As households across Australia come to terms with power bill increases of up to 50 per cent, there is a potential sweetener on the horizon in the form of renewable energy.
Listening to the government and energy wholesalers, you’d be forgiven for thinking that the current spike in costs is a short-term piece of pain while we wait for the cheaper renewable energy projects to come on stream by 2025.
In theory, it’s a win-win. Australia gets cleaner energy, emissions are reduced, and households get cheaper bills. And that can happen – California is an example of this.
But there’s one big problem. It relies on all renewable energy infrastructure being ready when the Eraring power station is scheduled to close in August 2025. That’s a tight timescale and assumes no delays. Currently we have a stuck drill slowing down Snowy Hydro 2, a major pause in the Karara Wind Farm in Queensland, and two billionaires fighting over a solar farm in the Northern Territory.
And given that most of our current power stations cannot deliver to full capacity – sending wholesale prices skyrocketing – the nirvana of cheaper, clean energy bills seems a long way away.
The leap in some cases exceeds, or even doubles the rises of between 19.6% and 24.9% for regulated benchmark tariffs approved by the Australian Energy Regulator in May for the next financial year. And as we creep further into the Australian winter, many households are going to be in for a nasty shock when their bills arrive on their new tariff.
Australia’s transition to renewables can’t come fast enough and, with our natural resources, we should be in a position to be a world leader in this area. But when it comes to relying fully on renewable energy in the immediate future, the dream doesn’t match the reality. Here’s a few key points, using solar as an example.
Solar generation has reached record output levels, which is good, in principle. It empowers households to generate their own electricity and reduce their dependence on the grid. But the reality is that many Australians are still reliant on that grid to power their homes.
The retailer price hikes that are significantly higher than the reference price are going to cause some serious stress for Australian households, particularly in New South Wales, Queensland and Southeast Australia. Solar will be sold as a solution to high bills, encouraging households to look at installing panels sooner rather than later. That’s going to require an upfront investment though.
But with bills increasing from July any delays in major projects and infrastructure hinder bill relief, likely contributing to further price hikes over the next couple years. Those who can’t afford to invest in renewables or – in the case of renters – have no option will get squeezed even further
The impact on the average household will be greater the more delays there are to renewable projects. One project that should be a major concern for households is the Snowy Hydro, which is currently mired in delays and cost blowouts.
The completion of the vaunted hydro project, which was expected to provide 350,000 megawatt hours in power backup for the increasingly solar and wind energy-dominated system, has now been pushed to the end of 2029. The project cost has reportedly increased from $2 billion to $5.9 billion, with a potential rise to $10 billion to complete. As always with budget blowouts, taxpayers will ultimately bear the burden.
The delays in major projects like Snowy 2.0, the Karara Wind Farm and concerns over infrastructure are absolutely going to hinder bill relief for households. Not only could this mean wholesale power shortages, but also higher power bills for households for a longer duration.
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 undoubtedly provide a challenge for the NSW power grid.
In pushing to close down Liddell and Eraring, the government is behaving like your mate who quit their job before having another one lined up. They thought it wouldn’t be that hard to find something but here they are, one year later, still playing video games on the couch, burning through their savings, with no job prospects in sight. We are in that limbo phase, hoping renewables will save us from the ongoing horror of energy bills.
However, there are power experts who remain confident that turning to renewables will push prices down. Rooftop solar generation has led to record power output from households, rising 23%, and reducing grid demand to the lowest level since 2005.
TransGrid, which claims to maintain the most important electricity network in Australia, has been optimistic that cheaper renewables will cover the shortfall of power in NSW caused by the closure of coal-fired stations.
I, however, am doubtful.
Their claim that they will have more than enough power from renewable sources is almost irresponsibly optimistic. There may be enough supply in place to keep the lights on during the day, but not nearly enough wholesale power to bring retail prices down… at least not in the next two years anyway. It’s the energy equivalent of the Reserve Bank telling us interest rates wouldn’t rise until 2024, and we all know how that turned out, although their CEO has now suggested that Eraring be kept open as ‘insurance’.
Ultimately a more comprehensive and sustainable joined-up approach is needed to achieve significant and long-term power bill relief for Australian families. Previous governments have done long term damage by not investing in renewables sooner so for more sustainable energy prices, we need action towards a longer-term solution.
But for now, households are better off shopping around for savings. Despite the rising prices, there’s also plenty of very good retailer offers in the market that, in some cases, are around 25% lower than the reference price.
One day a renewable grid will deliver substantial savings for households. But that day is a long way off. For anybody worried about the impending price rises – which is likely to be most of us – being proactive and switching providers is the easiest way to keep energy bills as low as possible.
It can be unnecessarily confusing and complex, so I’ll finish on some practical tips anyone can employ to drive down the cost of their energy bill.
Compare energy providers and negotiate a better deal: Prices vary between providers, so research and negotiate a better rate, whether that’s off your own bat or through a comparison service.
Invest in energy-efficient appliances. Replacing older appliances with energy-efficient models can significantly reduce electricity consumption and lower bills.
Consider installing solar panels: With the growing role of renewables in the energy market, installing solar panels can help families reduce their reliance on the grid, lower electricity costs, and benefit from government incentives.
Look into bill smoothing: Some utility providers offer an installment payment plan or ‘bill smoothing’ – where you can arrange to make payments fortnightly or monthly, instead of having to pay the whole amount in one go. This is often a good way for households to manage their budget.
Australia isn’t in the best shape right now, energy-wise, but it can get there over time. But that doesn’t mean that we should all passively accept July’s price increases. Be proactive, make changes where you can afford to do so, and hope that our current state and federal governments have a more practical vision than their predecessors.
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