Australia’s energy transition is driving an historic construction boom, which will see electricity become the largest infrastructure investment sector from next year, according to a new report from industry forecasting company Macromonitor.
In its report, Renewable Energy Construction Outlook—Australia, Macromonitor estimates the value of all electricity construction work has surged 74% 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.
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“This construction boom is being driven almost entirely by renewable energy and related projects,” Macromonitor economist and report author Dr Abdul Hannan said.
“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.”
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,” Dr Hannan said.
“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,” Dr Hannan said.
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“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,” Dr Hannan said.
