The Renewable Energy Target has fostered investment and intense price competition within the industry
Melbourne, Australia (PRWEB) December 06, 2014
The wind and other electricity generation industry uses a range of renewable inputs to generate electricity. According to IBISWorld industry analyst Caroline Finch, “Over the past five years, the industry has flourished as capacity growth has been supported by multiple government incentives designed to promote renewable energy generation.” Over the five years through 2014-15, industry revenue is expected to expand at a compound annual rate of 8.1%, to reach $570.2 million. Like other generation industries, the withdrawal of the carbon tax in the current year is projected to lead to a sharp industry revenue drop of 22.2%. The fall comes as wholesale electricity prices, which reflect the cost structures of generators active in the National Electricity Market, fall, reducing the price that the industry receives for its output. The industry has been shaped by regulation, as most participants have entered in order to address their obligations under the Renewable Energy Target (RET), which has been present in various forms since 2001. The target refers to a mandated share of energy that large energy users must draw from renewable generation.
The RET has fostered investment and intense price competition within the industry. The outcome in the past five years has been the large-scale expansion of wind energy generation, the industry's most commercial and scalable technology. “The industry now faces a likely shift in policy,” says Finch. The Federal Government commissioned a review of the RET in 2013. The review, delivered in mid-2014, contained a number of recommendations that would weaken the target, but the Federal Government is yet to confirm changes. Due to the policy uncertainty, new industry projects are on hold. Uneven revenue performance is anticipated in the next three years, as the industry struggles to adapt to a changing environment.
The wind and other electricity generation industry has a medium concentration level. This concentration level has increased over the past five years, due to the major players increasing operating capacity and energy output levels over these years to maximise efficiency and boost market share levels. With the current mix of regulation and policy, many players active in other areas of the electricity sector are being compelled to invest in renewable generation. In addition, a number of players operate wind farms with medium capacity. Over the past five years, this has resulted in a large number of players entering the industry through small-scale projects or joint ventures. There has also been a trend towards larger projects, such as the recently completed Macarthur Wind Farm in Victoria. In the next five years, more large-scale projects are expected to come on line, which has the potential to increase market share concentration in the industry.
For more information, visit IBISWorld’s Wind and Other Electricity Generation industry in Australia report page.
The industry generates electricity using renewable sources of energy such as wind, solar, tidal, biomass and other methods of electricity generation.
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