is a non-renewable source that emits around half the emissions of coal when used to generate electricity.
Gas used to come from large remote reservoirs, such as the Moomba and Bass Strait gas fields. More recently, coal seam gas comes from Queensland with untapped reserves in NSW and Victoria.
Renewable energy from sources like wind, solar and hydro provided about 29% of Australia’s electricity generation in 2021. This includes both large generators and small solar PV systems owned by Australian families and businesses.
As of 30 June 2022, there are over 3.1 million solar power PV systems and more than 4.6 million small-scale renewable installations in Australia.
There are also:
- 1.44 million solar and heat pump water heaters
- 424 wind systems
- 20 hydro systems.
(Source: Clean Energy Regulator)
For large-scale renewables, as at May 2022, 29.2 GW of large-scale renewable energy capacity had been accredited under the Australian Government’s Large-scale Renewable Energy Target (LRET) scheme.
Today, Australian businesses and householders have more options than ever to supply and manage energy.
You might have an electric vehicle powered by the solar PV on your roof or an in-home display linked to a smart meter that tells you when to reduce power consumption in response to prices that change during the day. Battery storage technology to store solar power for use at night is rapidly increasing in popularity.
How energy gets to your home or business
The National Electricity Market (NEM) interconnects the 5 eastern and southern states and the ACT. It delivers around 80% of all electricity in Australia. Western Australia and the Northern Territory are not connected to the NEM but have their own electricity systems and regulatory arrangements.
Large generators (power plants) produce the electricity from an energy source such as coal, wind, solar or hydro. High voltage transmission lines carry the electricity over long distances.
Distribution networks convert the high voltage back to low voltage currents for distribution via the local poles and wires to homes, offices and factories. Many homes have solar PV panels and some of these have their own battery storage systems.
Gas is sourced from gas fields (oil and gas wells or coal seam wells) and processed to specification, including adding the ‘rotten egg’ odour for safety reasons, and compressing the gas for transport.
Some of the gas is used at this stage for gas powered generation (GPG), or stored in large facilities for later use. The rest is sent long distances through large transmission pipes to what is known as a 'city gate'. When the gas runs through the city gate, the pressure is reduced making it suitable for distribution through a smaller network of pipes to homes, offices and small industrial customers.
Delivering priority transmission projects
The electricity transmission network is the backbone of the NEM. The transmission network transports electricity from where it is generated to where it is used by consumers in cities, towns and regional communities. It enhances reliability by diversifying the type and location of generation and storage available to supply consumers.
The NEM is central to Australia achieving its targets of reducing emissions by 43% by 2030 and net zero emissions by 2050. We need to ensure the NEM’s transmission network is fit for purpose and ready for the renewables and storage investment needed for the decarbonisation task ahead.
The Australian Energy Market Operator’s (AEMO) 2022 Integrated System Plan (ISP), published 30 July 2022, provides a 20-year plus forecast of the NEM’s infrastructure needs. The ISP shows we need more than 10,000 km of new transmission lines and 9 times the large-scale renewable generation we currently have. It recommends key transmission projects to keep the NEM reliable and secure.
The transmission investments identified in the ISP can improve electricity affordability by enabling renewable generation and large-scale storage investment across the NEM and allowing this to be shared between regions, increasing wholesale electricity market competition.
Rewiring the Nation will provide $20 billion of low cost finance for transmission investment to modernise the grid and implement the ISP. The Australian Government will work closely with state and territory governments to deliver this investment and facilitate timely delivery of the ISP’s major transmission projects.
The Australian Government is also providing $75 million for the design and approvals phase of Marinus Link and over $250 million in underwriting support for VNI West to support early works and enable it to share infrastructure with EnergyConnect. This reduces cost to consumers and the impact on affected communities and landholders.
- 2022 Integrated System Plan (ISP)
- Rewiring the Nation supports its first two transmission projects:VNI West (KerangLink) between Victoria and NSW and Marinus Link between Tasmania and Victoria
- Australian Energy Market Operator (AEMO)
- Australian Energy Market Commission (AEMC)
- Australian Energy Regulator (AER)
- Energy Security Board (ESB)
- Clean Energy Regulator (CER)
- Reducing transport emissions