Solar and wind to lead Australia’s decarbonisation effort

Australia’s electricity sector is showing significantly greater resilience to global energy shocks compared to the 2022 crisis, despite escalating geopolitical tensions in Iran driving sharp increases in global fuel prices, according to Wood Mackenzie.Despite oil prices surging more than 60% and Asian spot gas prices doubling compared to last year, Australian wholesale electricity prices have remained relatively subdued at about $70/MWh in Q1-Q2 2026, according to Wood Mackenzie.This is a stark contrast to the 2022 Russia-Ukraine crisis, when similar global fuel price shocks drove National Electricity Market (NEM) wholesale prices up by about 200% to average above $250/MWh.Wood Mackenzie energy storage and solar senior research analysis Natalie Thompson says this divergence reflects a structural shift in Australia’s power system.“Growth in renewables and batteries, reduced reliance on gas-fired generation, and the rise of distributed energy resources are materially lowering exposure to international fossil fuel markets,” she said.“Australia’s energy transition is now delivering tangible energy security benefits alongside emissions reductions.“While vulnerabilities remain to particularly from extreme weather events and supply-demand imbalances, the country's power sector is steadily decoupling from global fossil fuel market volatility.”Battery storage has emerged as a critical factor in this transformation, with batteries' share of price-setting rising from about 2% in early 2022 to about 20% by late 2025, while gas has decreased from 10% to less than 5%, according to Wood Mackenzie.Battery output tripled in Q4 2025 compared to Q4 2024, whilst gas generation declined almost 30% year-on-year during the same period, Wood Mackenzie reports.The report also found that Q2 of FY26 saw renewable energy reach record penetration levels across the NEM with midday solar oversupply now routinely driving wholesale prices to near-zero and, in some states, into negative territory, enabling battery systems to charge at minimal cost and discharge during evening peaks to replace traditional gas-fired generation.Wood Mackenzie's analysis highlights that Australia's distributed solar revolution has reached material scale, with more than 4.3 million rooftop solar systems installed nationally.The current fuel crisis may also be accelerating transport electrification across the country. March 2026 sales figures show battery electric vehicles capturing more than 14% of new car sales, with total electric vehicle share exceeding 20%, double the figures recorded in March 2025, according to Wood Mackenzie data.However, residual vulnerabilities remain with “dark doldrums", or extended periods with little sun or wind, still requiring dispatchable backup generation currently dominated by gas-fired plants.“Today’s batteries are highly effective for short-duration storage, but they cannot sustain the system through multi-day low renewable periods,” Ms Thompson said.“Longer-duration storage solutions, such as pumped hydro and extended-duration batteries, will be critical to ensuring reliability."The key question now is whether Australia can maintain the momentum of renewable and storage deployment to address remaining vulnerabilities before scheduled coal plant closures, to ensure the energy security dividend can be sustained."Addressing these challenges requires coordinated rollout of generation, storage and network infrastructure investments, according to Wood Mackenzie, including longer duration storage technologies such as 8-hour-plus batteries and pumped hydro to provide extended firming capacity during unfavourable weather patterns.

Gina Rinehart has become the majority shareholder in the US’s only rare earths producer, MP Materials, while majorly decreasing her US-listed lithium holdings.

Lynas Rare Earths (ASX: LYC) and Japan Australia Rare Earths (JARE) have extended their rare earths supply deal through 2038, locking in a market-linked floor price of US$110/kg for neodymium and praseodymium. Under the revised agreement, Lynas will continue to provide up to 7200tpa of neodymium and praseodymium to Japanese industry, while JARE has committed to purchase 5000tpa under the new pricing structure.If Lynas’ achieved price is above US$150/kg, 30% of the upside above that level, capped at US$10m each calendar year, will be paid to JARE. Lynas chief executive and managing director Amanda Lacaze comments on the agreement. “Lynas’ partnership with JARE has served both organisations well over the past 15 years. It has created a strong foundation for the development of Lynas’ business, supported investments in new processing capacity and new products, and delivered reliable supply of quality product to support Japanese industry growth,” she said. “This new agreement will ensure continued reliable supply of rare earth products that are strategically important to Japanese industry and its global market, and at the same time, the implementation of fair market pricing will reduce price volatility for Lynas and enable continued growth and investment in our operations.” Additionally, 75% of all HRE oxides produced by Lynas will be made available to Japanese industry, with JARE committed to purchasing the equivalent of 50% of all those HRE oxides. 

US President Donald Trump and Chinese President Xi Jinping have reached a trade and economic deal to suspend additional export controls on rare-earth metals, according to the White House.