The wind energy market in Australia has seen tremendous growth since 2016 when they only installed 122.8MW. The next 3 years will see significant capacity additions totaling nearly 8,000MW that has already been consented. This almost quadruples the current market size.

Victoria, New South Wales and South Australia have dominated in capacity additions, but some of the cheapest projects to build in the market will also come in Queensland in the next few years.

Let's take a look at what's happening in each state.

New South Wales looks to be the low cost leader in the Australian market, with normalized CapEx costs bottoming out towards AU$668,955 per installed MW. Over the past few years, costs have certainly been reduced, but the bulk of the capacity additions in New South wales have come in under AU$2 million per MW.

Future trends appear to continue the downward trend, with the weighted average in the next 3 years for new capacity at AU$1.45 million per MW. Proximity to load centers as well as demand and offtake from the Australian Capital Territory (ACT) have continued to drive some of the demand.

Queensland has only recently seen significant investment in meaningful wind energy capacity additions, but they have rather aggressively sought some of the lowest costs in the country. Seven new wind parks will add more than 1.9GW in the next three years.

South Australia wind energy project CapEx costs have been trending upwards, due in part to higher interconnection costs as well as more complex sites comprising projects with some newer turbines. These new turbines have yet to see significant capacity additions, and thus have not achieved enough economies of scale to allow for significant reductions in their price.

Nevertheless, South Australia remains in the mix for competitive new capacity additions, with 2.7GW in the construction pipeline to be installed by the end of 2022, and the bulk of that capacity to be installed at or below AU$2.2 million per MW.

In Tasmania, the market continues its' build-out with some significant capacity under AU$1.6 million per MW. The demand for renewable energy has grown, and the market anticipates the commissioning of Cattle Hill and Granville Harbour expected in the next two years and another 740MW in early stage development seeking planning consent. New transmission capacity to compliment these new wind parks is being built, and the extra interconnection costs are one reason for the slightly higher costs versus other states.

The history of wind energy development in Victoria, Australia has seen a dramatic drop in CapEx costs. Since 2017 the market is now deploying almost all capacity under AU$2 million per MW with a trend towards a weighted average below AU$1.5 million per MW by 2023. Proximity to load centers and availability of transmission have facilitated this trend.

Western Australia is seeing a split trend in terms of project CapEx costs, with some new capacity under construction seeing costs between AU$2.0 - 2.7 million per MW and other projects pushing down below AU$1.8 million per MW. The differences are down to the turbines being utilized as well as some of the unique development costs associated with the project sites. As more capacity gets built, we anticipate Western Australia will fall in line with much lower project CapEx costs similar to other states.

IntelStor | www.intelstor.com