Australia’s energy system is undergoing its greatest transformation since the 1950s. These changes are driven by economic, engineering and environmental factors. Consumer preferences are also changing, with an increasing desire for independence and control over electricity supply and use.
The government is leading a reform program of practical initiatives to improve energy security, reliability and affordability in Australia. Policy directions are being informed by the recommendations in a Blueprint for the Future.
Where does our energy come from?
Most of Australia’s energy relies on traditional sources—non-renewable fossil fuels. Coal and gas account for about 85% of electricity generation.
Most of our electricity is produced from burning black and brown coal at large power stations.
Natural gas is the third highest energy source in Australia (after oil and coal). It’s used by power stations for electricity generation, factories for manufacturing, and homes for heating and cooking. It is a non-renewable source that emits around half the emissions of coal when used to generate electricity.
Gas used to come from large remote reservoirs, such as the Moomba and Bass Strait gas fields. More recently, coal seam gas comes from Queensland, with untapped reserves in New South Wales and Victoria.
Renewable energy from sources like wind, solar and hydro provide about 15% of Australia’s electricity supply. This includes both large generators and small systems owned by Australian families and businesses. There are now almost 2.8 million small-scale renewable installations in Australia, including more than 1 million solar and heat pump water heaters, 418 wind systems, more than 1.7 million rooftop solar power systems and 18 hydro systems.
Today, Australian businesses and householders have more options than ever to supply and manage energy
You might have an electric vehicle power by the solar PV on your roof, or an in-home display linked to a smart meter that tells you when to reduce your power consumption in response to power prices that change during the day. Battery storage technology to store solar power for use at night is rapidly increasing in popularity.
How does it get to your home or business?
The National Electricity Market (NEM) interconnects the five eastern and southern states, and the ACT, and delivers around 80% of all electricity in Australia. Western Australia and the Northern Territory are not connected to the NEM—they have their own electricity systems and regulatory arrangements.
Large generators (power plants) produce the electricity from an energy source such as coal, wind, solar or hydro. High voltage transmission lines carry the electricity over long distances. Distribution networks then convert the high voltage back to low voltage currents for distribution via the local poles and wires to homes, offices and factories. Many homes have solar panels, and some of these have their own battery storage systems.
Gas is sourced from gas fields (oil and gas wells or coal seam wells) and processed to specification, including adding the ‘rotten egg’ odour for safety reasons, and compressing the gas for transport.
Some of the gas is used at this stage for gas powered generation (GPG), or stored in large facilities for later use. The rest is sent long distances through large transmission pipes to what is known as a 'city gate'. When the gas runs through the city gate, the pressure is reduced making it suitable for distribution through a smaller network of pipes to homes, offices and small industrial customers.