Leslie Massey
Australia has an abundance of renewable and non-renewable energy sources, including fossil fuels such as coal, oil, and natural gas. In 2021, Australia generated a total of 265 terawatt-hours (TWh) of electricity, with coal accounting for 52% and natural gas for 7.6%. Renewable sources, including solar, wind, hydro, and bioenergy, made up 40% of the total electricity generation mix. The country's electricity sector has been historically dominated by coal-fired power stations, but renewables are rapidly gaining traction, with wind and solar photovoltaics (PV) now the cheapest forms of new electricity generation. The National Electricity Market (NEM), which delivers around 80% of Australia's electricity, is central to the country's efforts to reduce emissions and achieve its net-zero targets.
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Coal-fired power stations
Australia's energy system is undergoing a significant transformation, driven by economic, engineering, and environmental factors. In 2023, fossil fuel sources contributed 65% of the country's total electricity generation, with coal accounting for 46% of that share. Coal-fired power stations have long been a significant source of electricity generation in Australia, but their usage is declining.
Australia was the world's fifth-largest hard coal producer in 2021, and coal remains essential to the country's energy sector. In 2021, coal represented 64% of domestic energy production, 32% of the Total Energy Supply (TES), and 53% of electricity generation. However, between 2010 and 2020, the share of coal in these areas decreased, and this decline is expected to continue.
The Clean Energy Council (CEC) and research groups like Cornwall Insight predict that most coal-fired power stations in Australia will close by the 2030s, with the last station closing in the 2050s. This transition is driven by the country's commitment to meeting net-zero targets and reducing emissions. The National Electricity Market (NEM), which delivers around 80% of Australia's electricity, has made significant strides in renewable energy generation, with a focus on wind and solar photovoltaics (PV).
Despite the expected closure of coal-fired power stations, Australia's biggest coal-fired power station, Eraring, is located in New South Wales. The closure of these power stations will impact jobs in regional areas, such as the Latrobe Valley in Victoria, Newcastle and the Hunter Valley in New South Wales, and Gladstone and Rockhampton in Queensland.
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Natural gas
- Open Cycle Gas Turbines (OCGT): Natural gas is burned to produce hot air, which drives a turbine to generate electricity. OCGTs are relatively cheap to build and suitable for short periods of energy production.
- Combined Cycle Gas Turbines (CCGT): Similar to OCGTs, but the hot air exiting the engine is used to heat water and produce steam, which drives another turbine to generate more energy. CCGTs are more efficient but more costly to construct.
- Combined Heat and Power (CHP): Similar to CCGTs, but the excess heat from the engine is utilised for local district heating instead of generating additional electricity.
- Boilers and Turbines: Power plants use boilers to create steam, which spins a turbine and generates electricity. Alternatively, they may use combustion turbines to create a rotating mass that produces electricity.
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Solar power
Solar PV has been the fastest-growing generation type in Australia. In 2020-21, solar PV generated approximately 10% of Australia's electricity, and by 2024, solar energy accounted for 16% of the country's electrical energy production. As of March 2025, Australia had over 4.09 million solar PV installations, with a combined capacity of 40.6 GW. This rapid growth is due to the decreasing cost of photovoltaics, with solar power becoming cheaper than grid electricity by 2013.
Australia leads the world in residential uptake of solar, with over 20% of free-standing households with a PV system. By 2021, Australia had 13 GW of rooftop solar, and more than 30% of Australian households had rooftop solar PV. The largest share of solar PV installations in 2018 came from grid-connected distributed sources, including residential, commercial, and industrial rooftop systems. Large-scale solar farms are also on the rise in Australia, with almost 7 GW of generation connected to the grid.
The Australian continent has the highest solar radiation per square meter of any continent, giving it some of the best solar energy resources in the world. The abundance of solar energy resources in Australia is likely to be used for energy generation on a large scale in the future. The Australian government has implemented incentive programs to encourage the uptake of solar PV power generation, such as the Solar Homes and Communities Plan, which provides rebates for installing solar panels.
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Wind power
Australia has a very good wind resource, and the country is taking steps to further develop its wind power capacity. In December 2024, the Australian government awarded more than 3.6GW of new onshore wind projects in its renewable energy auction. The largest wind project that secured development rights is the 936MW Valley of the Winds project in New South Wales.
The National Electricity Market (NEM) interconnects the five eastern and southern states and the ACT, delivering around 80% of Australia's electricity. The electricity transmission network plays a crucial role in transporting electricity from generation sites to consumers in cities, towns, and regional communities. The Australian Energy Market Operator's (AEMO) 2024 Integrated System Plan (ISP) recommends the development of new transmission lines and key transmission projects to enhance the reliability and security of the NEM, supporting the country's renewable energy goals.
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Hydro-electric power
Australia's energy system is undergoing a significant transformation, with hydropower being one of the oldest and most mature renewable energy technologies used in the country. Hydro-electric power, or hydropower, is the process of converting the energy of moving water into electricity through generation and storage technologies. This is achieved by passing water, typically from a reservoir or dam, through an electricity generator known as a turbine. As the water passes through the turbine blades, it rotates a shaft that drives the generator, converting the motion into electrical energy. This process is known as hydroelectricity, and it has been providing around 5-7% of Australia's total electricity supply for decades.
In Australia, there are over 120 operating hydroelectric power stations, with the majority located in south-eastern states such as Victoria, Queensland, and Tasmania. The Snowy Mountains Hydro-Electric Scheme, comprising 16 major dams and seven power stations, is one of the most well-known hydroelectricity projects and accounts for around half of Australia's hydroelectricity generation capacity. The scheme provides base and peak load power to the eastern mainland grid of Australia.
Tasmania, in particular, relies heavily on hydropower, with 87% of the state's renewable energy jobs being in this sector. The Tasmanian integrated hydropower scheme utilises six major water catchments, 50 major dams, numerous lakes, and 29 power stations with a total capacity of over 2600MW. This scheme provides base and peak load power to the National Electricity Market, supplying electricity to Tasmania and the broader Australian network through Basslink, an undersea interconnector.
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Frequently asked questions
The main sources of electricity in Australia are coal, natural gas, solar, wind, hydro, and bioenergy with waste. In 2023, fossil fuels contributed 65% of Australia's electricity generation, with coal making up 46% of that figure. In the same year, renewables contributed 35% of total electricity generation, with solar and wind power being the cheapest forms of new electricity generation.
The National Electricity Market (NEM) is the grid-connected electricity market that delivers around 80% of all electricity in Australia. It covers the 5 eastern and southern states and the ACT, with the transmission network transporting electricity from where it is generated to where it is used by consumers. The NEM is central to Australia achieving its targets of reducing emissions by 43% by 2030 and net-zero emissions by 2050.
In 2022-23, Australia's total electricity generation increased by 1% to around 274 terawatt-hours (988 petajoules). In 2021, Australia generated a total of 265 terawatt-hours (TWh) of electricity.
