Australia Thermal Power Market Report and Forecast 2025-2034

Australia Thermal Power Market Report and Forecast 2025-2034

Market Outlook

According to the report by Expert Market Research (EMR), the Australia thermal power market size reached around 5,193.93 PJ in 2024. Aided by advancements in high-efficiency, low-emission technologies and government incentives for transitioning to cleaner energy sources, the market is projected to witness a healthy growth between 2025 and 2034.

The Australia thermal power market is undergoing a gradual transformation as the country seeks to balance its long-standing reliance on coal and gas with its transition towards cleaner energy sources. Thermal power, primarily derived from coal-fired and gas-fired power plants, has historically played a dominant role in meeting the nation’s electricity needs. It has provided stable, large-scale energy generation that supports industrial operations, commercial infrastructure, and residential consumption. However, increasing environmental awareness, policy commitments to emissions reduction, and growing investments in renewable energy have begun to reshape the landscape, prompting a shift in how thermal power is viewed and utilised in the broader energy mix.

Coal remains the most significant contributor aiding the Australia thermal power market growth, with major power stations operating in New South Wales, Queensland, and Victoria. These plants continue to provide baseload electricity, ensuring a constant and dependable power supply to the national grid. However, ageing infrastructure, rising maintenance costs, and tightening emissions regulations have led to the gradual decommissioning of several coal-fired plants. The economic and environmental pressures associated with coal usage have prompted policymakers and energy providers to reconsider the long-term sustainability of coal-based power while ensuring that energy reliability is not compromised during the transition.

Natural gas is playing an increasingly important role as a transitional fuel in driving the Australia thermal power market expansion, making it suitable for balancing intermittent renewable sources such as wind and solar. Gas generation emits fewer greenhouse gases than coal, positioning it as a cleaner alternative for meeting peak demand and maintaining grid stability. Australia’s abundant natural gas reserves and established distribution infrastructure have supported the expansion of gas-fired plants, particularly in regions where coal plants are being phased out. Gas is also seen as a strategic asset in supporting energy security while renewable capacity continues to scale.

As per the Australia thermal power market analysis, technological advancements in thermal power generation are helping to improve efficiency and reduce emissions. Combined-cycle gas turbines and advanced boiler systems are being adopted to extract more energy from the same amount of fuel, while flue gas desulphurisation and carbon capture technologies are being explored to minimise environmental impact. These innovations are part of broader efforts to modernise thermal plants and align them with national and international climate goals. Energy providers are increasingly investing in hybrid solutions that combine thermal generation with battery storage or renewable energy systems to enhance overall performance and resilience.

The integration of thermal power with renewable energy sources is shaping the Australia thermal power market dynamics. As solar and wind energy contribute a larger share of Australia’s electricity generation, thermal power plants are being adapted to operate more dynamically. Rather than serving as baseload providers alone, many thermal plants are now acting as backup systems that compensate for the variable output of renewables. This flexible role is essential in maintaining grid stability and ensuring a continuous electricity supply, particularly during periods of low renewable generation or high demand. The complementary nature of thermal and renewable power is fostering a more balanced and sustainable energy framework.

Government policies and market regulations are significantly influencing the Australia thermal power market landscape. Australia’s energy policy framework encourages investment in cleaner technologies and promotes emissions reduction through mechanisms such as the Safeguard Mechanism and renewable energy targets. These initiatives are driving energy producers to optimise their generation portfolios by retiring older coal units, improving gas plant efficiency, and integrating cleaner technologies. Financial incentives, regulatory certainty, and clear transition roadmaps are vital to ensuring that the shift away from carbon-intensive generation does not undermine energy affordability or reliability.

Despite the challenges facing the Australia thermal power market, it continues to play a crucial role in Australia’s energy landscape. Until renewable energy and storage systems are capable of providing full-scale, round-the-clock electricity, thermal power will remain an indispensable part of the generation mix. Industry stakeholders are focusing on long-term planning, technology integration, and infrastructure upgrades to ensure that thermal assets can adapt to the changing energy environment. Workforce reskilling, environmental compliance, and community engagement are also being prioritised to support a just and inclusive energy transition.

Looking ahead, the Australia thermal power market is expected to continue evolving, shaped by the dual priorities of energy security and environmental responsibility. The strategic role of gas, the gradual decline of coal, and the development of advanced generation technologies will define the sector’s trajectory over the next decade. By embracing innovation and aligning with policy goals, the thermal power industry can contribute to a balanced, reliable, and cleaner energy future for Australia. As the nation progresses towards its climate commitments, thermal power will remain an essential yet transforming pillar of the country’s electricity system.

Market Segmentation

The market can be divided based on fuel type, application, and region.

Market Breakup by Fuel Type

• Nuclear
• Coal
• Natural Gas
• Oil

Market Breakup by Application

• Residential
• Commercial
• Industrial

Market Breakup by Region

• New South Wales
• Victoria
• Queensland
• Australian Capital Territory
• Western Australia
• Others

Competitive Landscape

The EMR report looks into the market shares, plant turnarounds, capacities, investments, and mergers and acquisitions, among other major developments, of the leading companies operating in the Australia thermal power market. Some of the major players explored in the report by Expert Market Research are as follows:

• AGL Energy Limited (AGL)
• Zenith Energy Pty Ltd.
• Hybrid Systems Australia
• ATCO Australia Pty Ltd.
• Others

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*We at Expert Market Research always strive to provide you with the latest information. The numbers in the article are only indicative and may be different from the actual report.