Financial market conditions and continuing carbon policy uncertainty have contributed to a decrease in the estimated capital expenditure for existing and new electricity generation over the next five years from $18 billion in 2009 to $8.2 billion in 2010, says the Energy Supply Association of Australia (esaa).
However, the energy sector will require significant additional capital in the next five years. Survey results from the Association indicate over $94.1 billion is needed to refinance existing generation and network assets and to invest in both existing and new assets.
Esaa’s 2009 survey found networks capital refinancing requirements for the next five years at $29 billion, but in 2010 this has ballooned to $33.6 billion. The capex on existing and new network assets in 2009 was estimated for the next five years to amount to $31 billion and 2010 survey results estimate this figure to now be $43 billion.
“Regulatory uncertainty around carbon policy and the effects of the legislated Renewable Energy Target are having substantial effects on the credit quality of carbon-intensive generators,” said esaa Chief Executive Officer Brad Page.
“Rising population – including economic growth in regional areas – together with future requirements to connect wind capacity to the grid, and the roll-out of smart meters in some areas are also contributing to an increased investment requirement.”
The 2010 survey took place in the first quarter of 2010 with the participation of 31 energy sector businesses.
The Energy Supply Association of Australia was established in January 2004. It is the successor to the Electricity Supply Association of Australia and focuses on p
policy advocacy.
