Analysis indicates that higher gas prices and the impending repeal of the Australian carbon price mechanism may see coal generation move out of the crosshairs and come back into focus in the Australian National Electricity Market (NEM), with market conditions likely to once more favour brown and black coal generators to 2020.
While wind and gas were previously viewed as the ‘low carbon’ fuels to smooth Australia’s transition away from coal-fired generation, favourable market conditions are now likely to see coal generation increase its dominance of the NEM, with output set to increase 7 percent through to 2020, while gas generation is likely to fall by more than 50 per cent over the same time period as higher gas prices and no carbon price support blunts competitiveness.
Analysis also indicates that wind generation is expected to suffer, with output forecast to be 4.5 per cent lower than previous estimates due to the resumed competitiveness of coal, with the lack of price support from the carbon price mechanism likely to make achieving the renewable energy target by 2020 a tall order, with a sizable shortfall likely.
RepuTex’s report, “Coal Generation: Moving Out of the Crosshairs”, forecasts generation across the NEM through to 2020 assuming the repeal of the carbon price mechanism, along with lower demand and higher gas prices.
