2025 Another Year Full of Energy (Developments)

2025 has been another year in which energy-related issues have been front and centre. It ended with a flurry of announcements and releases, including a new Solar Sharer tariff proposed by the Federal Government and the release of the 2026 Integrated System Plan (ISP) draft.

Below we highlight some of the more notable developments over the past 12 months.

A season of elections

The debate over nuclear power re-emerged in the lead up to the Federal election, with the Coalition proposing to lift the moratorium and build seven government-owned nuclear power plants around Australia. The policy was pitched as the answer to ensuring reliable baseload power as coal-fired power plants retire, as well as provide a viable means to deliver emissions reductions and a reduction in energy bills.

In contrast, the Labor Party, which was overwhelmingly re-elected at the May poll, ran on a continuation of its policies – a further expansion of renewables, and storage, backed by Government mechanisms like the Capacity Investment Scheme (CIS) and guidance from an expert panel review into the shape of the National Electricity Market’s wholesale market settings. The panel is expected to provide its recommendations to energy ministers at the final Energy and Climate Change Ministerial Council meeting for 2025, expected in the coming days.

One key addition to the Labor’s energy policy was the creation of the Cheaper Home Batteries Program, an expansion of the Small-scale Renewable Energy Scheme (SRES). Since 1 July it has accelerated the uptake of household batteries.

Queensland, Western Australia and Tasmania all held elections this year, with Queensland electing a Liberal National Party (LNP) Government for the first time in a decade. The newly elected Crisafulli Government overhauled the previous Government’s Energy and Jobs Plan with the Queensland Energy Roadmap, which includes extending the life of the state's Government-owned coal fleet to 2046, investing in both renewable projects and gas-fired generation. The Government has also reaffirmed it is committed to reaching net zero by 2050, while its Energy Roadmap Amendment Bill, currently before Parliament, includes repeal of the state’s renewable energy targets.

Federally the Coalition parties announced that they would drop Australia’s net zero by 2050 target and would not introduce interim targets. Meanwhile the Labor Government announced an interim 2035 target for emissions of 62–70 per cent below 2005 levels.

In WA the government reaffirmed its commitment to the closure of its coal plants in 2030, while the release of its Transmission Plan was welcomed. Significant investment is required in new transmission, generation and storage infrastructure to ensure the affordability and ongoing reliability and security of WA’s energy system as it shifts away from coal. And, as with the National Electricity Market’s ISP (discussed further below), a delay in delivering new investment and the transition does carry the risk of additional system costs.

Affordability

Affordability, never far from public discussion, re-emerged as a paramount consideration following the Federal election. 

The Australian Energy Council released its first CEO Survey in November. Given our CEOs are at the forefront of the changes underway in Australia’s energy system we wanted to get a better understanding of the key challenges and opportunities that they see. One overarching theme was affordability.

The report also reinforced the importance of an open and honest dialogue about the transition such as its cost and the speed of its delivery. The need to maintain public confidence that it will not just deliver a sustainable and reliable system but one that provides affordable energy for households and businesses also emerged. The report includes recommendations and concludes with some guiding principles on how governments and industry can work together to successfully deliver the transition.

As part of a review of the Default Market Offer, the Federal Government announced it would require retailers to provide three hours of “free” energy each day to consumers under tariff to be known as the Solar Sharer Offer (SSO). The details of the new tariff are now subject to consultation and as part of that retailers have highlighted additional steps that would need to be undertaken to make it successful and avoid retailers facing network and others costs to deliver the SSO. This preceded the Treasurer, Jim Chalmers, announcement this week that there would not be a fourth round of universal energy rebates in 2026.

The Australian Energy Market Commission continued its pricing review with the release of a discussion paper in June and a public forum to be held next week. Today, the Commission outlined a suite of proposed reforms, including changes to the way retailers can offer competitive deals. The AEMC’s price trends report pointed to the risk of higher prices from delays in the energy transition.  Affordability will be vital to delivering the energy transition and the AEC will be undertaking work in the New Year to focus on what steps can be taken to assist in this regard.

Blueprint Released

Another important document outlining what is needed to deliver the energy transition is AEMO’s biannual ISP. The draft 2026 ISP was released this week, It again puts into focus the sheer scale and pace of change in our grid required to deliver on government ambitions.

Even under a constrained development scenario in the draft there is a need to deliver four times more capacity of large-scale solar and wind than we are currently installing annually.

The ISP continued to expect 9 GW of offshore wind to be in the grid by 2050 but 2025 has seen some setbacks to offshore wind ambitions, particularly off the Victorian coast with several projects put on hold or being withdrawn. As a result the Victorian Government announced its planned offshore wind auction would be postponed. The first auction had been slated for September.

Looking Forward

The Australian Energy Council has also put significant amount of work into developing Energy2050 which aims to define what a successful transition to net zero by 2050 looks like for Australian energy consumers, focusing on the core trilemma pillars of reliability, affordability, and sustainability. The project focuses on Australia’s two main grids: the National Electricity Market (NEM) that covers the eastern states and the Southwest Integrated System (SWIS) that serves Perth and the surrounding region in Western Australia.  The project will deliver an assessment of what these grids could look like in 2050 and consider the way customers’ energy needs and wants are being met, the roles of different parts of the supply chain and the underlying policy and regulatory framework that governs the interactions between different parties. The report will be released next year and will also consider where we might be in 2035 on the way to 2050. The project is an opportunity for an open and honest dialogue about the challenges and costs of the energy transition.