| No. |
Topic |
Key Takeaways |
| 1. |
Market overview |
- Renewables accounted for 42.7 per cent of total electricity generation in 2025, exceeding fossil fuels in the final quarter for the first time.
- Only 2.3GW of new large-scale generation capacity reached financial close, reflecting rising costs, regulatory bottlenecks, and slow transmission delivery.
- However, 9.1GW of new generation and storage reached full output in FY2025-26 – more than double the prior year.
- A record 75.4GW of capacity sat stranded in the grid connection pipeline as at June 2026, marking a clear sign that connection has not kept pace with the volume of projects seeking to connect.
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| 2. |
Policy & regulatory
|
- The CIS transitioned to a one-stage tender process, reducing assessment periods from approximately nine to six months.
- In 2026, five further tenders have been announced, with Tenders 9 and 10 already open, and from Tender 9 a dedicated First Nations equity and revenue sharing set-aside has been introduced.
- The Hydrogen Production Tax Incentive passed the Senate in February 2025, offering eligible renewable hydrogen producers a refundable tax offset of A$2 per kilogram for production between 1 July 2027 and 30 June 2040.
- The Guarantee of Origin Scheme has expanded to cover biogas, biomethane, and additional hydrogen production pathways following the approval of the first REGO certificates in April 2026.
- The 2026-27 Budget withdrew A$1.3 billion in uncommitted ARENA funding from programs focused on solar manufacturing, battery manufacturing, and renewable hydrogen.
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| 3. |
Financing
|
- Financial commitments for new utility-scale renewable generation fell by approximately 46 per cent year-on-year to A$4.4 billion in FY2025-26.
- Large-scale battery investment reached a record 4.3GW of new capacity worth A$4.8 billion, up 10 per cent on the prior year.
- In FY2025-26, the CEFC committed a record A$9.1 billion across 45 new and follow-on transactions, bringing its lifetime investment commitments to A$27.1 billion.
- Corporate PPA volumes fell to approximately 1.3GW in 2025 as LGC prices collapsed from approximately A$30 to A$6.50.
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| 4. |
Batteries & storage
|
- Total installed large-scale battery storage exceeded 8,000MW by end of Q1 2026, more than doubling total installed NEM battery capacity within 12 months.
- 2GW of new large-scale battery capacity was commissioned in FY2025-26 – a 233 per cent increase year-on-year – making Australia the third-largest utility-scale battery market globally.
- Battery storage set prices in 32 per cent of NEM trading intervals during Q1 2026, displacing hydro as the most frequent price-setting technology.
- Australia’s first 8-hour battery system commenced full operations in May 2026.
|
| 5. |
Rooftop solar & distributed energy resources (DER) |
- Rooftop solar and household batteries together supplied a record 46.5 per cent of NEM electricity in Q1 2026, peaking at 92.2 per cent on 1 January 2026.
- From April 2026, A$50 million in incentives was made available ahead of virtual power plants and aggregated batteries competing directly in the wholesale market from May 2027.
- By end of 2025, Australia’s cumulative rooftop solar capacity reached 28.3GW across 4.3 million installations, surpassing the capacity of the entire coal fleet for the first time.
- Total home battery installations reached 454,753, with 268,675 units installed in 2025 alone.
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| 6. |
M&A
|
- The M&A landscape continued to reflect a bifurcation between an exceptionally strong battery storage market and more subdued large-scale generation activity.
- Australia’s merger reforms, commencing 1 January 2026, introduced mandatory, suspensory ACCC clearance for acquisitions above defined thresholds, adding complexity and extending pre-completion timelines.
- In May 2026, NSW introduced legislation requiring mandatory decommissioning plans and financial security for large-scale solar and wind projects.
- Wind construction costs have nearly tripled to approximately A$4 million per MW, leaving an increasing number of wind projects in financial and operational distress and creating acquisition opportunities for well-capitalised investors.
|
| 7. |
Environmental framework |
- The National Environmental Protection Agency (NEPA) and Environment Information Australia commenced on 1 July 2026, following a suite of EPBC reform bills passed by Parliament on 28 November 2025 – the most significant proposed overhaul of Australia’s environmental laws in over 25 years.
- The NEPA’s full enforcement powers, including stop-work orders and penalties of up to A$825 million, are expected to follow in August to September 2026.
- Remaining reforms, including streamlined assessment pathways for renewable energy projects, are expected to take effect on or before 1 December 2026.
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| 8. |
Outlook
|
- AEMO’s 2026 Integrated System Plan confirms Australia’s 82 per cent renewable electricity target by 2030 remains achievable under its least-cost Optimal Development Path, with renewables projected to reach 98 per cent by 2050.
- Achieving the 82 per cent target requires approximately 38GW of new grid-scale solar and wind capacity in the NEM by 2030.
- EnergyConnect – Australia’s largest transmission project, comprising a 900km interconnector linking NSW, Victoria and South Australia – completed construction of its 700km NSW section and commenced energisation in June 2026.
- Large data centres are emerging as a significant source of new electricity demand, with AEMO and the AEMC commencing work on regulatory frameworks to manage their NEM integration.
- A projected shortage of 42,000 skilled energy workers by 2030 is already delaying construction and risks becoming one of the most significant constraints on Australia’s clean energy transition.
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