Why SA’s power prices are the highest in the country

We’re a leader in renewable energy, but South Australia has the highest power prices in the country – more than the UK and average US cost. Here’s why.

South Australian electricity is the most expensive in the country, analysis shows.

And Australian electricity prices are now among the highest in the world, with more pain to come after regulators approved a hike of up to 25 per cent for people on default plans.

Analysis of power prices shows that as of this month, electricity costs per kilowatt in all the eastern states and territories now eclipse the average in the United States.

At 36.1c/kWh, South Australian electricity is the most expensive in the country, while NSW’s was the cheapest at about 26.5c/kWh.

The ACT joins SA are the two priciest jurisdictions, where power is now more expensive than in the UK.

More pain is ahead for people on so-called default offers after the energy regulator last month approved bill hikes of up to 25 per cent – increases that are likely to put upwards pressure on prices in the rest of the market.

News Corp analysed electricity prices based on government figures for average household electricity usage and bill size.

All Australian states and territories were more expensive than the US, where electricity costs about 22.6c/kWh.

South Australia and the ACT, where electricity costs about 29.8c/kWh, were more expensive than the UK, where power costs about 30.8c/kWh.

Europe, where electricity prices have rocketed due to Russia’s invasion of Ukraine, was more expensive than anywhere in Australia.

Across 27 European countries the average price of electricity was about 45.7c/kWh.

Why does South Australia’s electricity cost the most in the country?

• South Australia a leader in renewable energy but at 36.1c/kWh, South Australian electricity is the most expensive in the country.
• A report by the South Australian Productivity Commission into renewable energy, released late last year, says the state’s clean energy supply has spurred a steady decline in wholesale prices since mid-2019.
• But it said this has “not flowed through to SA retail customers, who continue to face the highest electricity prices” across the National Electricity Market (NEM).
• The report also found that at least a doubling of wind and solar energy within a decade will be needed to meet state greenhouse gas reduction targets.
• But that is unlikely to lead to lead to reduced electricity prices because of this gap between wholesale and retail prices.
• The report blames that gap on “limitations” in the SA electricity system, which it says are being targeted in the government’s Hydrogen Jobs Plan.
• The first is “a market concentration in on-demand electricity”, or baseload generation.
• The second is a sometimes very low daytime demand for solar generation on sunny spring and summer days.
• Unless market factors pushing up wholesale prices can be addressed, SA power prices are “likely to remain higher than interstate”.
• The report also found national grid regulations and pricing mechanisms were “not fit for purpose” because they are “delivering neither lowest cost for consumers nor inducing sufficient investment in storage to support the renewable energy transition”.