Following its victory in the 2025 federal election, Australia’s Labor government has reaffirmed its commitment to accelerating the nation’s energy transition. The government has pledged to uphold its ambitious renewable energy and emissions reduction targets, while unveiling new policies to bolster energy storage capacity and advance critical mineral development.
Renewable Energy Targets Remain in Focus, Nuclear Off the Table
The re-elected Labor administration remains steadfast in its commitment to achieving 82% renewable electricity generation and a 43% economy-wide emissions reduction by 2030, despite pressure from the opposition’s pro-nuclear stance during the election campaign.
“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 government’s Capacity Investment Scheme (CIS), launched in 2022, aims to deliver 32 GW of additional capacity by 2030, building on the 8.4 GW of utility-scale solar, wind, and storage added between 2021 and 2024.
Wood Mackenzie forecasts that Australia’s utility-scale storage capacity will expand from 2.5 GW to over 16 GW by 2030, marking a sixfold increase. This growth is supported by the CIS, which has already awarded more than 8 GW in funding, including 2.8 GW for storage projects with an average discharge 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.”
Distributed Storage and Solar Growth Accelerate
Australia’s solar capacity for residential, commercial, and industrial segments is projected to grow from 29 GW in 2025 to 46 GW by 2030, intensifying midday solar generation challenges. To tackle these, the government’s Consumer Energy Resources (CER) roadmap seeks to stabilize grid performance through enhanced distributed storage integration.
A key boost comes from the AUD 2.3 billion Cheaper Home Batteries subsidy, announced during the election campaign. This initiative is expected to complement existing state battery rebate programs and drive the tripling of distributed storage capacity by 2030. Battery systems eligible for subsidies must be virtual power plant (VPP) capable to support grid orchestration.
Electric Vehicle Adoption to Gain Momentum
The Labor government will also maintain its backing for electric vehicle (EV) adoption through a suite of funding and policy measures. These include continued investment in the Driving the Nation Fund, a Fringe Benefits Tax exemption for eligible EVs, and the New Vehicle Efficiency Standard.
“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.
Critical Minerals Strategy Anchored by Major Investments
Australia continues to strengthen its leadership in the global critical minerals market, particularly in lithium, of which it supplies 30% of the global total. To build more resilient and diversified supply chains, the government has reaffirmed support through significant funding and policy interventions. Key initiatives include:
- AUD 15 billion for the National Reconstruction Fund
- AUD 22.7 billion under the Future Made in Australia Act, including:
- AUD 13.4 billion in production tax credits for green hydrogen and critical minerals
- AUD 2 billion for Green Aluminium Production credits
- AUD 1.2 billion to create a National Reserve of Critical Minerals, covering lithium and nickel
Phasing Out Coal, Gas Remains for Interim Support
The transition away from coal continues, with 22 GW of coal-fired power expected to exit the grid over the coming decades. While coal capacity is projected to phase out entirely by 2045, gas will continue to play a role in peaking support and interim system reliability.
The government acknowledges that to meet its ambitious targets, more needs to be done to address grid connection challenges, streamline project planning, and ensure timely coal plant retirements.
