Sunshine state

South Australia is set to have the world's first net zero grid

Jun 25, 2025

From zero to hero

The world’s first net zero grid is most likely going to be in South Australia, which has a target to achieve this goal in 2027 and is already well on track.1

From denialism to acceptance

This might come as a surprise to most readers: wasn’t Australia the country that reversed its carbon price only two years after introducing it?2 Isn’t it the hotbed of climate denialism with Rupert Murdoch’s media empire?3 Isn’t there an entrenched indigenous fossil fuel industry?

The answer is yes, yes and yes. Yet, this Antipodean nation, with all its forces of backlash, is on track to set a global record in the energy transition. Nowhere else is it clearer that logic wins over rhetoric. Optimism wins over pessimism. New wins over old.

So how did it all happen? Let’s dive in!

An ageing problem

Like many nations across the world, Australia has an ageing coal fleet. In South Australia, the last coal-fired power station closed down in 2016.4 Rather than subsidise and build new coal, the state took a hard look at the new technological landscape and decided to pivot to renewable energy based on its superior economics. It started to commission utility-scale wind and solar farms, which today account for a substantial share of the electricity mix (Figure 1).

72% of electricity in South Australia comes from renewable energy.5 The grid is running reliably, showcasing that majority clean energy grids are not futuristic myths but current realities.

Figure 1

South Australia’s Electricity Grid from June 2024 - June 2025 (Data from OpenNEM)

A rooftop revolution

At the same time, action was picking up in the small-scale solar market, with many Australians realising that installing rooftop solar could reduce household electricity bills.

One in three Australian homes has rooftop solar. In South Australia, it is one in every two. This makes Australia the global leader in rooftop solar installations per capita.6

The Government of Australia does not mince words either. It clearly says, “solar power is now the cheapest source of electricity available.”7 There are no ifs and buts. No caveats. No qualifications. It also goes on to state the various other benefits of rooftop solar which include:

insulation from unpredictable electricity price swings,
lower charging costs for an electric vehicle,
lower gas bills, and finally,
a lower household carbon footprint.8

Households in South Australia say they adopted rooftop solar because it was a “great investment”.9 This is a familiar tale: rooftop solar booms are occurring across the globe. In countries like Pakistan, South Africa, and India such installations are helping consumers access cheaper electricity than ever before.10

Policy support

Since solar power generates a societal benefit by displacing polluting generation, the Australian government rewards households that contribute to this objective, the same way it penalises smokers and drinkers through higher taxes for the societal harm they generate. This is what taxes and subsidies are designed for: take from the bad, give to the good. Simple transfers.

In Australia, households with solar can get “small-scale technology certificates” that give a discount on the total installation cost. Further, from 1 July 2025, the government will support small-scale battery installations by providing a discount of around 30% on the upfront cost.11 This will help soak up excess solar when it’s not required.

Eternal sunshine on a spotless grid

As a testament to this new revolution, on new year’s eve 2023, South Australia’s grid saw something phenomenal: for some time, the entirety of electricity demand was met through rooftop solar, and there was still an extra 13% leftover.12

Grid operators were prepared for this milestone. The grid had been inching closer and closer towards this point, with moments in the autumn of 2023 where rooftop solar satisfied 99.7% of demand as declared by the Australian Energy Market Operator.

There have been more moments since that day, when rooftop solar generation has exceeded demand in South Australia. The extra electricity gets exported to neighbouring Victoria or gets soaked up by batteries to be dispatched a few hours later when it is needed.13

Shifting peaks

Most grid operators worry about a situation where there isn’t enough electricity supply to meet people’s demand. Characteristic of Down Under, the South Australian grid has the opposite problem: they worry about “minimum demand”, when there is excess renewable power that has nowhere to go. So far, a mix of energy storage and export has been working for South Australia.

But the next step is going full-steam ahead on demand-side response - the idea that the shape of electricity demand over a 24 hour period can be adjusted through incentives to better match the profile of supply. Discounts can be offered to households and firms for consuming electricity during periods of excess solar. This is an intuitive idea but is often rejected by conventional old-school engineers who are stuck in a supply-side view of the world.14

Australian engineers, however, do not lament over renewable energy’s intermittency. Instead, they build systems that can actively handle it. Apart from demand-side response, South Australia is also investing in a range of grid frequency stabilisation mechanisms.15 The results are in and it turns out that their design has worked.

Paradigm shifts

South Australia’s grid is challenging some entrenched paradigms in the electricity space.

