• Written by Tim Nelson, Associate Professor of Economics, Griffith University
The renewables revolution is starting to pay off: our electricity bills are set to fall. AAP/Julian Smith

Household electricity bills in Australia have increased sharply in the past decade. But new official figures show they are projected to fall markedly - in some cases by 20%.

In-house modelling we conducted at the Australian Energy Market Commission (AEMC) shows that a wave of new renewable energy entering the electricity grid is pushing down retail prices. The findings are contained in a report released today.

Retail electricity bills are projected to fall by 7.1% between 2019 and 2022, based on the national average. In southeast Queensland, household bills are expected to fall by 20% in that time - an average annual saving of A$278. Falls in other states are projected to be smaller.

An electricity tower on the Brisbane skyline. Retail electricity prices in Queensland are projected to fall by 20%. AAP

A quick history

The National Electricity Market (NEM) is one of the largest interconnected electricity systems in the world. It comprises about 40,000km of transmission lines and cables, supplying around 9 million customers in all Australian jurisdictions except Western Australia and the Northern Territory.


Read more: Australia has met its renewable energy target. But don’t pop the champagne


To understand the significance of our projection for electricity prices, a brief history recap is helpful.

Price trends since 1955 can be divided into three distinct periods:

  • 1955 to 1998, before the east coast’s National Electricity Market (NEM) was established. Prices fell due to economies-of-scale achieved by building large coal-fired power stations and transmission lines

  • 1999 to 2009, the first ten years of the NEM, when prices declined due to the introduction of competition between generators, improved price transparency and pricing efficiency

  • 2009 to 2019, when retail electricity prices doubled.

The increase between 2009 and 2019 was due to three factors: a significant and largely unnecessary rise in spending on network infrastructure (“poles and wires”); uncertainty about climate policy; and a large increase in wholesale prices.

The latter was triggered by both rising coal and gas prices and sudden exit of coal-fired power generators, and created a disorderly transition to firmed renewables.



What’s happening now

Electricity prices are determined by five main factors:

  • wholesale costs: the cost of generating electricity from coal, gas, hydro, wind and solar
  • transmission costs: the cost of transmitting electricity across the country
  • distribution costs: building and maintaining the poles and wires in our streets
  • environmental costs: government policies that drive new investment in renewable and low-emission generation
  • retail costs: the cost of billing, customer service and managing the financial risks of operating in the wholesale market.

Our modelling shows that additional electricity supply is now putting significant downward pressure on wholesale prices. Across the country, prices are expected to fall by 7.1% from 2019 to 2022.


Read more: Inducing choice paralysis: how retailers bury customers in an avalanche of options


This is due to a very large quantity of new renewable projects coming online, adding much-needed supply. In fact, at the time of our wholesale market modelling earlier this year, investors had committed to around 7,500 megawatts of new gas, wind, solar and hydro projects. For perspective, the largest coal-fired generator in the market today is around 2,000MW.

So what’s driving this new investment? The sudden closure of coal-fired power stations such as Hazelwood in Victoria took a lot of electricity from the system, leading to higher wholesale prices. This drove new investment in gas, wind and solar generation, which is projected to cause prices to fall.

Our modelling shows wholesale costs falling by 10-17% by 2022 across the NEM, which should flow on to the retail price paid by households.

An influx of new renewable energy, including solar power, is driving wholesale prices down. Lucas Coch

How much you could save

The below table shows the projected fall in electricity bills expected in each state and territory in the NEM. They range from a 20% fall in Queensland to 2% in South Australia.



The figures vary between states because of the other factors which determine retail prices. For example, network prices are expected to fall in Queensland but increase in Victoria.

Environmental costs are also expected to fall across the NEM as subsidies such as the Renewable Energy Target wind down.

The wholesale market operates according to real time electricity supply and demand, meaning prices are likely to change across the day. Increased solar generation has long been expected to reduce prices in the middle of the day when solar farms are at maximum production. This is now happening.

In the past few months, this has even led to negative pricing – generators paying customers to stay in the system.

As shown in the chart below for Queensland, price reductions from 2019 to 2022 are most pronounced in the middle of the day, and most limited in the evening when electricity demand peaks but solar output is zero.



So what next?

A lot of work is required to ensure these projections are realised in the longer term. The Australian Energy Market Operator’s Integrated System Plan outlines the need for investment in new transmission infrastructure to ensure new supply can feed into the system. National energy authorities must also keep improving the design of the market beyond 2025.


Read more: Australia has plenty of gas, but our bills are ridiculous. The market is broken


Electricity prices are not the only factor affecting the size of your bill; how much electricity you use is obviously also important. Policymakers must continue to enable customers to minimise their energy bills through measures that encourage energy efficiency, as well as lowering peak electricity demand.

