Damon Mcknight
Australia's electricity is generated through a mix of coal, natural gas, and renewable energy sources. The country's electricity sector has historically relied heavily on coal, but it is gradually transitioning to a more diverse mix, including gas and renewables like solar and wind power. Australia's electricity generation and distribution are managed by the National Electricity Market (NEM), the largest interconnected power system globally, spanning over 5,000 kilometres. The NEM, coordinated by the Australian Energy Market Operator (AEMO), ensures a continuous supply of electricity to homes and businesses across the country.
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What You'll Learn
Australia's electricity generation is evolving from a historic reliance on coal
Australia's electricity generation sector is evolving from its historical reliance on coal, with natural gas and renewable energy sources becoming increasingly important. In 2021, natural gas accounted for 29% of Australia's energy production, 28% of the Total Energy Supply (TES), 19% of electricity generation, and 17% of Total Final Consumption (TFC). The use of natural gas for electricity generation is particularly prominent in South Australia and Western Australia.
Coal has been a major fuel source for electricity generation in Australia, with the country being a significant coal producer and exporter. In 2003, coal-fired plants produced 58.4% of the total electricity generation capacity in Australia. However, in recent years, there has been a shift towards reducing coal dependence and exploring renewable energy options. In 2022, renewable energy sources such as solar and wind power accounted for 39.4% of the total electricity generated in Australia.
The National Electricity Market (NEM), managed by the Australian Energy Market Operator (AEMO), plays a crucial role in coordinating the generation and dispatch of electricity across interconnected grids. The NEM covers a distance of around 5,000 kilometres and includes Queensland, New South Wales, Victoria, South Australia, Tasmania, and Western Australia. In 2018, black coal accounted for 46% of the country's electricity generation, while brown coal contributed 14%. However, the share of coal in the energy mix is expected to decrease further.
The transition away from coal is also driven by commercial customers generating their own power from distributed energy resources, such as gas, solar, wind, or biomass. Additionally, South Australia has been at the forefront of adopting renewable energy sources, with rooftop solar installations and wind farms contributing significantly to the state's electricity generation. Large-scale energy storage installations in the state help balance the electricity grid during periods of high and low demand.
While Australia's electricity generation is evolving, coal still plays a significant role in the country's energy sector. However, with the increasing awareness of global warming and climate change, efforts to diversify energy sources and adopt more renewable options are expected to continue.
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Natural gas is increasingly used for electricity, especially in South and Western Australia
Australia's electricity was once low-cost by world standards, but this has changed. Natural gas is increasingly being used for electricity, especially in South and Western Australia. In 2019, natural gas accounted for 21% of electricity generation in Australia, making it the second-largest source of electricity generation. In Western Australia, Northern Territory, and South Australia, natural gas was responsible for 61%, 58%, and 49% of electricity generation, respectively, in 2019.
Natural gas plays a critical role in Australia's electricity supply, providing a stable and ongoing source of power. It is also a significant fuel for electricity in Western Australia, where it is the main fuel source. In South Australia, which has a high uptake of renewable power generation, solar and wind power are used during the day, while gas-powered generation fills the gap at night.
The use of natural gas as an electricity source has been trending upwards worldwide for more than three decades. In Australia, natural gas is sourced from gas fields and processed to meet specifications, including adding the 'rotten egg' odour for safety. Gas is then compressed for transport and used in gas-powered generation (GPG) or stored for later use. Two main types of power stations turn natural gas into electricity: combined cycle and open cycle stations.
While coal still accounts for over half of Australia's electricity generation, natural gas is becoming more recognized as a baseload power source due to its functionality in matching demand changes. Gas generators can quickly adjust their output to match demand, making them ideal partners for intermittent renewable energy sources such as wind and solar power. As Australia transitions away from coal, natural gas has the opportunity to increase its market share as an abundant and less polluting energy source.
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Renewable energy sources in South Australia
South Australia has been a leader in renewable energy generation, particularly wind and solar power. The state has transformed its energy system from 1% to over 69% renewable energy in just over 20 years. Between June 2022 and June 2023, South Australia generated 72.3% of its energy from renewable sources, compared to 36.3% nationally.
The Australian Government has invested in the state's renewable energy infrastructure, including wind power, solar power, and geothermal developments. South Australia's energy generation via renewables has been driven by public policy and the state's reputation for being one of the windiest and sunniest places in Australia. The Rann government, in particular, advanced plans to make the state a green energy hub for Australia's eastern seaboard.
