Australian households will be hit with higher power prices over the next decade, officials warn, unless governments urgently speed up the delivery of enough new renewable energy, transmission lines and big batteries to compensate for an approaching wave of coal-fired power plant closures.
New figures from the Australian Energy Market Commission, to be released on Thursday, mark a major reversal from its earlier forecasts that prices were poised to sharply fall by 2035. They also add to an intensifying political debate as the Coalition argues Labor’s green energy targets will cause unaffordable costs for homes and businesses.
The rollout of renewable energy and thousands of kilometres of extra power lines to link them to major cities is running behind schedule.Credit: Luis Enrique Ascui
While the commission expects renewables and batteries to successfully cut power prices by 5 per cent between now and 2030, those savings risk being wiped out by a 13 per cent increase in the following five years because not enough projects are being built fast enough to cater for the exit of more coal.
Unless these delays are addressed, the consequences could be severe: energy reliability will come under pressure as the economy’s growing demand for electricity outpaces supply, while the grid will be forced to call on expensive gas-fired generation more frequently to plug gaps in the evenings after the sun sets and solar power recedes, sending wholesale prices higher.
Commission chair Anna Collyer warns the risk could translate to an average household power price increase of 0.8 per cent each year until 2035 – an 8 per cent rise.
“Our price outlook highlights a critical five-year window,” she said. “Residential electricity prices are projected to fall through 2030 as renewable generation and batteries ramp up, but then rise through 2035 if the pace of new investment doesn’t keep ahead of growing electricity demand and planned coal retirement.”
Australia is adding more clean energy than ever before, as billions of dollars pour into new wind and solar farms, rooftop solar panels, batteries and hydroelectric dams every year, boosting renewable energy to a 40 per cent share of the grid. Meanwhile, most of the giant coal-fired power stations that still supply the bulk of the nation’s electricity are nearing the end of their usable lives, facing spiralling maintenance costs and frequent breakdowns, prompting their operators to bring forward their closure dates. More than half of Australia’s remaining coal-fired generators are now scheduled to be retired by 2035.
The Albanese government follows the advice of the energy market operator and CSIRO that the best way to replace ageing coal plants and deliver lower bills is to develop a mostly renewable grid, backed up by storage, power lines and gas-fired generators.
However, the rollout is lagging the speed that authorities and experts say is necessary to ready the grid for a future with less coal, as developers face permitting delays, rising costs and opposition from rural and regional communities worried about impacts on farming practices, property values and the environment.
