IBISWorld Market Research
The outlook for the industry remains uncertain due to shifting political policies.
Melbourne, Australia (PRWEB) September 11, 2013
Fossil fuel-powered power stations supply the majority of Australia's electricity. They run on black coal, brown coal and increasingly gas, with limited use of other fuels such as petroleum products. IBISWorld industry analyst Caroline Finch states, "as these fuel sources indicate, the industry is emissions intensive and its performance is sensitive to carbon pricing policies." As these have been implemented over the past five years, revenue for the Fossil Fuel Electricity Generation industry has increased. Revenue is estimated to rise at a compound annual rate of 7.1% over the five years through 2013-14. Underlying growth in industry revenue is estimated to have been much lower, projected at a compound annual rate of 1.6%, reflecting the combination of slightly lower output and declining wholesale electricity prices over most of the period. A spike in revenue of 34.6% in 2012-13 was due to the carbon price. Industry revenue is expected to expand by 1.7% in 2013-14 to take the industry to $18.8 billion.
The competitiveness of industry players to supply power to meet demand over the next five years is mixed. The different fuels used by the industry, such as black coal, brown coal and gas, have different generation profiles. Carbon emissions-intensive fuels such as brown coal are at a disadvantage, while gas becomes more attractive. Therefore, shifts in products and services are expected. According to Finch, "the rollout of small-scale solar generation among Australian households is a factor that is likely to continue to limit demand growth, as will ongoing energy-efficiency initiatives." There is considerable political uncertainty about the future of carbon pricing and other polices that affect the industry, such as the Renewable Energy Target. The switch to an emissions trading scheme linked to the European carbon markets in 2015 is expected to result in a one-off drop in industry revenue that will offset underlying growth in the industry.
Historically, the electricity sector (generation, transmission and distribution) was highly concentrated, with effectively only one producer or supplier operating in most states. This situation changed markedly in the 1990s, when separate power generation, transmission and distribution firms were split from vertically integrated entities owned by state governments. Since then, market share concentration in the Fossil Fuel Electricity Generation industry has been towards the upper end of the low range. Since there is still only limited trade in power between states, due mainly to the limited capacity of transmission system interconnections, it is also important to look at concentration within state markets. On this basis, concentration within state markets remains relatively high. The major industry players are International Power (Australia) Holdings, Macquarie Generation, Delta Electricity, AGL Energy, and Eraring Energy. For more information, visit IBISWorld’s Fossil Fuel Electricity Generation report in Australia industry page.
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IBISWorld industry Report Key Topics
Firms in this industry use fossil fuel such as coal, gas or oil to drive steam-producing turbines that generate electricity.
Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
International Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Industry Globalisation
Major Companies
Operating Conditions
Capital Intensity
Technology & Systems
Revenue Volatility
Regulation & Policy
Industry Assistance
Key Statistics
Industry Data
Annual Change
Key Ratios
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