South Australia generates more than 70% of its electricity from renewable sources, with wind power being the dominant source, contributing to 44.6% of the state's total energy output in 2021-22. Solar energy also contributed to over 20% of electricity generated for South Australia in 2020-21. The state has also made significant investments in large-scale solar power projects.
In addition to wind and solar power, South Australia is exploring other renewable energy sources such as geothermal, pumped hydro, renewable hydrogen, and bioenergy. The state has a number of big battery and large-scale energy storage installations that support the electricity grid during high and low demand periods.
South Australia is in the process of transitioning to a modern energy system, with a target of reaching 100% net renewable energy by 2030. This transition includes improving the stability and security of the state's electricity grid, which was originally designed for a one-way supply of electricity from power stations to end users. The state's electricity system is now operating two-ways, with end users sending electricity back into the system.
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The National Electricity Market (NEM)
The NEM is both a wholesale electricity market and the physical power system. It facilitates the exchange of electricity between producers and consumers through a spot market. This process is managed by the Australian Energy Market Operator (AEMO), which operates on a user-pays cost-recovery basis. The AEMO ensures that the electricity output from all generators is aggregated and instantaneously scheduled to meet demand through a centrally coordinated dispatch process.
The NEM comprises five physically connected regions on the east coast of Australia. High-voltage transmission lines transport electricity from generators to distributors, who then deliver it to homes and businesses via lower-voltage 'poles and wires'. The NEM generates approximately 200 terawatt-hours of electricity annually, meeting around 80% of Australia's electricity consumption.
The Australian Energy Market Commission (AEMC) is responsible for developing and maintaining the Australian National Electricity Rules (NER), which have the force of law in the participating states and territories. These rules are enforced by the Australian Energy Regulator (AER). NEM reliability standards are also established by the AEMC's Reliability Panel, which sets requirements to ensure a reliable supply of electricity.
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How electricity is generated
Australia's electricity sector is evolving from its historical reliance on coal and, to a lesser extent, hydroelectricity. It is now incorporating coal, natural gas, and renewable energy sources. In 2021, Australia was a net energy exporter and one of the largest exporters of liquefied natural gas (LNG) in the world.
In 2021, natural gas made up 29% of Australia's energy production, 28% of the Total Energy Supply (TES), 19% of electricity generation, and 17% of Total Final Consumption (TFC). Natural gas usage was highest in electricity and heat generation at 33.9%, followed by the industrial sector at 23.3%. In 2018, the Department of Environment and Energy put the national total gross generation at 261.4 TWh, with 46% from black coal, 14% from brown coal, 19% from gas turbines, 6.7% from hydro, 6.2% from wind, 4.6% from solar PV, 2.1% from oil/diesel, and 1.3% from biomass.
In 2022, renewable energy accounted for 39.4% of the total amount of electricity generated in Australia. Renewable energy sources such as geothermal, pumped hydro, renewable hydrogen, and bioenergy are also being explored for South Australia. South Australia is quickly transitioning from fossil fuels toward clean, renewable sources of power. In 2023, more than one in three homes in South Australia had rooftop solar installed. These homes use turbines to convert wind to electricity, and supply a significant amount of energy to the state.
To generate electricity, a fuel source is required, such as coal, gas, hydropower, or wind. Most generators operate on the same principle: turn a turbine so that it spins magnets surrounded by copper wire, generating the flow of electrons across atoms, which in turn produces electricity.
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Frequently asked questions
Australia's electricity is generated from a variety of sources, including coal, natural gas, hydropower, wind, solar, and other renewable energy sources. In 2021, natural gas made up 29% of Australia's energy production, while coal represented 64% of domestic energy production. In 2022, renewable energy sources accounted for 39.4% of the total electricity generated in the country.
The National Electricity Market (NEM) is the largest interconnected power system in the world, covering over 5,000 kilometres. It coordinates the generation and dispatch of electricity across various energy regions in Australia, ensuring a continuous supply of electricity to customers. The NEM includes a wholesale market that matches supply and demand instantaneously.
Australia has historically relied heavily on coal and, to a lesser extent, hydroelectricity for its energy needs. However, the country is transitioning towards a more diverse mix of energy sources, including natural gas and renewable options like solar and wind power. In 2023, over 40% of homes in South Australia had rooftop solar installations, and the country is exploring additional renewable energy sources such as geothermal and renewable hydrogen.
Australia has been working to reduce its carbon emissions and address the impacts of global warming and climate change. In 2009, the country had the highest per capita CO2 emissions globally, but by 2022, renewable energy sources accounted for a significant portion of its electricity generation. Australia was also the world's largest exporter of liquefied natural gas (LNG) in 2021, contributing to global energy supplies.
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