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Renewable energy construction upturn has four more years to run
Downturn to start in 2028/29
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Construction of renewable energy generation infrastructure will peak in 2027/28 and then begin a sustained downturn. This downturn is a natural part of the investment cycle, where the rate of increase in capacity will inevitably need to slow as the industry stabilises, and this means a decline in construction.
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Construction activity in renewable energy has more than doubled over the past three years (from 2020/21 to 2023/24) and is projected to surge by an additional 88%, in real terms, over the next four years. This boom is driven by ambitious government targets for transition to renewables, coal plant closures, and international decarbonisation efforts. After the peak in 2027/28, a gradual decline in new construction is expected, as the market shifts from rapid expansion to a more stable phase.
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Australia will add an average of 7.8 GW of new renewable energy capacity annually over the five years from 2024/25 and 2028/29 inclusive, more than doubling the 3.4 GW average of the past five years. However, challenges such as high construction costs, delays in connecting new projects to a rapidly expanding grid, and securing power purchase agreements could potenitally impact the sector's growth trajectory.
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The wind energy sector is playing a pivotal role in Australia’s renewable energy transition. The investment in wind energy projects is set to nearly triple, rising from $3.4 billion in 2023/24 to $9.4 billion in 2027/28 (in constant 2021/22 prices). Meanwhile, the solar sector is also expanding significantly, with investment expected to rise by 65%, from $3.2 billion in 2023/24 to $5.2 billion by 2025/26 (in constant 2021/22 prices).
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While many large new wind and solar projects are in the pipeline, the rate of new project commencements is likely to slow post-2028, leading to a moderate downturn in construction activity.
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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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