The Australian new energy landscape is poised for significant transformation in 2025. We explore the key trends, challenges, and opportunities that will shape the sector in the coming year.
From international political dynamics to technological innovations, the energy ecosystem is experiencing unprecedented complexity and potential. This article provides strategic insights for businesses, policymakers, and investors navigating the new energy sector in 2025.
International landscape uncertain
The international political landscape – particularly, the election of Donald Trump – will continue to influence Australia’s new energy sector. President Trump has already signed an Executive Order withdrawing the United States from the Paris climate agreement, and another Executive Order terminating the disbursements of funds under the Green New Deal and revoking the Executive Order on the “Implementation of the Energy and Infrastructure Provisions of the Inflation Reduction Act of 2022”. In a press conference on 21 January 2025, President Trump said he is considering imposing a 10% tariff on imports of Chinese-made goods as soon as 1 February 2025. While these changes could reshape the global new energy market, they may create unexpected opportunities for Australia.
Elsewhere, the global investment landscape for new energy is promising, with the International Energy Agency estimating total investment exceeding $3 trillion in 2024. Currently, developing nations receive only 15% of these investments, but there’s a growing focus on generating local skill sets and knowledge transfer in new energy technologies. Momentum from COP29 and the Australia-Pacific Partnership will continue to drive these efforts into 2025, suggesting a more inclusive and collaborative approach to global energy transition. Specifically, Australia’s input into energy generation in the Pacific Islands – both utility and using distributed energy resources – will be an area to watch.
Domestic policies hinge on the outcome of this year’s Federal election
Domestically, political dynamics are nuanced. The introduction of the $22.7 billion ‘Future Made in Australia’ (FMA) package in the 2024 Federal Budget, and the additional $2 billion capital allocation to the Clean Energy Finance Corporation (Australia’s specialist green bank), demonstrates the incumbent Government’s commitment to making Australia a ‘Renewable Energy Superpower’. If the Labour Party is re-elected, we expect to see continued public support for the new energy transition, including funding for refining and processing critical minerals, developing a renewable hydrogen industry and establishing an offshore wind industry (the latter of which is anticipated to be a key election issue). If the Liberal Party is elected it remains unlikely that nuclear generation will move from political debate into practice. This is because nuclear energy remains one of the most expensive forms of generation and as the CSIRO recently reported ‘no country with a similar level of democracy to Australia have been able to complete construction [of nuclear generation] in less than 10 years’.
Continued growth in Distributed Energy Resources (DER) and Grid Evolution
The DER market will continue to experience robust growth throughout 2025. This will be driven by consumer demand for more flexible and sustainable energy solutions, the scramble to own the DER market and the investment climate and grid stabilisation imperatives.
This growth will also lead to an increase in virtual power plant (VPP) solutions, consumer energy products relying on DER installations, quality requirements and energy plus applications (such as agrivoltaics.
This growth will be accompanied by increasing tension between distributors, retailers, and consumer rights. Regulatory agencies like AEMO will become ever more involved in shaping the market, with an eye toward balancing individual consumer benefits with broader grid stability.
Increased adoption of generation and storage technologies
Battery and energy storage technologies continue to be deployed throughout Australia, with the support of state and federal programs (in particular, the Capacity Investment Scheme). Wind farm projects and solar projects (particularly in Victoria) will increasingly integrate Battery Energy Storage Systems (BESS), and there’s growing interest in hybrid and multi-functional energy solutions.
Although lithium-ion battery costs continue to decrease, sodium-ion batteries could emerge as a key competitor technology (leading battery manufacturers (such as CATL) are already ramping up production). Meanwhile, long duration energy storage is gaining significant momentum, and industry experts anticipate it will be a major focus beyond 2026.
Community engagement in respect of generation and storage technologies will continue to be a key concern to developers and communities alike, and there will be greater agitation to streamline the approval process. The trend of regulating community engagement will continue (most recently in the Renewable Energy Planning Framework Overview, which prescribed dollar values of community benefit for wind, solar and BESS projects).
Workforce development remains a key challenge
The new energy workforce is facing a critical transition period. With a projected retirement of 5GW of coal generation in the next 15-20 years, the new energy sector must continue to proactively develop comprehensive skill development strategies. New South Wales is leading this charge with the NSW 2030 Renewable Workforce Roundtable, which has already committed to funding $275 million in Net Zero Manufacturing Initiative grants and developing eight new TAFE micro-skill courses relating to new energy.
The increased use of split contracting models (compared to full wrap turnkey solutions) is contributing to an ever-increasing demand for skilled project managers. This shortage will necessitate market participants to invest in the upskilling and accreditation of existing employees.
Specialist knowledge on how to integrate deliverables across a split contracting structure is also increasingly sought.
Technology and innovation will drive ongoing transformation
Artificial Intelligence will continue to be discussed as a transformative force in the energy sector. AI-driven development is set to dramatically increase electricity consumption, with AI data centres experiencing a 300% increase in global net energy demands during the first quarter of 2024 (compared with the first quarter of 2023). This increased energy demand, however, may be counterbalanced by AI’s potential to optimise energy systems. High-level AI applications are expected to revolutionise grid management systems and predictive maintenance technologies, creating a symbiotic relationship between technological innovation and energy infrastructure. Data centres will continue to increase demand for new energy.
Circular economy on the rise
In 2025 we expect to see an increased focus on the circular economy, specifically focusing on reusing and recycling energy facility components. This is driven in great part by environmental, social and governance (ESG) obligations, requirements for energy security, economic imperatives and technological advancements.
The future for new energy
The Australian new energy sector stands at a critical juncture in 2025. While challenges persist – ranging from regulatory tensions to workforce transitions – the opportunities are equally compelling. The intersection of technological innovation, international partnerships, and local market dynamics presents a nuanced and promising outlook. Businesses that remain agile, invest in skill development, and embrace emerging technologies will be best positioned to thrive in this dynamic environment.
The coming year will be defined not just by technological shifts, but by strategic adaptability. As the global energy transition accelerates, Australia’s unique position—with its robust renewable potential, innovative workforce, and strategic international relationships—offers a promising pathway forward. The new energy revolution is not just about generating power, but about reimagining how we produce, distribute, and consume energy in an increasingly interconnected world.
The Hamilton Locke team advises across the energy project life cycle – from project development, grid connection, financing, and construction, including the buying and selling of development and operating projects. For more information, please contact Matt Baumgurtel.
