Household electricity bills set to rise unless renewable energy rollout speeds up
Australian households will face higher energy prices over the next decade unless governments urgently accelerate the deployment of new renewable energy, transmission lines and large batteries to offset the coming wave of coal-fired power plant closures, officials warn.
New figures from the Australian Energy Market Commission, due on Thursday, mark a major reversal from its previous predictions that prices would fall sharply by 2035. The figures also add to the intensifying political debate as the coalition argues Labor’s green energy targets will lead to unaffordable costs for homes and businesses.
While the Commission expects renewables and batteries to successfully reduce energy prices by 5 percent between now and 2030, these savings risk being wiped out by a 13 percent increase over the next five years because not enough projects are being built fast enough to offset greater coal output.
If these delays are not addressed, the consequences could be serious: Energy reliability will come under pressure as the economy’s rising demand for electricity outstrips supply, while the grid will have to resort to expensive gas-fired generation more frequently to make up for shortfalls in the evenings after the sun sets and solar power wanes, causing wholesale prices to rise.
Commission chair Anna Collyer warns the risk could lead to an increase of 0.8 per cent in average household electricity prices each year until 2035 (an increase of 8 per cent).
“Our price outlook emphasizes a critical five-year window,” he said. “As renewable energy production and batteries increase, residential electricity prices are projected to fall by 2030, but will rise by 2035 if the pace of new investment does not keep pace with rising electricity demand and the planned retirement from coal.”
Australia is pouring billions of dollars each year into new wind and solar farms, rooftop solar panels, batteries and hydroelectric dams, increasing renewable energy’s share of the grid to 40 per cent while adding more clean energy than ever before. Meanwhile, many of the massive coal-fired power plants that still provide the bulk of the nation’s electricity are nearing the end of their usable lives, facing rising maintenance costs and frequent breakdowns, prompting their operators to bring forward their shutdown dates. More than half of Australia’s remaining coal-fired generators are scheduled to be retired by 2035.
Albania’s government is following advice from the energy market operator and the CSIRO that the best way to replace aging coal plants and reduce bills is to develop a mostly renewable grid supported by storage, power lines and gas-fired generators.
But deployment is stalling at the pace officials and experts say is needed to prepare the grid for a future with less coal, as developers face permitting delays, rising costs and opposition from rural and regional communities concerned about impacts on farming practices, property values and the environment.
NSW and Victoria have cut deals with owners of coal-fired generators to ensure some plants do not close prematurely.
The Coalition last month abandoned its support for Australia’s 2050 net zero target and vowed to expand taxpayer funding to support all energy technologies, including keeping coal-fired power stations running beyond their shutdown dates, if it wins the next election.
He has repeatedly attacked the Albanian government for breaking a promise made in 2022 that its policies would reduce electricity bills by $275 by 2025.
But Energy Minister Chris Bowen noted the Australian Energy Market Commission’s finding that slowing renewable energy deployment and extending the grid’s reliance on coal could increase electricity prices by a further 5 per cent as failures due to aging become more frequent and equipment becomes increasingly prone to failure.
“When coal runs out, your bills go up, so we must continue to introduce reliable renewables and help more households adopt solar power and batteries,” Bowen said.
“Coalition’s anti-renewable energy plan will cost Australians more.”
Opposition energy spokesman Dan Tehan said he questioned the credibility of the commission’s finding that electricity prices would fall over the next five years. “It’s hard to see how this is possible; it’s hard to see anyone saying prices won’t continue to rise,” he said.
“These figures are based entirely on Chris Bowen’s ideological approach to our energy transition.”
Collyer said it was not too late to avoid price increases after 2030. “This is a timing issue, not a technology cost issue,” he said.
The new report encourages policymakers to reduce barriers to building more renewable energy and power lines by designing programs to support investment in more projects and speeding up planning and approval processes.
The report also highlights the growing potential for people to use more of the energy stored in batteries in their homes and electric vehicles; This energy can absorb solar energy during the day and distribute it in the evening to reduce evening demand.
“With the right pace of investment, we can manage the energy transition while keeping prices stable,” Collyer said.
Although the commission’s outlook predicts that the rates retailers will charge for kilowatt-hours of electricity will increase by 2035, it calculates that a household’s overall electric bill will remain relatively stable as more people install solar panels and batteries and become more energy efficient.
Meanwhile, for those who embrace electric vehicles and replace gas-powered stoves, heaters, and hot water units with electric alternatives, a household’s total “energy costs,” including electricity, natural gas, and gasoline expenses, can drop by up to 90 percent.
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