Australia’s renewable push hits grid bottlenecks

Renewables supplied over half of NEM power for a full quarter in late 2025.

Australia's renewable energy sector is expanding, but constraints around transmission infrastructure, supply chains, planning, and the integration of variable renewable energy are creating challenges, according to Willis’ Renewable Energy Market Review 2026.

The report said addressing these system-level bottlenecks will be critical to achieving Australia's 82% renewable electricity target by 2030.

Renewables accounted for about 36% of Australia's total electricity generation in 2025, whilst penetration in the National Electricity Market (NEM) reached around 40% in early 2025, said John Rae, Pacific Renewable Energy Leader at Willis Natural Resources.

Renewables supplied more than 50% of NEM electricity over a full quarter for the first time in late 2025, driven by growth in rooftop solar, wind generation, and battery storage deployment.

"However, challenges related to transmission infrastructure, supply chains, and the integration of variable renewable energy are becoming increasingly prominent," Rae said.

Investment activity has remained robust, with billions committed to large-scale generation and storage projects, alongside continued uptake of rooftop solar.

However, large-scale project investment has been uneven due to grid constraints, planning delays, and higher construction and financing costs.

The expanded Capacity Investment Scheme is helping to underpin future supply, whilst policy certainty following the 2025 federal election has supported investor confidence.

The renewable energy insurance market remains supportive but selective in 2026 as natural catastrophe exposure, equipment failure, design defects, and evolving technology risks influence underwriting decisions.

"Insurer appetite remains present; however, capacity deployment and pricing are increasingly influenced by factors such as project location, technology type, and overall risk quality," Rae said.

Hail, wind, bushfire, and flood exposure remain key factors in underwriting and pricing decisions, whilst claims inflation and higher reinsurance costs are also supporting premium levels.

Well-structured, high-quality projects can achieve favourable insurance outcomes, whilst more complex or poorly presented risks face pricing pressure and tighter coverage terms.

The report said achieving optimal insurance outcomes increasingly depends on strong risk presentation, robust technical design, and a strategic, well-structured approach to insurance programme placement as the sector moves into a more complex phase of the energy transition.