Australia coal plant retirements accelerate need for dispatchable capacity

Renewable capacity is projected to reach nearly 79% of installed capacity by 2035.

Australia’s accelerating coal-fired power plant retirements are increasing the need for dispatchable capacity to support the country’s shift towards renewables, according to GlobalData.

The firm said Australia operates one of the world’s fastest-decarbonising power systems, with its generation mix rapidly shifting from thermal generation towards solar, wind, and storage.

With major coal-fired power stations retiring and the federal 82% renewable electricity target for 2030 approaching, Australia is deploying market and policy mechanisms to safeguard system reliability.

Cumulative installed capacity is projected to expand 6.2% annually between 2025 and 2035, whilst the renewable capacity share is expected to rise from just over 51% to nearly 79%.

The share of renewable electricity generation is forecast to more than double to over 72% during the same period.

“The scheduled retirement of foundational coal-fired assets, including Australia’s largest station, Eraring, by 2027 and Yallourn by 2028, is rapidly restructuring the national generation profile,” said Attaurrahman Ojindaram Saibasan, Power Analyst at GlobalData.

Saibasan noted that the Capacity Investment Scheme is underwriting 32 gigawatts of new renewable and clean firming capacity by 2030 through competitive revenue underwriting mechanisms, providing developers and financiers with long-term revenue certainty.

GlobalData said the retirement of coal capacity increases the need for resources that can balance variable renewable output and maintain reliability during periods of peak demand.

The Capacity Investment Scheme, Renewable Energy Zones (REZs), utility-scale batteries, pumped storage, demand response, and flexible gas generation will therefore play complementary roles as Australia shifts to a higher-renewables electricity system.

“Australia’s challenge is no longer simply to build renewable generation. It must ensure that clean power is backed by sufficient firming capacity and delivered through a grid that can connect new supply with demand,” Saibasan said.

He added that transmission projects such as HumeLink, VNI West, Project EnergyConnect, and Marinus Link are essential to unlock REZs and reduce the risk of curtailment and reliability shortfalls.

Australia’s power-sector investment is expected to exceed $60b between 2026 and 2030, with solar photovoltaic accounting for the largest share of expenditure, followed by onshore and offshore wind.

Saibasan said Australia’s investment outlook hinges on renewable-energy targets, rising electricity demand, grid constraints, and the need for firming.

“Delivery will depend on policy execution, transmission approvals, financing conditions, and the timely completion of projects,” he added.