Coal exit and workforce shortages keep short-term Australian power prices high

The latest NEM Benchmark Power Curve report from Cornwall Insight has forecast energy prices across all NEM regions will remain above US$100 per MWh until the end of the decade. With prices predicted to reach historic highs of US$170 per MWh in New South Wales (NSW) by 2028 and US$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.

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.”

Read the article online at: https://www.worldcoal.com/coal/25042024/coal-exit-and-workforce-shortages-keep-short-term-australian-power-prices-high/