Big solar versus small distributed solar

First, it is showcasing how a grid can deal with highly distributed, household-owned solar assets. It’s typically harder to manage a system where there are a multitude of small-scale generators that are out of your control relative to one with centrally controlled, large-scale electricity generators. Yet, “hard” does not mean “impossible”. South Australia is showing that a system with large amounts of distributed solar can work. In this system, utilities evolve from being the owners of large power plants to being service providers that help households manage their own solar. This is business model innovation.

Baseload? Who needs that?

Second, South Australia illustrates the fallacy of “baseload”, the idea that you need 24/7 power generating assets. The only reason this concept exists is because nuclear and coal-fired power plants are expensive to turn off. What you need, in reality, is electricity demand to equal electricity supply at all points in time. That’s it. If that condition is satisfied, there is no real reason for baseload.

If you look at South Australia’s grid over a recent 3-day period, you will see no rectangular block of generation that cuts through the chart (Figure 2). No baseload. Instead, there are peaks and troughs, equalising demand and supply dynamically and realiably. Lights are on. South Australians are fine.

Figure 2

The takeaway

The target to achieve a net zero electricity grid in South Australia is now only 18 months away. The road from 70% to 100% clean will not be easy: this is where the envelope of innovation gets pushed. New frontiers are created.

There have been moments when the Australian Energy Market Operator has had to curtail some solar, because there isn’t enough storage, export capacity or demand flexibility. This will, of course, change with time and does not negate any of the successes. Hurdles are a normal facet of any ambitious transition.

Yet, what one can see in South Australia is imagination. Political imagination allowed the state to close its coal chapter for good in 2016. Engineering imagination has helped the state already reach 70% clean electricity and will take it to 100%, breaking a world record.

So here’s to imagination - that fundamental quality that has always led to progress and innovation.

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Technical note

Currently gas, batteries and imports balance the grid (as can be seen in Figure 2 through peaks in peach, blue and indigo respectively). The initial net zero grid will see solar exports offsetting gas. However, gas remains unpopular because of its contribution to high bills (local gas still follows international prices). There have also been some major gas plant closures due to increased competition.16

The path to balancing the grid more sustainably involves more investment in storage, export capacity, and demand flexibility. South Australia is pursuing all three avenues. There is a pipeline of new battery projects,17 a new transmission project linking South Australia to New South Wales (EnergyConnect Interconnector)18 and trials on demand flexibility both at the level of households and firms.19

Petra Stock (8 September 2024). South Australia is aiming for 100% renewable energy by 2027. It’s already internationally ‘remarkable’. The Guardian.

Lenore Taylor (17 July 2014). Australia kills off carbon tax. The Guardian.

Graham Readfearn and Adam Morton (23 Sept 2023). ‘Climate villain’: scientists say Rupert Murdoch wielded his media empire to sow confusion and doubt. The Guardian.

Giles Parkinson (9 May 2016). Last coal-fired power generator in South Australia switched off. RenewEconomy.

Giles Parkinson (6 December 2024). South Australia has the most wind and solar and no baseload: So why is it the only state not fretting about a vulnerable grid?. RenewEconomy.

Adam Morten (1 November 2023). ‘Go hard and go big’: How Australia got solar panels onto one in every three houses. The Guardian.

Department of Climate Change, Energy, the Environment and Water. Solar for households. Government of Australia. Accessed: 25/06/2025

Adam Morten (1 November 2023). ‘Go hard and go big’: How Australia got solar panels onto one in every three houses. The Guardian.

Bill McKibben (16 September 2024). Silent Solar: Some really really good news you haven't heard. The Crucial Years (Substack).

Department of Climate Change, Energy, the Environment and Water. Solar for households. Government of Australia. Accessed: 25/06/2025

Giles Parkinson (18 November 2024). Rooftop solar meets 107.5 pct of South Australia’s demand, no emergency measures needed. RenewEconomy.

Chris Nelder with James Brown, Head of Network Strategy at SA Power Networks. [Episode #251] – South Australia on Point. The Energy Transition Show (Podcast).

Peter Hannam (24 November 2022). AGL to close South Australia’s main gas power station, citing new grid link and cheaper renewables. The Guardian.

Giles Parkinson (21 May 2025). Another big battery joins the grid in South Australia as state heads towards 100 pct net renewables. RenewEconomy.

Project EnergyConnect. Accessed: 26/06/2025

South Australian Demand Management Trials Program. Government of South Australia. Accessed: 26/06/2025

Stephen Reynolds

Jul 9

This article is a breath of fresh air. Here in NZ it’s all doom & gloom about our inability to let go of fossil fuelled electricity because of solar and wind intermittency or the complexity of roof top solar. It’s all painted as just too hard and unsolvable so let’s just do enough to make it look like we’re committed and meanwhile waste money looking for gas or buying Indonesian coal.

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1 reply by Dr Sugandha Srivastav