Australia Power Market Size - Share Outlook, Growth Analysis Report and Forecast Trends 2026-2030

Australia's power market operates through the National Electricity Market, which connects Queensland, New South Wales, Victoria, South Australia, and Tasmania via an interconnected grid, while Western Australia and the Northern Territory maintain separate power systems. The market is regulated by the Australian Energy Regulator and operated by the Australian Energy Market Operator, with wholesale electricity traded through a spot market alongside contract and retail arrangements. In 2024, total electricity generation across Australia exceeded 265 terawatt-hours, with coal still contributing roughly half of supply despite rapid growth in renewable capacity.

• •The National Electricity Market spans five eastern and southern states, serving approximately 10.5 million customers
• •Renewable energy (wind, solar, and hydro) accounted for approximately 40% of total generation in 2024, up from under 20% in 2015
• •The Australian Energy Update 2025 reports ongoing declines in coal-fired generation as aging power stations retire

Australia's legally binding commitment to reduce greenhouse gas emissions by 43% below 2005 levels by 2030, and net zero by 2050, is fundamentally reshaping the generation mix through large-scale renewable deployment and coal retirements. Government initiatives including the Capacity Investment Scheme, Rewiring the Nation program, and state-based renewable energy targets are channeling billions of dollars in public and private investment into new transmission infrastructure, utility-scale solar and wind farms, and battery energy storage systems.

• •Over 7 gigawatts of new large-scale renewable energy capacity is expected to be added between 2025 and 2028
• •Electrification of transport, industry, and residential heating is driving projected electricity demand growth of approximately 1.5-2% per year
• •Improving grid infrastructure and addressing congestion is a major policy priority to enable further renewable integration

New South Wales and Victoria represent the largest power markets by volume, each with significant coal-fired generation fleets undergoing transition under state government policies and corporate commitments. South Australia already sources the majority of its electricity from wind and solar, with battery storage managing variable supply, while Tasmania relies almost entirely on hydroelectric generation and Queensland maintains a higher proportion of coal-fired capacity than other NEM states.

• •Western Australia's South West Interconnected System operates independently and has its own renewable energy transition timeline, with rooftop solar penetration among the highest globally
• •Utility-scale solar and onshore wind are the fastest-growing generation segments, while rooftop solar already represents over 20% of generation capacity nationwide
• •Transmission and distribution network investment is increasingly focused on upgrading the grid to support renewable connections and maintain reliability

What are the recent trends and outlook?

The long-term trajectory points toward a grid increasingly dominated by variable renewable generation supported by battery storage, pumped hydro, and emerging technologies including green hydrogen production. AEMO's Integrated System Plan identifies approximately 40 gigawatts of new renewable and firming capacity needed by 2030 to maintain reliability as coal plants retire. The speed and cost of this transition remain subject to grid connection timelines, supply chain conditions, community acceptance of infrastructure, and the development of complementary technologies such as long-duration energy storage.

• •Over 70% of coal-fired generation capacity is expected to be retired or converted by 2035 under current corporate and government commitments
• •Battery energy storage systems are being deployed at scale to provide grid stability, with several gigawatts of capacity now operating or under construction
• •The market value and investment patterns are expected to increasingly reflect energy transition capital flows, regulatory changes, and evolving consumer preferences for distributed energy resources