Key renewable energy takes away from Australia’s federal election

Australia's re-elected Labor government has renewed its commitment to accelerating the energy transition following the 2025 federal election. The administration has pledged to uphold its ambitious renewable energy targets while introducing new policies to increase energy storage capacity and advance critical mineral development. 

Renewable energy transition continues with nuclear off the table 

The re-elected Labor Government has recommitted to its target of 82% renewable electricity generation by 2030 and an economy-wide strategy to reduce emissions by 43% during the same period. These commitments follow the wake of the defeated Liberal-National opposition's nuclear energy policy, which had raised concerns about rolling back progress on renewable energy expansion. 

“Despite the federal government’s ambitious targets, our analysis indicates that Australia is currently on track to achieve only 58% renewable electricity generation by 2030,” said Natalie Thompson, senior analyst, energy storage and solar at Wood Mackenzie. “This highlights the urgent need for increased investment and greater coordination across all levels of government to accelerate the energy transition. Efforts may be further complicated by moves from some state governments, such as Queensland and the Northern Territory, to repeal or scale back their renewable energy targets.” 

The Capacity Investment Scheme, introduced in 2022, targets 32 Gigawatt (GW) of additional capacity by 2030. This initiative builds on the 8.4 GW of utility-scale solar, wind and storage capacity added to the grid between 2021 and 2024. 

Utility-scale storage to grow sixfold by 2030, but challenges remain 

According to Wood Mackenzie, Australia's utility-scale storage capacity is expected to increase from the current 2.5 GW to over 16 GW by 2030. This sixfold increase is bolstered by the government's Capacity Investment Scheme, which has already awarded more than 8 GW in funding, including 2.8 GW for storage solutions with an average duration of 3.5 hours. 

“While over 65 GW of utility-scale storage projects are in various stages of development, only 5-10% of announced projects are likely to reach financial close,” Thompson added. “Continued policy support is crucial to overcome grid connection and project planning barriers.” 

More subsidies support distributed storage capacity to triple by 2030  

Wood Mackenzie projects Australia's solar capacity for residential, commercial, and industrial use will expand from 29 GW in 2025 to 46 GW by 2030. This growth presents challenges in managing midday solar peaks, prompting network operators to focus on grid stability strategies. The government's Consumer Energy Resources (CER) roadmap aims to address these issues, with distributed storage offering a partial solution. 

Additionally, the newly announced AUD 2.3 billion Cheaper Home Batteries subsidy, introduced during the election campaign, is designed to accelerate growth in the distributed storage market by complementing existing state-level battery rebate programs. 

Under these schemes, distributed storage capacity is projected to triple by 2030. Eligible battery systems must be virtual power plant (VPP) capable for future grid orchestration. 

Government support to fast-track electric vehicle adoption 

The re-elected Australian government will maintain its support for the adoption of electric vehicles (EVs) through a variety of funding initiatives and policies. Key measures include continued investment in the Driving the Nation Fund, a Fringe Benefits Tax exemption for eligible EVs, and the implementation of a New Vehicle Efficiency Standard. Together, these policies are expected to significantly drive hybrid and EV adoption over the coming decade, supporting Australia’s broader emissions reduction goals. 

“EVs currently represent about 10% of passenger vehicle sales in Australia, with over 350,000 on the road. Our projections show that by 2030, EVs will account for 3.7 terawatt-hour(TWh) of demand, or 1% of gross electricity consumption,” said Thompson. 

Reinforce critical minerals major player for global energy transition  

Australia aims to maintain its position as a global leader in the supply of critical minerals needed for the energy transition. Currently accounting for 30% of global lithium supply, the country is seeking to strengthen its role by investing in resilient and diversified supply chains. The government has reaffirmed its commitment to supporting the sector through continued funding and policy support aimed at mitigating risks from geopolitical tensions and global trade uncertainties. 

The government has launched several initiatives to boost domestic manufacturing and critical minerals production, including AUD 15 billion for the National Reconstruction Fund and AUD 22.7 billion for the Future Made in Australia Act. The Act allocates AUD 13.4 billion in production tax credits for green hydrogen and critical minerals as well as AUD 2 billion for Green Aluminium Production credits. Additionally, the government has committed AUD 1.2 billion to establish a National Reserve of Critical Minerals, including lithium and nickel. 

Coal closures to reshape energy mix, with gas playing interim role  

The re-elected Labour government aims to accelerate the transition away from coal-fired power generation, with 22 GW of coal capacity expected to exit the system over the coming decades. However, gas is anticipated to remain a part of the energy mix for peaking support and interim system reliability. 

Current projections suggest the remaining coal capacity will gradually phase out by the end of 2045, based on existing policy settings. To achieve the government’s renewable energy ambitions, more support is needed to overcome roadblocks in grid connection and planning processes, ensure a smooth transition and meet planned coal plant closure timeframes.