Industry Analysis & Industry Trends
Fossil fuel-fired power stations supply the majority of Australia's electricity, running on black coal, brown coal and (increasingly) natural gas, with limited use of other fuels such as petroleum products. Industry assets represent large capital investments that are operated for the long term. The lack of operational flexibility leaves the industry exposed to change, and the industry has grappled with government intervention and decline trends in demand for centrally generated electricity in the past five years. The outcome has been lower wholesale energy prices, and industry revenue is forecast to contract at a compound annual rate of 2.2%.
There has been significant regulation-induced volatility over the past five years... purchase to read more
Industry Report - Industry Investment Chapter
The Fossil Fuel Electricity Generation industry is highly capital intensive. In 2014-15, the industry is forecast to spend $1.67 on capital for every dollar spent on labour. The industry's wages are high, but are dwarfed by the capital value of industry assets.
Individual generating units are large, and additions to capacity are lumpy and may take some years to be fully absorbed by demand. This can mean that growth in revenue lags behind depreciation charges. One measure of excess capacity is the reserve plant margin, which relates generating capacity to maximum demand. Large movements in reserve plant margins can occur, depending on whether generating units are operating, the amount of electricity generated and demand... purchase to read more