Customers should also continue to shop around to get the best deal by visiting government comparison sites such as the Australian Energy Regulator’s Energy Made Easy and in Victoria, Victorian Energy Compare).

Tim Nelson receives funding as an employee of the Australian Energy Market Commission and an employee of Griffith University.

Alan Rai receives funding from the Australian Energy Market Commission

Authors: Tim Nelson, Associate Professor of Economics, Griffith University

Read more http://theconversation.com/finally-your-electricity-bill-looks-set-to-fall-heres-how-much-you-could-save-128459

All You Need to Know About Trenchless Technology

For many years, the traditional sewerage lines and pipe developments were not enough due to the long wait and cracking. The traditional sewer pipe repairs involved cracking the earth to find the par...

News Company - avatar News Company

Before we rush to rebuild after fires, we need to think about where and how

A primary school in East Gippsland was burnt down in the current bushfire crisis. While Premier Daniel Andrews immediately committed to rebuilding the school as it was, media reported the local CFA ca...

Mark Maund, PhD Candidate, School of Architecture and Built Environment, University of Newcastle - avatar Mark Maund, PhD Candidate, School of Architecture and Built Environment, University of Newcastle

Australian sea lions are declining. Using drones to check their health can help us understand why

Australian sea lions (Neophoca cinerea) are one of the rarest pinnipeds in the world and they are declining. Jarrod Hodgson, CC BY-NDAustralian sea lions are in trouble. Their population has never rec...

Jarrod Hodgson, PhD Candidate, University of Adelaide - avatar Jarrod Hodgson, PhD Candidate, University of Adelaide

With costs approaching $100 billion, the fires are Australia's costliest natural disaster

It’s hard to estimate the eventual economic cost of Australia’s 2019-20 megafires, partly because they are still underway, and partly because it is hard to know the cost to attribute to de...

Paul Read, Climate Criminologist & Senior Instructor/Lecturer, Faculty of Medicine, Monash University - avatar Paul Read, Climate Criminologist & Senior Instructor/Lecturer, Faculty of Medicine, Monash University

In cases of cardiac arrest, time is everything. Community responders can save lives

Cardiac arrest can occur with little or no warning in people who were previously healthy, including young people. From shutterstock.comEach year more than 24,000 Australians experience a sudden cardia...

Bill Lord, Adjunct Associate Professor, Monash University - avatar Bill Lord, Adjunct Associate Professor, Monash University

So the government gave sports grants to marginal seats. What happens now?

When Australians pay their income tax, they assume the money is going to areas of the community that need it, rather than being used by the government to shore up votes for the next election. This is...

Maria O'Sullivan, Senior Lecturer, Faculty of Law, and Deputy Director, Castan Centre for Human Rights Law, Monash University - avatar Maria O'Sullivan, Senior Lecturer, Faculty of Law, and Deputy Director, Castan Centre for Human Rights Law, Monash University

The Olympics have always been a platform for protest. Banning hand gestures and kneeling ignores their history

It is the year of the Tokyo Olympics, and the International Olympic Committee was quickly out of the blocks with new guidelines regarding athlete protests. The IOC is worried the biggest stories of...

David Rowe, Emeritus Professor of Cultural Research, Institute for Culture and Society, Western Sydney University - avatar David Rowe, Emeritus Professor of Cultural Research, Institute for Culture and Society, Western Sydney University

Where Can You Get Weed By Ordering It Online?

Nowadays, everyone wants to get their hands on some weed. Marijuana has become legalized in a lot of countries worldwide. People wait in lines for days to buy some. You couldn’t have imagined that...

News Company - avatar News Company

Hidden women of history: Catherine Hay Thomson, the Australian undercover journalist who went inside asylums and hospitals

Catherine Hay Thomson went undercover as an assistant nurse for her series on conditions at Melbourne Hospital. A. J. Campbell Collection/National Library of AustraliaIn this series, we look at under...

Kerrie Davies, Lecturer, School of the Arts & Media, UNSW - avatar Kerrie Davies, Lecturer, School of the Arts & Media, UNSW

Sick and Tired of Your Dead End Job? Try Teaching!

Tired of the same old grind at the office? Want an opportunity to impact lives both in your community and around the world? Do you love to travel and have new experiences? Teaching English is the perfect job for you! All you need is a willingness to ...

News Company - avatar News Company

The Impact of an Aging Population in Australia

There’s an issue on the horizon that Australia needs to prepare for. The portion of elderly citizens that make up the country’s overall population is increasing, and we might not have the infrastructure in place to support this. Australians h...

News Company - avatar News Company