Origin Energy warns that the economics of the energy transition are deteriorating just as Australia needs massive new investment in renewables and transmission. The group highlights a roughly 50% jump in wind farm construction costs since 2020 as a clear marker of the challenge.
Industry data presented at an Australian Energy Council conference in Sydney points to sharply higher costs for financing, logistics, steel, concrete and labour. Projects that looked profitable and bankable only a few years ago are now much harder to justify.
The company’s analysis suggests that building out the large scale assets required for decarbonisation is colliding with global inflation and tighter capital markets. Higher interest rates increase financing costs for long lived wind assets, compounding expensive materials and supply chain bottlenecks.
Developers are also dealing with more complex construction schedules, workforce shortages and stricter grid connection requirements. Each factor adds cost and delay, which ultimately flows through to wholesale electricity prices.
Industry leaders argue that Australia’s ambition on climate targets is not the issue, the problem lies in making the numbers stack up for investors. Rising project budgets are slowing the pipeline of new wind capacity at the very moment coal plants retire and demand for clean power accelerates.
Tension between urgency and affordability hangs over the transition and is set to shape policy debates on everything from consumer bills to investment incentives.
