Guide to renewable energy options in Australia

Renewable energy is a source of power created from natural sources that are constantly replenishing themselves and won’t run out.  These renewable energy sources are better for the environment as they produce less harmful emissions, making them an attractive alternative to non-renewable resources and hydrocarbons such as oil and coal.

According to the Department of Climate Change, Energy, the Environment and Water, electricity generation accounted for just over one-third of all greenhouse gas emissions in Australia in 2025.¹ As Australians become increasingly aware of the environmental impact of traditional energy sources, they are increasingly turning to renewable energy technology.²

There are numerous benefits of renewable energy for both the planet and consumers, such as lowering emissions and long-term energy costs. Plus, a lot of renewable energy systems, such as solar panels, require minimum maintenance after initial installation.

The most common renewable energy used in households and businesses is solar power, with its benefits including:

• Budgeting. When using solar systems, you can utilise your own energy consumption while generating it, meaning you can reduce your overall cost of living through minimising energy bills.
• Feed-in tariffs. If you have solar panels, you may be eligible for a solar feed-in tariff if your energy system meets certain criteria set out by your electricity retailer. This means you may receive a credit that’s then offset against your electricity bill depending on the location of your residence and your specific retailer. However, this may change with the introduction of two-way solar charging.
• Return on investment. After your initial investment, only a few costs are involved with running or maintaining a renewable energy system, such as maintenance of your solar panels. In general, solar panels with a battery storage system typically pay for themselves in seven to nine years.³

Depending on your circumstances, solar power may only cover a portion of your energy usage. However, the long-term savings may make it a worthy investment.

GreenPower, an Australian Government initiative, is an accreditation scheme that simplifies the process of selecting an electricity retailer that invests in renewable energy.

Through this initiative, you can choose to have some or all your electricity usage matched with renewable energy fed into the grid, helping you reduce the emissions associated with your energy consumption.

GreenPower products available to you may vary between electricity retailers, states and territories. Depending on your retailer, it may be available without a charge or for an additional cost.

Some renewable energy resources that aren’t eligible under the GreenPower program include:

• coal seam gas
• biomass generated from native rainforests
• renewable energy from generators that were running before 1997
• hydro power where large-scale river diversions occurred during construction of the plant
• non-renewable sources such as natural gas, nuclear, oil and coal-fired energy generation.⁴

There are two main ways of harnessing green energy from the sun which can both be used by households and businesses:

• Solar thermal energy. This is produced from a rise in temperature and can be used directly to heat water in solar water heaters, helping reduce energy bills. On a larger scale, thermal energy can superheat water into steam, which can be used to drive turbines to produce electricity.
• Solar photovoltaic (PV) energy. PV systems generate electricity from sunlight for homes, businesses and the energy grid. This works by the cells creating an electric current through the photovoltaic effect. The main drawback of solar energy is that the sun must be shining for it to work. To keep your lights on during cloudy days and at night, energy must be stored in a solar battery or sourced from alternatives like the national electricity grid.

On the plus side, you could be eligible for a solar rebate to help cover the cost of installing a solar system. You might also be able to take advantage of solar feed-in tariffs, which is a bill credit your energy retailer pays you for surplus energy your solar panels generate that’s sent back to the grid.

Wind energy has long been used as a source of mechanical power, but now wind turbines are mainly used to produce electricity. These turbines are found in wind farms (also known as wind power plants) that are placed over several kilometres of land. One advantage of wind energy is how offshore wind farms can take advantage of coastal wind and therefore don’t need to take up land, helping reduce deforestation.

Most wind generators are found in clusters where reliable winds mean they’re working most of the time. As with solar energy, wind power can be somewhat sporadic in supply. As such, storage and alternative energy options are essential to make them a more efficient source of green energy.⁵

Water wheels, like windmills, are an old form of renewable electricity that are often used to run machinery directly. Meanwhile, modern hydropower uses the energy of moving water to turn turbines that produce electricity.

In Australia, hydroelectricity supplies around 5 to 7 per cent of the country’s electricity.⁶ The most famous Australian hydroelectricity scheme is the Snowy Mountains complex in New South Wales (NSW). Hydroelectricity is also widely used in Tasmania, where around 80% of the energy supply comes from power stations (also known as power plants) harnessing hydropower.⁷

Nationwide, the main drawback of electricity generation using hydropower is the large volumes of water required for continuous operation. Prolonged drought can reduce water supplies below critical levels, so in these and other circumstances, electricity generation may be stopped to preserve a supply for drinking water and other purposes.

Biomass is another natural resource that comprises different agricultural by-products that are then burned or broken down into liquid fuel (also known as biofuel). This process can include burning solid fuels (such as wood) or extracting waste products from sewage (such as methane gas).

When biofuel is burned, it creates steam that powers turbines, creating bioenergy (the usable energy that is produced). Meanwhile, the methane captured from waste can be used as biogas for heating, cooking and power generation.

Although burning biomass releases carbon dioxide, it can reduce overall emissions when it replaces fossil fuels or prevents the release of methane, a potent greenhouse gas.

Unlike other renewable energy types, you have to delve beneath the earth’s surface to harness geothermal energy. This type of energy uses the geothermal heat created from magma, so areas close to active volcanoes tend to be the most suitable places for generating geothermal power.

In some areas, water may be injected into the ground so it returns to the surface as steam that can be used to drive turbines and generate electricity. In other places, the water may already be present below the earth’s surface and just needs to be tapped.

While the Australian Renewable Energy Agency (ARENA) notes that Australia does have the potential to harvest geothermal energy, this renewable energy solution is not currently cost-effective.⁸ This is because:

• identifying viable sources of geothermal energy is challenging
• producing hot water at a high rate is difficult
• financing costly up-front expenses from harvesting and transmitting geothermal energy will be expensive.

The Renewable Energy Target (RET) is an Australian Government scheme that plays a central role in reducing greenhouse gas emissions by helping green electricity become a more accessible part of Australia’s energy industry as opposed to fossil fuels. The Clean Energy Regulator notes that the RET is broken down into two parts:⁹

• Large-scale target. This provides financial incentives for the development of renewable energy infrastructure by power-generating companies, including solar plants, wind farms and hydroelectric power stations.
• Small-scale target. This encourages individuals and small businesses to adopt small-scale renewable energy systems through financial incentives. For example, if you add solar panels to your home, you could be eligible to receive a small-scale technology certificate that energy retailers and other entities are required to purchase off you.

In Australia, renewable energy sources contributed 40% of total electricity generation in 2024, an increase from 39.4% in 2023.¹⁰ Australia’s renewable energy production in 2024 came from:

• wind – 13.4%
• rooftop solar – 12.4%
• medium and large-scale solar – 7.2%
• hydro – 5.5%
• bioenergy – 1.5%

Renewable energy is important for many reasons, such as the environment and the economy. Benefits of switching to these sustainable energy choices include:

• helping to combat global warming and climate change
• assisting with the national goal to achieve net zero emissions by 2050¹¹
• adding diversity to the nation’s energy mix, making it less reliant on just one source of energy
• reducing land, water and air pollution to promote a healthy natural environment
• creating thousands of jobs in the energy sector, especially in regional Australia¹²
• the possibility to become a source of wealth through energy exports to other countries.

In most cases, you can access renewable energy by simply getting in touch with your energy retailer to switch over to green energy options. It may not be available to all, but there are retailers throughout the states and territories in Australia that offer you electricity from renewable sources.

Some retailers offer as little as 10% of your electricity to come from renewables, while others offer up to 100% of your energy needs from renewable sources. It’s worth checking with electricity retailers before committing to a change and reading the fine print before signing up.