Key takeaways:
- Power market cost dynamics and pricing: Wholesale prices dropped by 57% to US$59/MWh in 2023 and will further decrease to US$48/MWh by 2030 following increasing renewable share. Long-term prices will be volatile, ranging between US$46-59/MWh to 2050, as coal power phases out from the 2030s.
- Energy mix: Australia’s renewables share was 35% in 2023 and will rise to 54% by 2030. Renewable’s share in the NEM will rise from 38% in 2023 to 57% in 2030, falling short of the 82% ISP target in 2030.
- Power demand is expected to grow by an average annual rate of 2.8%, reaching 340 TWh in 2030 from 264 TWh in 2023.
- Supply: Australia will require US$77 billion of investments in renewables and storage generation assets over the next decade, with 52% allocated to solar, 37% to offshore wind, and the rest to battery storage.
- Power sector carbon emissions will decline as fossil fuels retire, dropping by 96% from 156 Mt of CO2 in 2023 to just 7 Mt in 2050.
- Market structure: Australia’s power market is fully liberalised with a competitive wholesale market, driving substantial private investments in generation as the NEM accounted for US$12 billion worth of electricity transactions in 2023.