A fresh batch of energy market data for the December quarter sent transition optimism to new levels in what continues to be a resilient and lower-cost summer for the grid. But data also showed renewable energy projects are still not getting to financial close quick enough to deliver on net zero targets.

Capital

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A stable start to summer saw wholesale electricity prices tumble across the NEM in the December quarter, in a period marked by new demand highs tempered by rooftop solar. AEMO’s latest Quarterly Energy Dynamics confirmed the now well-quoted news that renewables tipped the scales in the quarterly energy mix for the first time, delivering 51% of overall supply, up from 46% in Q4 2024. WA also recorded new records, with an average renewable contribution of 52.4% for the quarter and a new peak renewable contribution of 91.1% on December 20.

The Australian Energy Market Operator’s latest grid Connections Scorecard showed progress in getting new projects to full output was sharply up on the same stage last year, but approved applications and registrations — those that can move to the next stages — are running behind the rates of last year. Aggregate projects in the registration stage crept up just 2% for the 2026 financial year to date.

Clean Energy Regulator data showed major solar and wind investment in Australia totalled 2.1 gigawatts in 2025, compared to 4.3GW in 2024, marking the third worst year in a decade for utility scale wind and solar final investment decisions. (The Australian)

Three-quarters of Australia’s coal-fired power capacity will have been retired by 2035, BloombergNEF (BNEF) noted in a reminder that operators have less than a decade to bolster alternative baseline power supply. Despite recent state moves to extend the lifespan of key coal-fired generators, a major decline in 2029 will slash coal-fired generation to around 15GW, with generation declining to around 6GW in 2035 and just 1GW by 2040 amid what Australian senior associate Sahaj Sood called growing “fears… that not enough replacement capacity will be installed in time.”

Australian industrial electric vehicle (EV) maker Applied Electric Vehicles (AEV) received a $30.7 million shot in the arm after the National Reconstruction Fund Corporation chose the firm for its first transport investment.

Ausgrid moved forward with a plan to sell its Plus Es smart meter business. The company currently has 36% of the smart meter market, and is expecting continued growth on the back of the rule maker’s 2030 deadline. Analysts are expecting a deal value of between $2 and $3 billion. (AFR)

Projects

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The Queensland Government unlocked three new gas exploration areas, naming Santos QNT Pty Ltd and Drillsearch Energy Pty Ltd as the preferred tenderers for the sites in the Cooper-Eromanga Basin, near Queensland’s border with South Australia. Minister for Natural Resources and Mines Dale Last said the move would put downward pressure on prices for gas supplies that are “critical to our state’s energy mix”.

Meanwhile, “changing energy market conditions” have driven state-owned Queensland energy company CleanCo to decide against purchasing the new 360MW Moah Creek wind project – instead signing a smaller 10-year offtake deal with the decade-old Kennedy wind farm, which was built by Windlab and is controlled by mining magnate Andrew Forrest. The Kennedy Energy Park is located near Hughenden where state-owned Powerlink hopes to complete the CopperString transmission line by 2032. (Renew Economy)

Three offshore wind projects were offered feasibility licenses in the Bunbury zone off Western Australia. Two are being developed by the Australian arm of the French government's EDF Group, and the other by a joint venture between Spain's EDP Renewables and France's ENGIE. The government said no applications were able to be progressed to licence in the Illawarra, and a lack of competitive bids meant it also chose not to offer any licenses in the Bass Strait.

Energy Minister Chris Bowen also opened applications for research and demonstration licences that allow trials and testing of offshore renewable technology in all six offshore wind zones. And Victorian Victorian Energy Minister Lily D’Ambrosio said the delayed offshore wind auction that had been scheduled for September will now be held in August.

The UK signed a clean energy pact with European allies under which the UK, together with Germany, Norway, France and Denmark agreed to deliver 100GW of offshore wind power through joint projects. The "Hamburg Declaration” will include new offshore wind farms that are directly connected to more than one country through interconnectors. (BBC) (Politico)

Policy

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The Ross Garnaut and Rod Sims-led Superpower Institute called for a two-pronged economy-wide carbon levy, in an audacious pitch that involves scrapping the government’s existing emissions policies including the Safeguard Mechanism. Under the policy a Polluter Pays Levy (PPL) would tax carbon pollution at source, including oil, gas and coal extraction sites and on companies that import the resources, generating an average $35.6 billion over the next 35 years.
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A 40% cashflow tax would capture the economic rents that producers make on super profits and redirect them back into other parts of the economy. It would replace the existing Petroleum Resource Rent Tax. Part of the proceeds from the levies would compensate households and small businesses for the inevitable higher prices stemming from taxing the upstream resources

The government said it had found “broad support” for its solar sharer scheme during its short consultation period, despite the Australian Energy Council and consumer groups arguing it’s unlikely to deliver the benefits envisaged for households. The task of delivering it by July has now been handed to the Australian Energy Regulator which will consider the consultation recommendations as part of its 2026-27 Default Market Offer (DMO) determination process. A cap to stop excessive use and a mechanism to allow retailers to recover supply costs are among several design principles laid out by the government.

Climate

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After announcing its departure from the Paris climate agreement in Trump's first day in office last year, the US has now formally exited. The US will now attend the meetings of the Paris agreement as an observer only. (NYT)

Diesel emissions in the mining sector are rising 6% year-on-year, a new analysis by the Institute for Energy Economics and Financial Analysis (IEEFA) has found — a stark contrast to government projections that the sector would cut emissions by 4.5% annually.

Soaring temperatures in Victoria drove demand in the state to all-time highs, with its 17-year record of 10,496MW falling as record-beating temperatures nearing 50°C across the state drove demand to 10,784MW just before 7pm local time on 27th January. More than 94,000 customers were reported to be without power across the state. (Watt Clarity)

Looking ahead to next week, Parliament returns with the Coalition's future still in doubt and the International Energy Agency delivers its annual electricity market report, which this year will have a special focus on grids and flexibility.