Australia’s Construction Sector Energised by Renewables Boom

As Australia strides towards its ambitious carbon targets and phases out aging coal-fired power stations, the renewable energy sector is poised to become the predominant driver of growth in the construction industry. By the 2026/27 financial year, investment in renewable energy development is projected to surge to $20 billion annually, marking a significant upturn and cementing its role as a key contributor to the sector’s expansion.

This substantial growth trajectory has been highlighted in a recent report by Macromonitor, which details the sector’s rise from $4 billion in 2021 to an estimated $10 billion in 2023. These figures, adjusted to constant 2021/22 prices, reflect a genuine increase, unaffected by recent cost inflations. The report forecasts that renewable generation will peak at $17 billion in 2026/27, with an additional $3 billion anticipated from associated transmission projects.

Abdul Hannan, a Macromonitor economist, emphasises the scale of this growth, stating, “The additional $10 billion of real increase in renewables work over the next three years will far outstrip any other segment of building and construction in Australia.” The drivers of this upsurge are multifaceted, rooted in stringent government targets, the fast-tracking closure of coal power stations, and the burgeoning potential for renewable energy exports as global decarbonisation efforts intensify.

In alignment with these developments, the Albanese government is endeavouring to position Australia as a renewable energy superpower. This vision includes pioneering initiatives in green hydrogen, critical minerals processing, and the export of green commodities.

Despite a forecasted decline post-2026/27, the sector’s overall construction activity related to renewables is expected to remain robust, stabilising at about $15 billion annually. Key projects fuelling this momentum include the Asian Renewable Energy Hub in Western Australia, the Marinus Link interconnector between Tasmania and Victoria, and the Star of the South offshore wind project in Victoria.

Additionally, projects like the Borumba Dam Pumped Hydro Project and the Pioneer-Burdekin Hydro Electric Scheme in Queensland are set to significantly contribute to the sector’s activity.

The ongoing transition away from coal is underscored by the scheduled closures of several major coal-fired power stations, which include Eraring in NSW, Western Australia’s Collie Power Station, and Yallourn in Victoria. These closures are accelerated by the diminishing appeal of coal power, exacerbated by rising operational costs, dwindling fuel security, and escalating maintenance expenses, along with stiff competition from renewables in the wholesale market.

The closure of these coal plants not only underscores the need for increased renewable energy generation but also aligns with Australia’s broader commitment to environmental sustainability. The federal government has revised its emissions reduction target to 43 percent by 2030, aiming for 82 percent of electricity in the National Electricity Market to be supplied from renewable sources, with a vision for net-zero emissions by 2050.

This commitment is expected to catalyse further investments in renewable energy, supported by the construction of large-scale battery storage facilities and new transmission routes, such as the Hume Link and the SA-NSW Interconnector. These developments are crucial for enhancing the capacity of renewable energy zones across the nation, ensuring a sustainable and resilient energy future for Australia.