UPDATE: The impact of a 26-45% NEG target on electricity prices to 2030

Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone

Modelling indicates that increased ambition under the National Energy Guarantee (NEG) will place downward pressure on wholesale electricity prices in the National Electricity Market (NEM) through to 2030.

Under the current design of the NEG (26 per cent scenario), we view electricity prices falling to 2020 as more than 6 GW of renewable energy investment enters the NEM under the LRET. Increased competition will see average prices become less influenced by high priced gas, falling toward $60 MWh in 2020.

Although some new renewable energy continues to be supported after 2020, underpinned by demand from corporate Power Purchase Agreements (PPAs) and the Victorian Renewable Energy Target (VRET), annual additions are projected to be small relative to pre-2020 levels. The result is the continuation of a coal-dominated market with a fairly static picture for large-scale renewables investment, as gas provides flexibility to meet evening ramp ups. As a result wholesale electricity prices rise above $70 per MWh after the closure of Liddell, and above $80 per MWh after the expected retirement of Yallourn in 2028.

In contrast, a 45% emissions guarantee would imply a constraint on coal-fired emissions, while providing a signal for additional investment in clean energy. Similar to the price decline under the 26 per cent scenario prior to 2020, the competitive pressure from higher solar and wind energy is modelled to push wholesale prices lower. As a result wholesale electricity prices are projected to oscillate around $60 per MWh through to 2030, rather than rise above $80 per MWh as seen under the low investment scenario under a 26% NEG.

To access this report, please view the Downloads box below.

LATEST UPDATES

  • What impact will a net-zero emissions target have on forecast ACCU prices?

    Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone

    The Australian carbon market is undergoing a “fundamental repricing” on the prospect of a national […]

    Research Insights | April 7th, 2021
  • OUTLOOK: Long-term Australian carbon price, supply and demand outlook

    Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone

    The price of Australian Carbon Credit Units (ACCUs) has risen 11 per cent calendar year-to-date, […]

    Research Insights | April 7th, 2021
  • ALERT: Australian CO2 spot price hits record high of $18.50/t, up 12% YTD

    Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone

    The price of Australian carbon credit units (ACCUs) reached $18.50/t on Monday, a record high, […]

    Research Insights | February 16th, 2021
  • EU levy could impose carbon price of A$65-140 on Australian exports, with more climate tariffs to come

    Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone

    The European Parliament’s environment committee last week endorsed the proposed Carbon Border Adjustment Mechanism (CBAM), […]

    Research Insights | February 10th, 2021
  • Australian carbon offset price climbs past $17/t, a 12-month high: Here’s why

    Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone

    The price of Australian carbon offsets broke through $17 a tonne on Wednesday, reaching a […]

    Research Insights | February 4th, 2021
  • Download this free report

    To start your free download, simply fill in the below form. You will also receive our future updates, event invitations, and research insights by email.
    Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone