2025 Inputs, Assumptions and Scenarios Report Planning and Installation Cost Escalation Factors in Australia
Australia can accelerate its transition to a low-carbon future, while managing costs and meeting its climate goals
2025 IASR (Inputs, Assumptions and Scenarios Report) Planning & Installation Cost Escalation factors, report for Australian Energy Market Operator (AEMO)
The Problem: Rising Emissions and Infrastructure Challenges
2024 marked the hottest year on record, with global emissions continuing to rise and intensifying the climate crisis. In Australia, emissions have remained relatively stagnant since 2020, reflecting limited progress in decarbonisation. Compounding this issue is the declining reliability and phased exit of coal, which poses a risk to maintaining a stable electricity grid. These realities underscore the urgent need to decarbonise Australia’s energy infrastructure and transition to sustainable energy sources.
The Challenge: Cost and Time Pressures in Renewable Energy Projects
Despite the pressing need to scale up renewable energy, Australia faces significant hurdles. Supply chain constraints and rising project costs and timeframes are slowing progress. Two critical aspects, installation costs and lead times, are central to understanding these challenges. Installation costs form a major part of overall project expenses, influencing budgeting and planning. Meanwhile, lead times, from project initiation to operational delivery, dictate how quickly new infrastructure can replace ageing coal generators and support Australia’s energy targets.
The Solution: Informing the 2026 Integrated System Plan
To address these challenges, Oxford Economics Australia (OEA) was commissioned by the Australian Energy Market Operator (AEMO) to provide key inputs for the 2026 Integrated System Plan (ISP). This report offers original analysis, quantitative findings, and evidence-based recommendations to support informed planning. It focuses on the impacts of supply chain disruptions on installation costs and examines pre-construction and construction lead times. These insights are vital for ensuring that Australia’s energy transition is both timely and cost-effective
The experts behind the research
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Kristian KoldingHead of Consulting, OE Australia
Kristian leads Oxford Economics Australia's Consulting team, working with public and private sector leaders to help them prepare for the future by applying relevant economic theory and forecasts to inform effective policy and business strategy development.
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Alex HooperHead of Climate Forecasting, OE Australia
Alex has over 6 years of economic consulting experience, working with senior internal and external stakeholders to develop quantitative and qualitative approaches for a range of strategic investments and interventions across Europe, the Middle East and Asia Pacific.
Alex has undertaken a wide range of consulting projects for the public and private sectors including the viability of major new infrastructure initiatives in transport, arts and culture; strategic analysis of new city developments; the economic and social impact of innovative investment programs and recently advising a Middle Eastern government on the impact of once in a generation fiscal reform.
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