According to the Climate Change Authority’s (CCA) advice, which informed the government’s decision, achieving even the lower end of this target range would require dramatically scaling renewable energy capacity, including tripling large-scale solar deployment and doubling rooftop solar installations across the country.

Also just announced, the government’s new ‘Net Zero Plan’ identifies the electricity sector as the primary driver of Australia’s emissions reduction pathway, with solar energy playing a central role in this transformation.

The plan outlines how the electricity sector will need to achieve the deepest cuts of any economic sector to enable Australia’s broader decarbonisation goals.

Climate change and energy minister Chris Bowen emphasised the economic rationale behind the ambitious target: “This is an ambitious but achievable target – sending the right investment signal, responding to the science and delivered with a practical plan.

“It builds on what we know are the lowest cost actions we can deliver over the next decade, while leaving room for new technologies to take things up a gear.”

The government has also released the ‘Electricity and Energy Sector Plan’, establishing a framework for transforming Australia’s energy system. The plan recognises that achieving the 2035 target will require accelerating the deployment of proven clean energy technologies, with solar photovoltaics identified as a mature, cost-effective solution that can be rapidly scaled.

The Net Zero Plan

The newly released Net Zero Plan outlines the major growth in both utility-scale and distributed solar installations in Australia. The strategy notes that solar technology has become the cornerstone of Australia’s renewable energy transition, driving significant progress toward the nation’s emissions reduction targets.

Indeed, the strategy showcases the growth of solar energy across Australia. For instance, over 40% of electricity in Australia’s two major grids now comes from renewable energy sources, with solar contributing a substantial portion of this generation.

In 2024 alone, an estimated 3.2GW of new rooftop solar PV capacity was installed across Australian homes and businesses, continuing the nation’s world-leading adoption rate of distributed solar technology.

A recent report from the Clean Energy Council (CEC) published last week revealed that Australia’s cumulative installed rooftop solar capacity surpassed the 26.8GW mark in the first half of the year.

The Net Zero Plan also reveals that small-scale solar contributed 32.5TWh to the national energy mix in 2024, representing 11.5% of total national electricity generation – a 16% increase from the previous year.

This growth trajectory has been supported by dramatic cost reductions. Solar PV electricity costs decreased by approximately 85% between 2010 and 2019, making solar energy increasingly accessible to Australian households and businesses.

Within the Net Zero Plan, the government showcases several different approaches to land management for solar installations, featuring examples like the 333MWp Darlington Point solar PV power plant in New South Wales.

The government references this installation as it demonstrates successful dual land use. Solar modules are arranged in rows, and sheep graze on the grassland beneath and between the panels, one of the dual uses between PV generation and agriculture known as agrivoltaics.

This co-location strategy addresses concerns about land use competition between energy generation and agriculture, providing a model for future solar developments across Australia’s vast rural landscapes.

Consumer Energy Resources and grid integration

The Net Zero Plan identifies Consumer Energy Resources (CER), like rooftop solar and home battery energy storage systems (BESS), as key drivers in decarbonising Australia’s electricity system.

According to projections from the Australian Energy Market Operator’s (AEMO) Integrated System Plan, rooftop and other distributed solar could contribute over 20% of total annual generation in the National Electricity Market by 2050.

To support this growth, the government has launched the Consumer Energy Roadmap, which sets out national reform priorities to harness the full potential of distributed solar resources.

This includes addressing technical challenges related to grid integration, developing new market mechanisms to reward solar exports during peak demand periods, and ensuring equitable access to solar benefits across all communities.

CERs, commonly categorised in other countries as a subset of distributed energy resources (DERs), have become increasingly prominent in Australia, given the opportunity they could provide to decarbonise the National Electricity Market (NEM), which spans Australia’s eastern and southern states and Tasmania.

In late July 2024, the Australian Energy Market Commission (AEMC) introduced a new draft determination proposing to enable virtual power plants (VPPs) to compete directly with large-scale generators in the energy market. This would be achieved by allowing aggregated CERs to be scheduled and dispatchable in the NEM.

The AEMC cited that price-responsive small resources, such as backup generators and solar PV, could, therefore, respond to changes in spot prices. This would also contribute to a decentralised energy system.

Including CERs would result in cost savings of around AU$834 million (US$550.47 million) between 2027 and 2050 while also further incentivising the uptake of small-scale solar PV installations.

Future directions to support solar in Australia

Under Chapter 6.1.2 of the Net Zero Plan, the Australian government outlines several key initiatives to accelerate the deployment of renewable energy.

For instance, the government plans to update the Clean Energy Finance Corporation’s (CEFC) investment mandate to prioritise the rapid deployment of renewable energy projects, including solar installations.

This comes with a commitment of up to AU$2 billion in additional funding to the CEFC General Account, which aims to drive down electricity prices through increased renewable energy generation.

Alongside this, the government aims to introduce a comprehensive approach to unlock sustained investment in renewable energy generation, and energy storage capacity is being developed.

This includes reviewing the NEM wholesale market settings to ensure they support the continued growth of solar and other renewable technologies. The framework aims to give investors greater certainty, accelerating capital flows into utility-scale solar projects.

Environmental protection reforms are being implemented to streamline approvals for renewable energy projects, including large-scale solar PV power plants. These reforms aim to reduce regulatory barriers while maintaining environmental safeguards, allowing solar projects to progress more rapidly from planning to construction phases.

The federal government is also exploring additional renewable energy investment opportunities in partnership with state and territory governments. This collaborative approach aims to coordinate policy frameworks across jurisdictions, creating a more consistent and supportive environment for solar deployment nationwide.

Financial support mechanisms to support solar expansion

Alongside the announcement of the Net Zero Plan and the new emissions reduction target, the government has also stated new financial commitments to support the clean energy transition required to meet the 2035 target.

A total of AU$1.1 billion has been allocated to support various initiatives that will accelerate the deployment of renewable energy technologies, including solar PV.

This funding includes support for critical transmission infrastructure to connect Renewable Energy Zones (REZ) to the grid, financial mechanisms to reduce investment barriers for large-scale solar projects, and targeted programmes to expand distributed solar capacity across residential and commercial sectors.

The government’s financial support package recognises the need for substantial capital investment to triple large-scale solar capacity and double rooftop solar installations by 2035. These investments aim to leverage private sector capital and accelerate the already strong market momentum behind solar energy in Australia.

Comprehensive policy framework

Beyond direct financial support, the government has outlined a comprehensive policy framework to drive solar industry growth over the next decade.

The Safeguard Mechanism will be progressively strengthened to drive industrial decarbonisation and create demand for clean energy solutions, including behind-the-meter solar installations.

Transmission infrastructure development will be undertaken through the Rewiring the Nation initiative, which will address grid constraints that have historically limited large-scale solar project development in optimal locations.

Energy efficiency standards and electrification incentives that will increase electricity demand from clean sources, creating additional market opportunities for solar deployment.

Support for energy storage technologies that complement variable solar generation, including battery energy storage systems (BESS) and pumped hydro energy storage (PHES), to ensure system reliability as solar penetration increases.

Based on the CCA’s advice that informed the 2035 target, Australia’s solar industry is projected to experience unprecedented growth over the next decade.

The government’s plan acknowledges that achieving this growth will require addressing current constraints in the solar industry, including grid connection challenges, supply chain limitations, and workforce capacity.

The policy framework includes specific measures to overcome these barriers and enable the projected expansion of solar deployment.