REPORT: It’s the economics, stupid. Scenarios for the NEM wholesale price to 2030

In this update, we present our updated outlook for black and green wholesale electricity price in the NEM to 2030, accounting for current policy settings, along with scenarios for a “minimum CET” , assuming electricity emissions are reduced by 28% below 2005 levels by 2030; and a “2°C aligned CET” assuming a scaled up target aligned with the Paris Agreement.

Key findings include:

• • In the absence of new energy policy, black wholesale electricity prices will continue to be heavily influenced by gas-fired generators due to a tighter supply-demand balance across the NEM. This is projected to lead to wholesale price rises, partially mitigated by large wind and solar investments subsidised by the LRET through 2020, with a significant price premium for green electricity driving a significant amount of wind and solar investment over the period to 2020-21.

• • A Clean Energy Target (CET) is likely to reduce wholesale electricity prices from around $100 per megawatt hour (MWh) to between $40-60/MWh over the next decade. Lower wholesale electricity prices are driven by higher volumes of renewable energy supply, which is forecast to increase competition and decrease the influence of high gas prices in the