Electricity prices predicted to fall as renewable supply increases
Household electricity bills are expected to fall by 9 per cent over the next three years as more renewable generation joins the grid.
- Electricity prices are expected to fall by 9 per cent over the next three years
- More renewable energy production is behind the fall
- Power prices in Canberra are predicted to buck the trend
A new report by the Australian Energy Market Commission (AEMC) predicts all states in the National Electricity Market — NSW, Victoria, Queensland, South Australia and Tasmania — will have lower energy prices in 2023.
The residential electricity price trends report 2020, published by the advisory body today, projects the ACT will have a slight rise in electricity prices over the next three years.
Western Australia and the Northern Territory are not in the National Energy Market.
The report says the main reason for the drop is lower gas prices and the introduction of new sources of energy generation like solar and wind.
It also says network costs and environmental costs are falling, too, although they contribute less to the overall reduction.
"The projections across Australia are really encouraging … prices we're projecting to fall across Australia about 9 per cent, or about $120 per customer over three years," AEMC chief executive Ben Barr said.
"In South Australia it's even larger than that, so about $200 per customer, depending on how much electricity you use."
"What's really driving that across the national electricity market is … new supply entering the market making downward pressure on the cost of producing electricity, but also due to gas prices flowing through into those wholesale energy costs."
It is the second year in a row that the AEMC has predicted a fall in energy prices.
"This is the second year and that is really good news for households," Mr Barr said.
"One of the objectives of the report is to let customers know what we think is going to happen so they're armed with that and they can ring up their retailer and say, 'I hear prices are falling, what sort of deal can I get?'."
It projects electricity prices will fall over the next two years, with a slight increase in 2022–23 as capacity decreases when some coal-fired power stations are due to close.
Victorians will enjoy the biggest price decrease of 15 per cent, the AEMC says, mainly because of increased wind generation but also lowering gas prices.
Queenslanders are not far behind with a 14 per cent drop.
Power prices are expected to fall in NSW over the next two years but then jump back up to almost what they were this year as the Liddell power station closes.
South Australian electricity prices are predicted to drop 11 per cent and Tasmania's 4 per cent.
Transmission and distribution costs are behind the 2 per cent predicted increase in electricity prices in Canberra.