SolarInsights: Unmasking the Truth Behind Australia's Rising Electricity Costs
Crikey! Are your electricity bills leaving you feeling more shocked than a dingo at a daycare centre? You're not alone. Many Aussies are struggling with the ever-increasing cost of living, and power bills are a major contributor to household budget stress. But why are they going up, and what can we actually do about it? For an even deeper dive, check out this Complete Guide for more info.
The simple (but not necessarily palatable) truth is that Australia's continued reliance on coal and gas is a significant driver of these high electricity prices. Let's break down why.
Fossil Fuels: A Costly Addiction
Wholesale power prices, what retailers pay for electricity, make up a considerable portion of your bill – up to 40%. And these wholesale prices are heavily influenced by the cost of fossil fuels. While Australia is rapidly adopting renewable energy sources like solar and wind (with over 40% of our power now coming from renewables), we still depend heavily on coal and gas.
Here's the kicker: electricity generated from fossil fuels is now far more expensive than renewable energy. In 2025, the average price of electricity from fossil fuels hovers around $123 per megawatt hour (MWh), nearly double the average price of electricity from renewables at $64 per MWh. Imagine the savings if we shifted even more rapidly to renewables!
Global Markets, Local Pain
Why are fossil fuels so expensive? Beyond general inflation, coal and gas-fired power stations are forced to pay international prices for their fuel. These prices, while having come down a bit from the peaks during the Russia-Ukraine conflict in 2022, remain stubbornly high. As long as our energy system leans heavily on these internationally traded commodities, we'll always be vulnerable to sudden, unexpected price spikes.
Think of it this way: the wind and sun are free. When coupled with effective storage solutions like batteries, they offer a pathway to abundant, locally produced power that is insulated from global market volatility.
Gas Exports: A Question of Priorities
The situation with gas is particularly galling. Australia is one of the world’s largest exporters of gas, shipping around 80% of its production overseas. This means we're essentially competing with global export prices, driving up the cost for Australian consumers and businesses.
Gas companies prioritise shipping their gas offshore to maximise their profits. The numbers are staggering: these companies have raked in close to $100 billion in profits since 2022, while Australian families and businesses struggle with soaring energy bills. The impact is being felt across the board, with some industries facing significant pressure and even closures.
Even though gas contributes a relatively small percentage (around 5%) of the electricity in Australia's main grid, its high cost means it disproportionately influences overall power prices. Studies show that gas prices can dictate pricing periods in the grid for a significant portion of the time (50-90%).
Ageing Coal-Fired Power Stations: A Reliability Risk
Adding another layer of complexity, most of Australia's coal-fired power stations are over 40 years old and are becoming increasingly unreliable. This decreased reliability leads to unplanned outages, which then cause severe price spikes.
Imagine a scenario where a major power station, like Eraring in NSW, experiences thousands of hours of planned and unplanned outages in a single year. Or another, like Yallourn in Victoria, has generators unexpectedly offline for a large chunk of the year. These outages reduce supply and force increased reliance on expensive gas generation, further driving up prices. Unplanned coal outages were, in fact, a major contributor to some of the most severe power price spikes witnessed in recent years.
A Brighter, Cheaper Future
So, what's the good news? We can actually do something about this!
Firstly, we need to accelerate the replacement of our ageing coal-fired power stations with cleaner, more reliable alternatives. Renewables are not only the least expensive option to build, but also provide the lowest-cost source of power in the long run. By diversifying our energy sources with solar, wind, and storage projects in multiple locations, we can create a more reliable and resilient grid. This reduces our dependence on a small number of large generators prone to outages, leading to a more stable energy system. Modern grids thrive on a mix of technologies, not outdated baseload generation.
In conclusion, the rising cost of electricity in Australia is a complex issue, but the underlying truth is clear: our dependence on expensive and unreliable fossil fuels is the primary culprit. By embracing renewable energy and modernising our grid, we can pave the way for a cheaper, cleaner, and more secure energy future for all Australians.
