Millions of Australian households have been grappling with skyrocketing electricity bills brought about by last year’s energy market crisis, but falling wholesale energy prices and the increasing role of renewables may mean power bill relief is on the way.
The recent drop in national electricity market spot prices, and the increasing role of renewables in reducing energy prices, could lead to possible relief for households, say some power pundits.
Wholesale energy prices drop, renewables surge
The Australian Energy Market Operator (AEMO) reported a decline in national electricity market spot prices, averaging $83 per megawatt hour (Mwh) in the March quarter, a 70 per cent drop from the $250 (Mwh) peak during the global energy crisis in June 2022.
Prices have steadily decreased since then, with the March quarter average 10.7 per cent lower than the December quarter and 61 per cent lower than the September quarter. Despite the decrease, current prices remain 11.3 per cent higher than the average between 2016 and 2021.
AEMO chief executive Daniel Westerman attributed the ongoing surge in renewables as the key factor pushing prices down.
While fossil fuels played a smaller, but still significant, role in power generation, renewable energy sources contributed to negative or zero wholesale prices 12 per cent of the time. South Australia and Victoria experienced negative wholesale electricity prices 60 per cent and 55 per cent of the time, respectively, between 9am and 5pm.
Grid-scale solar and industrial wind farms grew during the March quarter, providing a record quarterly average of 4654 megawatts of power – an 11 per cent annual increase. Rooftop solar generation in Australia also saw record power output from households, rising 23 per cent, reducing grid demand to the lowest level since 2005.
Is power bill relief for households on the way?
Dr Bruce Mountain, energy program policy director at Victoria University, says a “big pull down” in wholesale power prices has been observed over the past six months. This was due to Europe finding new suppliers, including Australia, and experiencing lower than expected demand in winter because of warmer weather.
While large customers may already be experiencing lower prices, smaller customers might have to wait because of regulatory decisions under the Default Market Offer and Victorian Default Market Offer. Although regulated electricity prices are set to increase in July, households may be able to negotiate a cheaper market offer.
Hope for renewables may be premature, says utilities boss
The wholesale price drops predicted by many power pundits may be premature, says Compare Club general manager utilities Paul Coughran.
“I’m a big fan of renewables, but there are some big hurdles to jump before they’re cutting the cost of power for Aussie households,” he says.
The recent closure of the Liddell coal power station after 52 years and the impending closure of Origin Energy’s Eraring plant on the NSW Central Coast in August 2025 will no doubt provide a challenge for the NSW power grid, says Mr Coughran.
“TransGrid saying it will have more than enough power from renewable sources is highly optimistic, in my opinion, and I’m surprised it even put it out there,” he adds.
“There’ll be enough supply in place to keep the lights on during the day, but not nearly enough wholesale to bring retail prices down – at least in the next two years,” he says.
Cost blowout
He says the Snowy Hydro delay and cost blowout is also a huge blow to households on two fronts.
Snowy 2.0 is tipped provide two gigawatts of capacity and 350,000 megawatt hours in power backup for the increasingly solar and wind energy-dominated system.
The federal government-owned company this week announced a reset for “the delivery timeline and budget” for the hydro project. It expects a delay of up to two years, with the completion of the project now pushed to the end of 2029.
While the statement did not include an updated cost, the project had already blown out from $2 billion to $5.9 billion before the latest delay. A Sydney Morning Herald report claims this could rise to $10 billion to complete.
“Not only could this mean power shortages, but also higher power bills for households for longer, and we as taxpayers will also foot the bill,” says Mr Coughran.
“That, and the ‘renewables roulette’ we’ll face due to unpredictable environmental conditions lead me to think that AGL’s predictions of bill relief are a bit hasty, to say the least.
“There may be enough to power homes, but I’m certain it won’t be cheap power. At least not until infrastructure catches up with demand.”
What are your thoughts on renewables? Should we go all in? Or hedge our bets on other sources? Why not share your opinions in the comments section below?
Updated 5 May 11.25am: Previously published as Bill relief on the way as power prices fall, renewables surge and minor changes made to Paul Coughran comments
My wife is an architect. She’s identified how to cut household and small business electricity consumption. Briefly. 1. colour of the roof; white or light colour best 2. ceiling space ventilation; solar powered roof crest ventilators to remove ceiling space heat 3. ceiling insulation and be sure your light fittings are sealed, so they do not allow the warmth or cold you make to leak into the ceiling space. 4, renew electrical appliances regulary as they are constantly getting more efficient and use less electricity.
And here is the big place households and the country could save on a wider scale. Half the cost of grid electricity is the cost of moving it. Households and small business could halve their electricity bill, and halve the need for large-scale power generating factories, if the power station was on their property. Sure, rather impractical with gas and coal fired power factories, but not so with solar and wind.
Why are government agencies encouraging the development of distant wind and solar power generating factories, and with them massively more transmissions lines? None of these facilities are visually attractive, and they all consume productive land, cause great strips of National Parks to be deforested, and in the long run, ensure yet more of people’s meagre income will be transferred to those who presently have the wealth to “invest” in these unnecessary facilities?
The enthusiasm of owners/operators of solar and wind powered electricity factories rather confirms these, along with the linking distribution systems, are great money-makers for those who have the wealth to get into this exploitation. But these distributed power grid systems will never be good news for households or small businesses which must pay and pay through future grid electricity bills. So why is this being done, when on-site solar and wind generation, in combination with battery storage could largely eliminate them?
Who presently has their sticky fingers in the customers’ money flowing through distribution lines and is colluding to encourage and facilitate the creation of distant solar and wind generator sites, so there is an excuse to continue to strip money from householders and small businesses; forever? Shouldn’t the shift to renewables be an opportunity to kill off this blatant exploitation and environmental destruction?
Distant large scale power plants and ugly transmission lines might have been necessary in the past to locate generators near the sources of coal or gas, but this is no longer a requirement. Sunshine and wind is available almost everywhere.
Surely it is time our government employees championed the use of taxpayer’s funds to subsidise on-site production and storage, rather than create opportunities for wealthy owners/operators of large scale wind or solar power factories and long distant transmission lines to continue to strip more money from struggling households and small business into the forever future.
Who’s colluding with who?
This is a great comment Allan. And some great food for thought, too. Thank you!
The whole Government climate change strategy seems to be riddled with inconsistencies, to the detriment of Australian consumers:
How come it is deemed essential to saddle Australian businesses/corporations with yet more green tape to reduce emissions yet at the same time is it OK to export massive amounts of coal to be burnt overseas. ?
For 5 years Federal Senator M Roberts has been asking the CSIRO for proof that man-made CO2 causes atmospheric temperature rises and has yet to receive any.
Everyone states that renewables are the cheapest form of energy generation so why are they still heavily subsidised?
Why is the cost of additional transmission infrastructure never included in renewables costings?
Why are we basing our essential energy provision on a supply of renewable equipment from China, a nation that is hardly an ally?
Why are we refusing to entertain the provision of electrical power supply from nuclear generators yet happy to purchase nuclear powered submarines?
I could go on…