Riding the Overnight Wave: Will Cheap Electricity Last?
For many Australians, the hum of the dishwasher late at night or the EV charging overnight has become synonymous with significant savings on their electricity bills. These cheap overnight rates, fuelled by the increasing influx of renewable energy into the grid, have been a welcome reprieve from ever-rising living costs. But is this a permanent feature of our energy landscape, or are we facing a future where these savings dry up?
If you're thinking about capitalising on these cheaper rates by installing solar, batteries and EV charging, then check out our Complete Guide.
The Good News: Renewable Energy is Driving Down Prices
Currently, the news is relatively positive, particularly for some states. The Australian Energy Market Commission (AEMC), the expert advisor on energy policy, recently released a report projecting that electricity prices per unit will actually fall by around 5% over the next five years. This is largely thanks to the continued rollout of renewable energy generation, battery storage solutions, and improvements to transmission infrastructure. The AEMC highlights that renewable energy and battery storage are major drivers in bringing down electricity prices.
Think about it: solar panels generate most actively during the day, pushing electricity supply up. This, in turn, drives down prices, especially during off-peak times when demand is lower and excess energy needs to be stored or used. This benefit is not just for those with solar panels; it can flow through to all consumers on the grid.
The Looming Challenge: Maintaining Momentum
However, the AEMC report also includes a warning. The projected price decreases are contingent on maintaining the current momentum in renewable energy development. If the pace of investment slows down, prices could potentially increase by as much as 13% between 2030 and 2035. This potential price hike is directly linked to the retirement of existing coal-fired power plants, and the need for renewable energy and battery storage to keep pace with increasing electricity demand.
The key takeaway? We need to keep investing in renewable energy solutions, and do so quickly, to avoid future price shocks.
Electrification: A Pathway to Savings
Beyond grid-scale solutions, the AEMC report emphasises the huge savings potential for households that electrify their energy use. This means transitioning from gas appliances and petrol cars to electric alternatives. For example, switching to an electric heat pump hot water system instead of gas, or driving an EV instead of a petrol car.
The benefits are twofold. First, you reduce your reliance on fossil fuels, contributing to a cleaner environment. Second, you can drastically reduce your overall energy costs. The AEMC estimates that a fully electrified household could reduce its total energy expenses by up to 90%, with the initial investment paying for itself in as little as four years! This is partially due to the savings possible by charging EVs overnight or using solar power during the day to run appliances.
The Role of Smart Energy Management
The report also highlights the importance of smart energy management. This involves optimising the use of home batteries, scheduling EV charging during periods of high solar generation, and using appliances during off-peak hours when electricity is cheaper.
Consider a scenario where you have a home battery charged by solar panels. Instead of sending excess solar energy back to the grid (at a lower feed-in tariff), you store it in your battery and use it to power your home during the evening peak, when grid electricity prices are higher. This reduces your reliance on the grid and lowers your energy bills.
Regional Variations
It's important to note that electricity price trends vary across different Australian states and territories. According to the AEMC, New South Wales and the Australian Capital Territory are projected to experience stable or falling prices, while Victoria, Queensland, South Australia, and Tasmania may see increases in the latter half of the forecast period. These increases are primarily driven by growing electricity demand and a tightening supply-demand balance.
However, regardless of the regional variations in electricity prices, the report projects that all states and territories will see total energy cost savings from electrification.
Conclusion: Act Now to Secure Future Savings
The future of cheap overnight electricity rates hinges on our collective commitment to renewable energy investment, electrification, and smart energy management. While the immediate outlook is positive, we cannot afford to become complacent. By embracing solar power, battery storage, EVs, and energy-efficient appliances, Australians can not only reduce their carbon footprint but also secure significant long-term savings on their energy bills. The wave of cheap overnight electricity is here now, but it's up to us to ride it sustainably into the future.
