As of 2004, Australia had 48.6 gigawatts (GW) of installed electric generating capacity. Approximately 75 percent of electricity produced in Australia is from coal with around 55 percent coming from black coal. In 2004, Australia generated around 225.3 billion kilowatthours (Bkwh) of electricity. After accounting for the electricity used by the power plants and other losses, Australia consumed 209.5 Bkwh in 2004.

Prior to 1996, Australian state governments owned the electric utilities, but 1996 reforms privatized many of them. Key to these reforms was the creation of the National Electricity Market (NEM), a wholesale “pool” operated by the National Electricity Market Management Company (NEMMCO). The NEM serves Queensland, New South Wales, the Snowy Mountains, Southern Australia, Tasmania, and Victoria via an interconnected national electricity grid. Western Australia and the Northern Territories are not members of the NEM. In November 2002, the government of the state of Western Australia adopted its own plans for reforming its electricity sector by unbundling the state’s regulated utility, Western Power and establishing a wholesale power market in 2005.

Australian Gas Light (AGL), the largest power retailer, has plans to build a 370-MW power plant in the state of Queensland. The state has a liberalized power market, and AGL wishes to increase its generation capacity there with a new natural gas-fired plant. NEMMCO has warned that during peak demand times, Queensland may risk a power generation shortage by 2008-2009. AGL has indicated that it will have the plant in operation by 2009. In 2005, AGL acquired Southern Hydro from Meridian Energy Limited. Southern Hydro has a total generating capacity of 736 MW and is the largest, privately held renewable energy company in Australia.

In August 2006, French-based Alstom completed the design, supply, construction and commissioning of the Braemar power station. The natural gas-fired Braemar project has a 450 MW capacity and will provide power to Queensland. NewGen Power, an independent power producer (IPP) that is owned by Babcock and Brown, ERM Power will operate the power facility. The Queensland government has required that 13 percent of electricity sold in-state must come from electricity generated by natural gas. In addition to Braemar, Alstom is currently constructing the 320-MW Kwinana power project in Western Australia and the 400-MW Tallawarra power project in New South Wales.

As of 2004, Australia generated 2.5 Bkwh of electricity from renewable sources. Australia’s Mandatory Renewable Energy Target (MRET) is set at 9.5 Bkwh of total electricity generation. By 2010, Australia hopes to attain the MRET. Currently, there are numerous investments being made in the renewable energy sector across Australia. The three most prominent companies investing in renewable energy include Babcock and Brown Wind Partners, AGL and Pacific Hydro.