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Utilities construction surges to record levels
Renewable energy drives the boom
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Australia's utilities construction sector is experiencing its largest boom in 15 years, driven primarily by a massive surge in renewable electricity projects.
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Over the past three years (2020/21 to 2023/24), the total value of utility construction has soared by 41% (in real terms) to an all-time high of $40 billion, surpassing the previous record of $38 billion set in 2012/13. This growth is expected to continue, peaking at around $50 billion in 2026/27.
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At the forefront of this growth is electricity construction, which is expected to account for over half of the total utility construction activity in the coming decade. We forecast 57% growth in electricity construction over the next three years to June 2027, with peak of $30 billion.
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Renewable energy investment, spurred by government clean energy targets, coal plant closures, and global decarbonization efforts, is forecast to rise from $12 billion in 2023/24 to $20 in 2026/27 (both figures in constant 2021/22 prices).
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However, several challenges could slow the progress of renewable energy construction. High construction costs, delays in new grid connections, and issues in regulatory agreements could hamper the pace of large-scale renewable projects. The delayed retirement of coal plants like Eraring in New South Wales, and the possible extension of Victoria’s Yallourn Power Station beyond 2028, reflect concerns over energy security during the renewable transition.
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Beyond electricity, other sectors in utilities construction also experienced steady growth in 2023/24. The telecommunication construction rose by 5% in 2023/24, spurred by upgrades to the National Broadband Network. Meanwhile, investments in water security, such as the National Water Grid Fund, are pushing water and wastewater construction to $11.7 billion by 2024/25, with activity expected to hold steady over the following years.
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Gas pipeline construction is set for a 33% increase between 2022/23 and 2025/26, as major infrastructure projects address supply issues in the east coast gas market.
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Our most recent reports:
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Australian Construction Cost Trends
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This report examines the outlook for construction costs, in detail be sector and type of input.
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Australian Construction Projects Database
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This latest list of projects corresponds with our fully revised set of forecasts published in November 2023.
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Australian Regional Construction Outlook
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Our latest regional forecasts for residential building and construction have just been released.
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Australian Construction Materials Forecasts
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Our latest forecasts assess the implications for construction materials demand of the current outlook for building and construction.
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Australian Road and Bridge Works
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This report examines the strength and composition of the current upturn, and determines the likely timing of the peak, and subsequent decline.
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