Australian households’ move to green energy alternatives will halve their energy bills by 2050

A major think tank has urged the government to embrace carbon pricing, revealing household solar panels and batteries will deliver dramatic bill savings by 2050.

Australian households move to green energy alternatives will halve their energy bills by 2050, according to the Grattan Institute.

Green energy adoption will slash Australian household energy bills in half by 2050, giving the Federal Government vital room to implement tougher power emissions policies without financially burdening families, according to a new Grattan Institute report.

The report shows cutting greenhouse-gases from electricity, in line with the

net-zero 2050 national target, would result in average household energy bills of about $3000

in 2050 – down from an average of about $5800 today.

These savings come about because most households in 2050 will have solar panels on

their roof, a battery in the shed, an electric car in the garage, and all-electric appliances

in the home.

The report called for the Federal Government to embrace carbon pricing, saying any fears it would increase electricity prices were outdated.

However, price reductions will take time to flow through.

In May, the Australian Energy Regulator released its final determination for the electricity default market offer in 2025-26 for NSW, South Australia and Queensland, announcing increases of up to 9.7 per cent for some households.

The Grattan Institute report calls on the Federal Government to consider activating the Safeguard Mechanism to reduce emissions in the electricity sector, to complement policies to

cut emissions in the industrial and transport sectors.

“How we use energy is changing, and the politics of carbon pricing should change too,”

lead author of the report and Grattan Institute Energy and Climate Change Program

director Alison Reeve said.

“For too long, Federal Governments of both political colours have avoided pricing carbon

because they fear higher electricity prices.

“Our report shows that the source of that fear is becoming outdated. The benefits of the

energy transition can outweigh the costs – so our political leaders can and should take

decisive action now to cut future emissions to help tackle climate change.

“Carbon pricing can play a constructive role in the electricity sector in coming decades,

just as it does already in the industrial, mining, and transport sectors.”

Grattan Institute Energy and Climate Change Program director Alison Reeve.

Under the Grattan Institute’s policy scenario energy bills refers to total household spending on energy, across petrol, gas, and electricity,

The report recommends using next year’s planned review of the Safeguard Mechanism to explore how it can help the electricity sector get to net zero at lower cost.

The Safeguard Mechanism reduces electricity sector emissions by applying a declining sectoral baseline to all grid-connected electricity generators, setting a limit on their collective emissions that reduces each year in line with national targets.

The report calls for governments to maintain and extend programs to ensure that the benefits of electrification are available to all households, particularly those on low incomes and in rental and multi-unit properties.

It is also seeking for reforms to continue to make planning approvals for transmission faster and easier, and build social licence in host communities.

Originally published as Australian households’ move to green energy alternatives will halve their energy bills by 2050