Record-high average wholesale electricity prices of 2022 have driven up power bills for Australian homes by hundreds of dollars a year.
Several factors impact wholesale electricity prices, including weather-related demand, supply availability and commodity prices.
Over the last six months, the key driver of high electricity prices in Australia has been the high cost of operating coal and gas generators.
Government needs to look at ways to bring more clean, low-cost renewable energy into homes and to power industry without paying unreliable and expensive coal and gas to stay open, which ultimately results in more expensive electricity bills.
The good news is that renewable energy is already playing a significant role in helping to drive down wholesale electricity prices.
The 2021-22 CSIRO GenCost report confirms past years’ findings that wind and solar are the cheapest sources of electricity generation and storage in Australia, even when considering additional integration costs arising due to the variable output of renewables, such as energy storage and transmission.
The Australian Energy Market Operator’s most recent Quarterly Energy Dynamics Report showed that the growth in large-scale solar and wind power meant renewable energy dictated price levels more frequently, rather than gas and coal and that reduced wholesale prices.
Early in 2022 with significant rises in wholesale electricity prices, AEMO said that the “reduced availability of thermal generators” (where approximately 30 per cent of coal power generation capacity in the NEM was offline) and “higher prices for key generation fuels, influenced by volatile international energy commodity prices” was to blame.
And that’s why the Clean Energy Council has called for measures that will directly impact the cost of living for Australian households and businesses:
1. Power more households with clean, low-cost renewable energy
2. Modernise the electricity grid
Now is the time to double down on electrification through renewable energy, networks, and storage. This is the answer to many of the current issues not only in decarbonisation but also in the areas of affordability, energy autonomy, and security of supply.