Electricity Outlook

OUTLOOK: NEM wholesale electricity and LGC price forecast 2020-40 (Q3 FY20)

Dear Subscriber,

Our Q3 FY19-20 Australian Electricity Outlook (AEO) for medium- and long-term price development in the National Electricity Market (NEM) has now been published.

The AEO provides an outlook for wholesale electricity prices for each region of the NEM over medium- (16 quarters) and long-term horizons (annual to 2040); an outlook for LGC prices to 2040; forecast market outcomes such as change in capacity and generation mix; and analysis of the major factors impacting the market in the forecast period.

‘Step change’ shift to 90% renewables by 2040 not forecast to increase electricity prices

Key findings:

  • We continue to forecast Australia will reach 50% renewables by 2030 under our Central case, despite the absence of a federal policy framework beyond the UNGI.
  • Even without further policy, renewable energy generation is forecast to grow to 75 per cent of NEM generation by 2040, with more than 18 GW (53 per cent of Australia’s thermal capacity) modelled to exit the market by 2040.
  • Under our Central case, the commissioning of renewable energy capacity is forecast to maintain downward pressure on wholesale prices though the 2020s.
  • However, as renewable energy investment remains low due to lower prices, the closure of major coal-fired facilities in the 2030s is forecast to increase prices.
  • Should more aggressive action be taken to shift to clean energy capacity under AEMO’s “Step Change” scenario, Australia is forecast to reach 70% renewables by 2030, growing to 90% by 2040.
  • Notably, modelling suggests that renewable energy penetration of around 70-90 per cent is not forecast to trigger large increases in wholesale prices, owing to continuing advances in demand side resources and energy storage.

Modelling considers a Central Case for electricity price development in line with RepuTex’s view of the current transition of the energy industry and market drivers, along with an Alternative Case reflecting AEMO’s “Step Change” shift to renewable energy, accounting for faster technological improvements and more aggressive action on climate change in line with a “well below 2°C” Paris climate commitment (achieving net-zero emissions prior to 2050).

This report is published under our Australian Electricity Outlook service. Login below to access the report and technical modelling, or click here to more about our services for the Australian electricity market. 

Click here to read our summary expectations for wholesale prices to 2040 >> 

Restricted Access

This is a subscriber report. Please login to access this content.

Become a Carbon Insider today

Unlock our latest analysis, briefings and price information with our new Carbon Insider service.

Click below to see our plans.

Sign up for regular insights

LATEST UPDATES

  • Carbon Markets

    UPDATE: Carbon Offset Market Report – Buyers ‘rush to regeneration’ ahead of ACCU review – but are HIR projects without risk?

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

    The price for Australian Carbon Credit Units (ACCUs) has continued to drift sideways, with spot […]

    Research Insights | July 4th, 2022
  • Carbon Markets

    REPORT: Modelling Potential Futures for Australia’s Safeguard Mechanism (Carbon Market Institute)

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

    RepuTex has been engaged by the Carbon Market Institute (CMI) to analyse the current operation […]

    Research Insights | June 30th, 2022
  • Carbon Markets

    UPDATE: Carbon Offset Market Report – Nature-based ACCUs dominate as divergence between broker and bilateral spot price grows

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

    The spot price for Australian Carbon Credit Units (ACCUs) fell 0.7% on the week, with […]

    Research Insights | June 13th, 2022
  • Carbon Markets

    UPDATE: Carbon Offset Market Report – Positive sentiment returns as ACCU buyers favour regeneration over land-based avoidance projects

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

    The change of government has proven to be supportive for the local ACCU market, with […]

    Research Insights | May 30th, 2022
  • Carbon Markets

    INSIGHTS: Election 2022 – Market impacts, and where to next for the ALP’s “Safeguard Mechanism 2.0”?

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

    The Federal Election has been run and won, with the Australian Labor Party (ALP) confident […]

    Research Insights | May 24th, 2022
  • Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone