Installation Costs & Lead Times: Oxford Economics’ Energy Infrastructure Study
Oxford Economics Australia delivered detailed modelling and analysis for AEMO, quantifying real installation cost escalation and project lead times across 15 asset types to support planning assumptions for the 2026 Integrated System Plan.
Background: Rising Costs and Delays Are Undermining Energy Transition Goals
Australia’s push to decarbonise its electricity grid is facing mounting pressure from increasing infrastructure installation costs and lengthy project lead times. Despite urgent climate goals and the retirement of coal-fired power, the rollout of renewable and clean energy projects is constrained by rising real costs and slow project delivery. Without intervention, these pressures risk delaying the transition and raising the long-term cost burden for consumers and government.
The Challenge:Supply Chain Pressures and Regulatory Complexities Are Slowing Progress
Australia’s construction sector is navigating simultaneous pressures from high demand, global supply disruptions, and local policy complexity. Labour shortages, escalating wage growth, and rising material costs especially in cement, steel, and transport are intensifying cost escalation. At the same time, planning and environmental approvals vary significantly across states, introducing uncertainty and delays. The lack of streamlined approval processes and regional construction capacity gaps pose major risks to timely energy infrastructure deployment.
The Solution: Strategic Cost and Time Forecasting to Support Smarter Energy Planning
To help AEMO improve the accuracy of planning assumptions for the 2026 Integrated System Plan, Oxford Economics Australia delivered two key tools:
- Installation Cost Index: A robust, inflation-adjusted model that tracks real installation cost trends for 15 electricity infrastructure assets across five NEM states. It isolates cost escalation related to labour and materials from equipment pricing, offering clear visibility on cost growth.
- Lead Time Analysis: Based on a database of 579 energy projects, this model estimates state-specific pre-construction and construction durations. It highlights bottlenecks in planning processes and helps forecast the time required to bring energy assets online.
Together, these deliverables empower AEMO to make more data-informed decisions, mitigate planning and budget risks, and support a faster, more cost-effective energy transition for Australia.
The experts behind the research
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Adrian HartHead of Construction & Infrastructure Consulting, OE Australia
Adrian has over 23 years of economic analysis and consulting experience with Oxford Economics Australia, focusing on the infrastructure, building, maintenance and mining industries. Adrian has undertaken a wide range of consultancy projects for the public and private sector based on his detailed understanding of construction, mining and maintenance markets, their drivers and outlooks, the range of organisations operating in this space and the issues they face.
This work includes deeper industry liaison, contractor and competitive analysis, pipeline analysis, demand and cost escalation forecasting, and industry capacity and capability projects for the public and private sector. He is the lead author of major reports but also undertakes briefings and workshops for senior management, board members and industry associations, leads in-depth stakeholder consultation, and facilitates and chairs roundtables between government and industry.
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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.
