What is renewable energy and how does it work in Australia?

Renewable energy is a hot topic these days. With countries around the world slowly building their renewable energy portfolios, it seems the pressure is on for Australia to keep up. But what exactly is renewable energy and how does it all work Down Under? In this article, we break down the details you need to know about renewable energy in Australia and how it could affect you.

What is renewable energy?

Renewable energy is produced by natural resources that can not be depleted or run out. This includes energy created by renewable sources such as sunlight, water and wind, which are replenished naturally without human interference. Renewable energy is regarded as the most sustainable source of power generation.

How is it different to non-renewable energy?

Non-renewable energy — which includes fossil fuels — uses resources that take years to regenerate naturally, like oil, coal and gas. As fossil fuels are often formed from buried plant and animal remains, as well as other natural materials, these resources take much longer to replenish as opposed to renewable energy, which is regenerated on a day-to-day basis.

Since non-renewable sources cannot be as quickly replaced as they are used, they are more environmentally difficult to source, burn and maintain than renewable energy.

Types of renewable energy

There are currently five main  renewable energy sources in Australia: Solar, hydro, wind, ocean and bioenergy.

• Solar: The most well-known type of renewable energy is solar power. Solar uses heat and light from the sun and converts it into energy via solar PV panels or solar thermal technology.
• Hydro: One of the most prominent renewables in Australia for large-scale energy production is hydroelectricity. Hydro uses passing water, usually from a dam or reservoir, to create energy. The water passes through a turbine, which uses blades to drive the generator and convert the momentum of the water into electricity. Australia utilises areas of heavy rainfall such as New South Wales and Tasmania to source its hydroelectricity.
• Wind: Wind energy is created with wind turbines in high-altitude places, usually on hilltops, or near the ocean. Wind turbines can even be found floating on the surface of the ocean or built into the ocean floor, with the turbines turning on the water’s surface to generate electricity.
• Ocean: Commonly used as a renewable energy source for industrial purposes, ocean energy uses three types of ocean technology — waves, tidal and ocean thermal — to generate electricity. Wave energy converts the momentum of waves into electricity. Tidal energy harvests the energy from the height difference between low and high tide, or the momentum of the currents flowing in and out. Ocean thermal energy converts the temperature difference between the ocean’s surface and deep ocean into energy.
• Bioenergy: Another renewable energy source in Australia is bioenergy. Bioenergy uses organic renewable materials like wastewater, municipal waste and stream waste from agriculture — known as biomass — to produce heat, electricity, biogas and liquid fuels. Biomass is converted into bioenergy through conversion technologies like combustion, pyrolysis, gasification and fermentation.
• Bonus geothermal energy: Geothermal energy is also another well-known renewable energy source. Geothermal extracts heat from the earth and converts it into energy. This resource is not as prevalent in Australia though, as it is quite costly to source, produce and maintain with the correct technologies.

What are the advantages of renewable energy?

There are notable advantages to using renewable energy. For a start, it typically emits little to no greenhouse gasses or other harmful pollutants that can cause health issues for our planet and the people who live on it. Renewable energy also has the advantage of being produced by an infinite source of energy thanks to its reliance on the sun, wind and water rather than the finite resources of fossil fuels. Naturally sourced energy also allows Australia to be less reliant on foreign countries for energy supplies.

Is renewable energy more expensive?

Renewable energy can be costly to set up – whether it’s installing solar panels to a home or commercial property or building the infrastructure needed for hydro and wind-powered energy production. However, the long-term financial benefits of renewable energy are well documented and research from the University of Sydney has shown “it is more cost effective to build and run a wind farm or solar array, rather than a new fossil fuel power plant”.

How much renewable energy is Australia using?

According to the Clean Energy Council Clean Energy Australia 2024 report, renewable energy made up 39.4 per cent of Australia’s total electricity generation in 2023, an increase of 9.7 per cent from 2022. The 2021 iteration of this report had Australia at 27.7 per cent renewable energy within the country’s total electricity generation. This number was up by 3.7 per cent from 2019. 

According to the Department of Climate Change, Energy, the Environment and Water, solar power was the largest renewable contributor to Australia’s total electricity generation, at 14% in 2022.

What’s the difference between renewable energy and carbon neutral energy?

Though the two are often confused for each other, renewable energy and carbon neutral energy are very different. While both options are greener than fossil fuels, carbon neutral energy still contributes to fossil fuels as it runs through the energy grid. While this contribution is small, it cannot be disregarded completely. Renewable energy, on the other hand, is self-reliant and is created from natural materials and elements. Carbon neutral energy simply means the emissions associated with the electricity usage are offset. To do this, energy retailers purchase carbon offset credits in renewable energy or climate-positive projects up to or equal to the level of emissions released. EnergyAustralia, AGL, Energy Locals and Origin are just some of the retailers that offer carbon offset initiatives to customers in Australia.

Plans with carbon offset energy

Are renewable energy and GreenPower the same thing?

No, not exactly. GreenPower is renewable energy that is sent back into the grid by an electricity provider, usually at the cost of the customer. Some providers will give customers the option to purchase a percentage of GreenPower as an additional cost on their bill. The provider will then put that percentage of GreenPower — renewable energy — back into the grid.

While a provider cannot specifically connect renewable energy sources to an ndividual household, as all electricity comes from the same grids, GreenPower allows customers to invest in renewables and greener energy projects while still being connected to the grid. At this stage in Australia, the only way for a household to use 100 per cent renewable energy is  through the use of solar or solar batteries.

Energy plans with GreenPower options

How does renewable energy work at home?

So, how can you bring renewable energy into your home? Here are the main options available:

• Solar: Rooftop solar panels allow you to generate clean electricity for your home. Paired with battery storage, you can maximise self-consumption and reduce reliance on the grid. 
• GreenPower: As mentioned, this option doesn’t require solar installation. By subscribing to a GreenPower plan offered by your electricity retailer, a portion of your bill goes towards supporting renewable energy generation such as wind and solar farms.
• Community power: Community projects offer an alternative to home solar. A local council or organisation may invest in a shared solar farm. 

Virtual Power Plants (VPPs): Your home solar battery, along with others in the neighbourhood, are connected to a virtual network. A smart system optimises energy use and buying and selling electricity on the wholesale market. VPPs contribute to grid stability and increased renewable energy integration.

Is renewable the most sustainable energy option?

Advancing technologies mean that renewable energy is an increasingly cost-efficient option and has fewer negative impacts on the environment compared to fossil fuels. By using the sun, wind, water and bioenergy sources, we can theoretically generate electricity forever with little impact on the environment. 

While there are upfront costs to consider, research has shown that these costs can be recouped through the savings associated with generating renewable energy compared to running fossil fuel power plants.