This article examines the opportunities for, and barriers to, the expansion of the production and use of Australian solar and wind electricity generation systems. Australia has large solar and wind resources. It also has one of the world's largest near-term (5–15 years) domestic markets for solar electricity generation systems. This market comprises the displacement of diesel fuel used to generate electricity in remote towns, farms, outstations and mining camps. There is also a vast potential export market in the Asia and Pacific regions. In addition, grid-connected windpower is already economically competitive with medium-scale hydro-electricity in Tasmania and is close to competitiveness with medium-scale coal-fired electricity in Western Australia. Some of the barriers to a more rapid development of solar and wind generated electricity are cross-subsidies to rural users of grid electricity and diesel fuel; failure to include the environmental, social and health costs of fossil fuels in their prices; political impediments; and the lack of an Australian strategic industry development plan.