Australia’s Energy Transition Is Slowing While Futures Prices Ease

Australia’s energy market is entering one of its most challenging periods in decades. The latest updates from the Australian Energy Market Operator show a system where coal generation remains for longer, renewable build schedules are slipping and the cost of new infrastructure continues to rise. 

At the same time, electricity futures have dropped from recent highs. For large commercial users, this creates a timely moment to reassess contracting strategies and understand how current market conditions could influence long term planning. 

AEMO Flags Delays and Rising Costs 

AEMO’s most recent outlook highlights several significant shifts in the National Electricity Market: 

• The exit of coal generation is now forecast to occur in 2049, an extension of the original expectation. 

• Transmission project costs have risen by up to 100 percent since 2024. Delivery timelines have been pushed out as governments and network operators review scope and funding. 

• Only around six thousand kilometres of new transmission are now forecast by 2050. This is a reduction from earlier plans after several Queensland and Victorian projects were scaled back or cancelled. 

• AEMO expects aging coal stations to become less reliable. Forced outages are predicted to increase throughout the 2030s as plants reach the end of their technical lives. 

These updates illustrate a system that is progressing, but not at the pace required to match policy targets or relieve long-term reliability concerns. 

Massive Investment Required for the Next Phase 

Despite the adjustments, Australia still faces a significant rebuild of its energy infrastructure. 

• Utility-scale investment in generation, storage and transmission is expected to reach about 128 billion dollars by 2050. 

• Households are forecast to contribute another 50 billion dollars through rooftop solar, batteries and electric vehicle charging. 

• By 2050, the NEM may include about 120 gigawatts of grid-scale wind and solar, 40 gigawatts of large batteries and hydropower, 14 gigawatts of gas peaking plant and substantial growth in rooftop solar systems. 

The scale of these changes underscores the transformation ahead, even as timelines continue to shift. 

What This Means for Large Market Electricity Users 

Commercial and industrial customers face a combination of structural pressure and a short-term softening in market sentiment. 

On one hand, infrastructure delays, increased project costs and older generation assets create uncertainty around long term system conditions. 

On the other hand, futures prices have eased across multiple regions. This reflects stronger renewable output in the short term, reduced outage risk and seasonal demand patterns. 

For many organisations, this creates a practical moment to understand how current forward prices align with their operational requirements for the coming years. It is an opportunity to review contract timing, portfolio exposure and long-term budgeting assumptions while conditions remain favourable. 

Why Forward Contracting Is Worth Reviewing Now 

When market conditions shift, many large users choose to evaluate forward contracting as part of their broader energy management strategy. The value of this review is not tied to predicting price movements. Instead, it helps businesses understand: 

• The potential benefits of cost certainty over multiple years 

• How different contract start dates or durations impact operational planning 

• The level of exposure to market changes under current usage patterns 

• Whether today’s futures curve aligns with organisational risk tolerance and budget cycles 

Given the current environment, a clear assessment can support confident decision-making without rushing into the market. 

A Practical Next Step for CEOs and Energy Managers 

If your organisation operates a high usage portfolio across manufacturing, retail, health, logistics or large property, this may be an appropriate time to undertake a structured review of your forward contracting position. 

We can prepare a comparison of future-dated offers, model cost outcomes under different terms and provide a simple breakdown of how current pricing conditions relate to your consumption profile. This helps your executive team evaluate options with clarity and without pressure. 

Explore What Today’s Market Means for Your Business 

If you would like a tailored review of your sites and a clear snapshot of how forward contracting aligns with current market conditions, contact us to arrange an analysis. 

This is a constructive moment to understand your position before the market cycle evolves. 

Coal-fired power until 2049 as energy grid costs rise to $128b 

Coal power is now expected to linger in the National Electricity Market until 2049 in the latest blueprint for the power grid.