Electricity bill shock: why the price pain, and will it ever go away?

Cheap, clean electricity is the dream result of the renewable energy transition, but don’t hold your breath. Here’s why.

Power price pain is intensifying across Australia, leaving households hit by 20-30 per electricity cost spikes since July wondering if there ever will be relief – and the bad news is that for many, it’s likely still a long way off.

The promise of huge savings from the switch to renewable energy is looking shaky, while the idea of reaching energy “nirvana” – where everyone drives electric vehicles using cheap electricity from their solar-powered homes – appears an impossible dream for a large proportion of households.

However, some clean energy categories such as solar panels and EVs have been falling in price and already deliver savings to consumers.

The Australian Competition and Consumer Commission said households currently faced higher power bills as wholesale price spikes flowed through the system.

Alinta Energy executive director for retail Amanda Hagan said the war in Ukraine was still reverberating.

“Last year sanctions triggered an increase in international gas prices,” she said.

Bad weather impacting coal supplies and some power station outages also pushed up wholesale prices, Ms Hagan said.

“If you have higher fuel prices and fewer power plants online to generate energy, you get a higher cost of energy overall,” she said.

Ms Hagan said the hope for a renewable energy nirvana reminded her of a famous saying: “good, fast, cheap – you can only pick two”.

Amanda Hagan from Alinta Energy

Solar Analytics CEO Stefan Jarnason

Australia already had some elements of this ideal and would have more “but I’m not sure we’ll ever tick all the boxes”, she said.

While solar panel prices had halved in a decade, some home batteries were more expensive today than five years ago, Ms Hagan said.

“I think the positive takeaway is that every day we’re seeing more options for household electrification hit the market.

“We fully support the transition to net zero, but the cost of getting there will be enormous. “And everyone investing in the transition needs to earn a modest return on their investment.

“So the brutal reality is the overall cost of energy is probably going to be higher and never go back to the price we all paid for energy in previous decades. It’s been good to see federal and state governments on both sides providing bill relief over the last 12 months.”

Energy specialist and Solar Analytics CEO Stefan Jarnason said global price rises in fossil fuels – especially gas – had pushed up bills, but people with rooftop solar could cut their energy costs by 70 per cent.

“According to analysis from CSIRO and Australian Energy Market Operator, electricity prices for people who can’t get rooftop solar will stabilise until around 2030, after which they should decrease as large amounts of wind and solar come online,” Mr Jarnason said.

He said home energy “nirvana” was happening now for those with a roof suitable for solar.

“Over the next one-to-two years most homes with solar will find that adding a battery will save them money as time-of-use pricing kicks in and battery prices decline.

“EVs are also falling in price quickly, and already make financial sense if you drive more than 20,000km each year. By 2026 I expect that half of all new car sales will be EVs.

“The nirvana of a fully electrified and automated home and car, with tiny monthly energy bills, is still a few years away but we are already seeing many of our customers achieve this.”

There are several ways to combat higher electricity prices. Picture: iStock

ELECTRICITY SAVINGS TIPS

• Monitor your usage.

• Adjust airconditioning to no more than 8 degrees above or below outside temperatures.

• Seek assistance through government and retailer rebates and concessions.

• Only heat or cool rooms you are using.

• Shop around for a better deal using energymadeeasy.gov.au or similar state government comparison websites.

• Insulate your home as much as possible.

• Buy energy-efficient appliances.

Source: Alinta Energy, Solar Analytics