Australia's energy transition is finally bearing fruit, and it couldn't come soon enough. Ten years ago, a heatwave as intense as the recent record-breaker would have strained the power supply, but this time, the system largely held up, despite some outages. The main grid saw renewables and energy storage contribute over 50% of electricity supplied for the first time, with wholesale power prices more than 40% lower than a year earlier. This significant shift in energy production and distribution is a testament to Australia's long, complicated, and challenging energy transition. If current trends continue, retail electricity bills are expected to drop by mid-2026, as coal plants close and new transmission and storage infrastructure is implemented. However, electricity prices could rise again as more coal plants close and new infrastructure is built. Despite these challenges, the immediate trends are positive. Wind generation increased by almost 30%, grid solar by 15%, and grid-scale batteries tripled their output. Gas generation fell to its lowest level in a quarter century, while coal generation fell to its lowest quarterly level ever. This reduction in gas demand has led to lower wholesale prices, though consumers may not see immediate benefits due to the structure of power bills. The power system has also proven resilient under strain, with rain filling reservoirs, solar and wind production, and the availability of fossil generators. The expansion of electricity storage is another crucial aspect of this transition. Until recently, electricity had to be produced immediately before use, but now, batteries are revolutionizing the system by allowing power to be stored for later use. Plummeting battery prices have led to a surge in installations, with close to 4,000 megawatts of grid storage coming online since 2024. However, transmission delays mean coal will be needed for longer, as new transmission lines are not yet complete. This is why NSW's Eraring coal plant will continue to operate until 2029, and the planned closure of the Torrens Island gas power plant near Adelaide has been pushed back. Despite these challenges, gas will play an important role as a backup, as it can quickly fill gaps when wind and sun are not abundant. The federal government has proposed a mandatory east coast gas reservation scheme to address longstanding gas market problems. Victoria, Australia's most gas-dependent state, faces its own set of challenges, including the depletion of Bass Strait wells and the export of most of Queensland and WA's gas as liquefied natural gas (LNG). The Victorian government is trying to shift away from gas, but this process is slow. The state has high hopes for offshore windfarms, but progress has been slow, with no turbines installed yet. Some developers have withdrawn applications due to global uncertainty and delays to the auction process. Despite these hurdles, the transition is making real progress, and it's happening at a crucial time. Tony Wood, the energy and climate change program director at the Grattan Institute, emphasizes that the government's goal of 82% renewables in four years may be ambitious, but it's clear that significant progress is being made.
