Electricity Market Australia

Regional Market Outlook on Energy Market in Australia

The average electricity prices in Australia have increased over the last decade but some relief can be expected in the years 2018-2019 and 2019-2020. The wholesale prices have risen, since not enough was invested in new power generation capacities. This put strain on the existing plant to meet the increasing needs, thereby pushing the prices further.

Electricity Prices Forecast

• The cost of generation of electricity constitutes to about 25% of the electricity bill. This generation cost is the wholesale  price.
• Electricity prices have increased firstly because increase in costs of production  from gas .
• The state of Victoria and  Southern Australia saw closure of many old and inefficient power plants.
• It is forecasted that the prices will reduce by at least 1-2% in the year 2019- 20

 Industry Structure and Outlook

• Synergy, which is a government- owned generator/retailer, owns 38 percent of the capacity in the SWIS
• The T&D sectors are highly regulated. A consumer, with more than 50 MWh annual consumption, has an option to get into a non-standard contract with any electricity retailer
• Once the contract is signed between the consumer and retailer, electricity is supplied to the consumer through the available T&D network

Porter's Five Forces Analysis 

• The Australian electricity market is divided into generation, T&D sector, where the generation sector has both private and public players.
• T&D sectors are operated by Western Power and Horizon Power
• Large buyers have an option to avail the services from any of the supplier for procuring electricity

Supplier Power

• Synergy, a government utility, is a major supplier, with an average generation capacity of 48 percent of SWIS
• The T&D sector is a monopoly of Western Power and Horizon Power, both regulated by the Australian government
• Australia has abundant coal and natural gas resources, which is a major fuel used in electricity generation
• Due to the monopoly of suppliers and abundant availability of resources, supplier power is high

Barriers to New Entrants

• High capital expenditure for establishing an utility company
• West Australia has enough generation, T&D capacity than its current consumption. So, the existing players can easily satisfy any growing demand
• Any new entrant needs to acquire customers of other companies

Intensity of Rivalry

• 65 percent of the total electricity consumed is generated by top two retailers in West Australia, with Synergy supplying ~50 percent of electricity consumed
• The market is concentrated in nature, hence rivalry among the market players is less

Threat of Substitutes

• West Australia is heavily dependent on coal for its electricity generation
• It has enough natural gas capacity to gradually substitute coal-based generation to meet clean energy requirements
• The threat, due to unavailability of raw material, in case of regulatory change, is low

Buyer Power

• A large consumer of electricity can choose an electricity retailer, the choice is limited to seven retailers
• This limits the buyer power in the market

Energy Market Australia Overview

• According to Australian energy market intelligence, electricity generation from wind and rooftop photovoltaic continues to increase causing an increase in power generation, whereas thermal synchronous generation, such as coal and gas-fired generation, is declining.
• Consumption met by grid-supplied electricity is forecasted to remain relatively flat for the next 20 years, despite a projected 30 percent growth in population and projected growth in the Australian economy.
• Despite an anticipated growth in population and economy in Australia, grid-supplied electricity consumption in the National Electricity Market is expected to grow below 1 percent for the next five years.
• The increase in usage of the household appliances is likely to offset the improvement in the energy efficiency of the equipment, similarly, the growth of rooftop PV is also a major factor in keeping the consumption of grid-electricity flat around 15.4 TWh.
• New South Wales, Queensland, and Victoria are the top three electricity consuming regions in the NEM with a share of 37 percent, 27 percent, and 24 percent, respectively.
• Australian energy market analysis shows that for Australia, the renewable energy generation share is the highest from hydropower at 35.16 percent of the total renewable energy generation, followed by wind at 33.47 percent, solar at 24.28 percent, and so on
• The energy market Australia met 21 percent of its total electricity generation from renewable sources in 2018.

Why You Should Buy This Report

• Information on the energy market Australia, structure, outlook, value chain, supply-demand, energy market analysis, key regulations, and policies, and other energy market intelligence.
• Porter’s five forces analysis of the energy market Australia
• Supplier landscape, profiles and SWOT analysis of key players like Alinta, etc.
• Cost structure analysis, cost breakup, contract models, pricing analysis, etc.
• Price trend and forecast, price drivers, cost comparison, etc.
• Sourcing practices, supplier switching, etc.