Powering forward: The fossil fuel sector’s electric growth rates

feature-hazelwood-200The fossil fuel electricity generation industry is expected to earn revenue of $17.1 billion in 2012-13, compared with $14 billion in 2007-08, yielding annualised growth of 4.1%.

The growth reflects the combination of slightly lower output and substantially higher prices over that period. Industry revenue is expected to expand by 10.3% in 2012-13, as higher prices (due to the introduction of carbon pricing) more than offset a fall in the amount of electricity generated from fossil fuels.

Electricity generation from fossil fuel produces about 0.4% of Australia’s GDP and the industry’s net profit in 2012-13 is forecast to be approximately $2.88 billion. As Australia does not export or import electricity, the size of the local market matches output.

Generating electricity from fossil fuels (mainly coal and natural gas) is a capital-intensive activity, but the industry employs about 7,190 people and is expected to pay $804.8 million in wages during 2012-13. There are about 49 firms involved in electricity generation and numerous smaller ones that generate electricity for their own use and can also sell power into the public grid.

Total installed generating capacity is about 49,327 megawatts, of which about 45,571 megawatts are located in major power generating plants. Smaller generators provide a further 3,756 megawatts of capacity.

Industry at a Glance

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The volume of electricity generated by burning fossil fuel in 2012-13 is expected to be 222,444 gigawatt hours, compared with 223,348 gigawatt hours in 2007-08. However, production is expected to grow over the five years through 2017-18, although higher prices will limit growth in demand for electricity.

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Industry revenue is expected to expand by an annualised 6.9% in the next five years, with revenue expected to reach $24 billion in 2017-18. Net profit is expected to grow slower than revenue due to cost pressures.

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