The ongoing phase-out of coal facilities and the sluggish progress in launching new renewable energy projects, partly due to shortages in the skilled workforce, are poised to push electricity prices higher until 2030 as the next tranche of coal units retires.
The latest NEM Benchmark Power Curve report from Cornwall Insight has forecast energy prices across all NEM regions will remain above $100 per MWh until the end of the decade. With prices predicted to reach historic highs of $170 per MWh in New South Wales (NSW) by 2028 and $164 per MWh in Queensland (QLD) by 2029.
NEM regions are forecast to need over 70,000 people in jobs to build and maintain the new renewables infrastructure in the next 20 years, up from approximately 40,000 people in 20231. Shortages in the workforce are likely to hinder the deployment of essential renewable projects necessary to replace retiring coal plants, pushing up power prices in the process. Retraining existing workers, increased funding of institutions such as TAFE, and incentives to encourage increased participation in the industry are all vital.
Looking further ahead, prices are expected to fall across the regions in the early part of the 2030s as more renewable energy sources become operational, displacing the often costlier fossil fuel generated power. This shift will make renewables the primary price influencers, leading to decreased electricity costs.
However, lower electricity prices are forecast to cause a slowdown in the entry of new capacity, and with demand from the electrification of the economy continuing to grow and the closure of the remaining coal units, power prices are expected to creep up as we move through the next decade.
Figure 1: Power price forecasts NSW – average price per fiscal year (£/MWh)
* Actuals (to date) cover July 2023-March 2024, while the BPC curves cover the complete 2023-2024 Financial Year
Source: Cornwall Insight
Figure 2: Power price forecasts QLD – average price per fiscal year (£/MWh)
* Actuals (to date) cover July 2023-March 2024, while the BPC curves cover the complete 2023-2024 Financial Year
Source: Cornwall Insight
Figure 3: Power price forecasts SA – average price per fiscal year (£/MWh)
* Actuals (to date) cover July 2023-March 2024, while the BPC curves cover the complete 2023-2024 Financial Year
Source: Cornwall Insight
Figure 4: Power price forecasts VIC – average price per fiscal year (£/MWh)
* Actuals (to date) cover July 2023-March 2024, while the BPC curves cover the complete 2023-2024 Financial Year
Source: Cornwall Insight
Ben Tudman, Modelling Manager at Cornwall Insight:
“The key to ensuring long-term energy security and affordability lies in a smooth and rapid shift to renewables. Unfortunately, delays to workforce growth are hindering the transition, leaving all the NEM regions struggling to fill the void left by the retirement of coal generated power.
“It is important we see a collaborative effort to attract skilled workers and train a new generation in order to speed up the deployment of renewables. Otherwise, high power prices and the inevitable rise in bills are likely to persist until the end of the decade. Bridging the gap between fossil fuels and renewable power is critical to bringing in a new era of clean, affordable power for Australia.”
Reference:
1.Integrated Energy System Plan – AEMO
– Ends
Notes to Editors
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About the Cornwall Insight Group
Cornwall Insight is the pre-eminent provider of research, analysis, consulting and training to businesses and stakeholders engaged in the Australian, Great British, and Irish energy markets. To support our customers, we leverage a powerful combination of analytical capability, a detailed appreciation of regulation codes and policy frameworks, and a practical understanding of how markets function.
