Australia’s Clean Energy Boom Masks a Deeper Risk: Wind and Solar Investment Is Stalling
Australia’s clean energy system is undergoing rapid change, and the latest Quarterly Carbon Market Report from the Clean Energy Regulator (CER) shows a country in transition. Renewable generation is hitting repeated records, home batteries are being installed faster than expected, and the grid is becoming cleaner year after year. But beneath this progress lies a structural risk: the pace of new investment in large-scale wind and solar is slowing, threatening to leave Australia short of the generation it will need later this decade.
A Rapidly Changing System — But Still Fossil-Heavy
To understand the context, it helps to look at where Australia stood in 2024. Fossil fuels still dominated the electricity mix, supplying 65% of the nation’s power. Coal accounted for 45.3%, natural gas 17.4%, and minor fossil sources made up the rest. Renewables reached 35%, led by solar at 17.8% — much of it from Australia’s world-leading rooftop solar — followed by wind at 11.6%, hydro at 4.6%, and bioenergy at 1.1%.
This mix highlights both Australia’s progress and its challenge. The country has moved rapidly from its coal-heavy past, yet the shift toward clean electricity must accelerate significantly through the rest of the decade if it is to meet its 2030 emissions goals. Much of that acceleration must come from large-scale wind and solar, since households have already contributed enormous growth and most small-scale opportunities have now been captured.
Record Generation in 2025 — But Not Enough New Projects
The CER’s latest data shows renewable generation hitting new highs. In Q3 2025, wind supplied a record 18.1% of electricity in the National Electricity Market (NEM), pushing total renewable penetration to 42.7%. Large-scale generators created 15.7 million LGCs during the quarter, with wind doing much of the heavy lifting. Rooftop solar and other small-scale systems also continued their strong growth, and the CER expects nearly 7 GW of combined small- and large-scale solar capacity to be added in 2025.
But despite strong output from existing assets, far fewer new projects are actually moving into construction. Only around 2.5 GW of new wind and solar capacity is expected to reach Final Investment Decision (FID) this year—well short of the pace needed. Analysts estimate Australia must approve two to three times more renewable capacity each year to stay on track for its 2030 clean-energy goals. The result is a widening gap: Australia is generating more renewable electricity than ever, but not building enough new projects to sustain that momentum into the next decade.
A Pipeline Full of Possibilities — But Bottlenecks Hold It Back
Australia does not have a shortage of renewable proposals. The Capacity Investment Scheme remains heavily oversubscribed: the most recent round saw 6.6 GW of successful bids but another 19 GW of renewable projects that did not receive support. Developers clearly want to build, and the national pipeline contains more than 20 GW of “probable” projects.
But grid connection queues, financing challenges, rising construction costs, and workforce constraints have slowed the flow of projects from concept to construction. The CER notes that the number of FIDs has been lower in 2025 than in earlier years, despite the “healthy” development pipeline.
If this trend continues, Australia could face a shortfall in new generation around the second half of the decade — just as electrification, data centres, and industry push electricity demand higher.
Why Wind and Solar Matter Most
Battery installations are booming, the carbon market is evolving, and the Guarantee of Origin scheme has launched, all of which help build a more modern grid. But none of these developments replace the need for utility-scale renewable generation. Large solar and wind farms will remain the backbone of a clean electricity system. Without a steady stream of new capacity reaching FID each year, the transition could stall despite strong performance from existing assets.
Why Australia Has No Nuclear — Despite Being a Uranium Giant
A frequent question is why nuclear power is absent from Australia’s plans. Although Australia is one of the world’s biggest uranium producers, it generates no nuclear electricity. A legislative ban prevents the construction of nuclear power stations, and the country has only one reactor — the OPAL research reactor — used for scientific and medical isotope production. Nuclear has periodically re-entered political debate, but any shift would require major policy changes, long lead times, and large investment commitments. For now, Australia’s clean energy future is being built almost entirely around renewables and storage.
A Strong Present, Uncertain Future
The overall story from the CER’s quarterly report is one of strong near-term performance but growing medium-term risk. Renewable generation has never been higher, storage uptake is accelerating, and industry interest is overwhelming. Yet the slowdown in large-scale investment is a critical warning sign.
Australia’s clean energy boom is real, but without a faster flow of new wind and solar projects reaching construction, the boom may not last. The coming two to three years will determine whether today’s momentum translates into a secure, fully renewable electricity system — or whether Australia risks missing its targets just as demand rises.