Energy bills could rise 69pc on current trajectory – think tank estimates

Australians have endured substantial increases in their energy bills and a think tank has warned more is inevitable without policy changes.

Australia is replacing exiting coal with large-scale wind and solar – propped up by batteries.

Energy bills could rise by nearly 70 per cent over the next 10 years under current government policy, a new report has estimated – findings likely to be seized on by the Coalition as it pushes its alternative plan.

The federal Labor government has set the aggressive target of having renewable energy generate 82 per cent of the country’s electricity by 2030, but a new ­report, commissioned by the Alliance for Responsible Citizenship Research, estimates that will raise bills by 69 per cent.

ARC chief executive Gerard Holland said Australia had endured substantial price rises in the last near 20 years.

“Energy bills have increased 67 per cent in real terms since the Coalition left office in 2007,” Mr Holland said.

“But 60 per cent of that increase has happened in the last 10 years. Something has happened that leaves us on a drastically different trajectory than we would have otherwise been on. That coincides with the expansion of renewables from 8 per cent to 34 per cent. It has been a policy choice.”

Mr Holland said the decision of successive governments to allow coal plants to shut meant the grid was plagued by periods of wild wholesale prices when there was unfavourable weather for renewables or heightened demand.

Recent data supported Mr Holland’s stance as adverse weather last winter and in recent weeks had caused wholesale electricity prices to edge higher. Households do not pay wholesale prices but they are a major determinant of annual tariffs.

Already a record number of Australians are struggling to pay electricity bills and there are growing signs of a willingness to consider alternative energy plans.

Mr Holland said Australia had four choices but the cheapest way to lower power prices would be the traditional fuel source.

“The only way we can see to lower electricity prices is by building more coal-fired power stations,” he said. “That would obviously have to be paired with a freeze on any new renewable energy and transmission assets.”

Mr Holland’s comments are controversial. The Australian Energy Market Operator estimates nearly all of the country’s coal fleet will have been mothballed by 2037 as coal plants approach the end of their technical lifespan and become increasingly unprofitable.

Coal is under mounting economic pressure from the rise of renewables, most notably solar. Coal-power stations have to purchase the commodity, and this can often be nearly $100 a tonne. Solar is free to run once operational, and when conditions are optimal coal struggles to financially compete with solar. Coal-power stations are profitable once the sun begins to set but the rise of batteries is eroding those lucrative periods too.

The Coalition’s plan is to build seven nuclear power stations, which Mr Holland said that plan would be cheaper than Labor’s – though he cautioned there remain substantial hurdles to that.

“While the upfront costs are significant, nuclear offers a stable, low-emission energy source. However, the lack of political and regulatory appetite for nuclear energy in Australia makes this pathway an uphill battle,” he said.

Labor disputes the Coalition’s nuclear costings, and has argued that the opposition will be forced to curtailed rooftop solar during sunny days to ensure the ongoing profitability of nuclear power.

Originally published as Energy bills could rise 69pc on current trajectory – think tank estimates