Electricity infrastructure investment is predicted to overtake road spending in 2026
Industry forecasting company Macromonitor says in its latest report that next year will see a boom in investment into energy infrastructure as Australia looks to boost its renewable energy capabilities.
The report, Renewable Energy Construction Outlook – Australia, provides detailed forecasts for renewable energy construction spending in Australia, covering all major types of renewables, including solar, wind, battery, hydro and biomass.
Macromonitor estimates that the value of all electricity construction work has surged 74 per cent over the past four years, rising from $13.8 billion in 2020 to $24 billion in 2024 (in constant 2022/23 prices). This growth is forecast to peak at over $36 billion in 2027/28, more than double the level recorded in 2020/21.
“This construction boom is being driven almost entirely by renewable energy and related projects,” Macromonitor economist and report lead author Dr Abdul Hannan says.
“Construction will rise even more rapidly over the next few years and be at peak levels in 2028, 2029 and 2030, while renewable generation capacity will still be rising strongly through the early 2030s.”
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Renewable generation construction has doubled, from $4 billion in 2020/21 to $8 billion in 2023/24, and is forecast to reach $21.5 billion by 2027/28. Transmission investment has also more than doubled in 2023/24 and is projected to accelerate further in the coming years.
“Along with a large increase in renewable generation investment, a large proportion of growth will now come from transmission and storage,” Hannan says.
“Transmission upgrades are critical to the energy transition, as is investment in a variety of storage types, including pumped hydro, mechanical storage and batteries.”
Despite the strong outlook, the report flags several challenges that could hinder progress. These include high construction costs, grid connection delays, complex planning and approval processes, and community resistance, particularly for wind and transmission projects in regional areas.
“The next few years are critical,” Hannan says.
“The pipeline of projects is strong but delivering them on time and within budget will be a real challenge given regulatory complexity, competing infrastructure demands and ongoing cost pressure.”
Looking beyond the peak, Macromonitor forecasts a moderate downturn in renewable energy construction, particularly after 2030.
“This downturn is a natural part of the investment cycle, where the rate of increase in capacity will inevitably slow as the industry stabilises. Construction will remain well above historical levels, however, and capacity will continue to expand, but at a slower rate,” Hannan says.