Annual Australian power bills will fall by $28 for most households over the next couple of years, a report by the Australian Energy Market Commission (AEMC) shows.
The drop is thanks to a renewable energy pipeline of large-scale wind and solar power.
According to the 2018 Residential Electricity Price Trends report, average annual power bill for Australians will fall from $1,367 to $1,338 by mid-2020.
Australian Power bills cut by doomed LRET
Chief executive of the AEMC Anne Pearson told the Sydney Morning Herald that Large-scale Renewable Energy Target (LRET) driven projects will drive down electricity prices up to 2020.
Big renewable energy projects create Large-scale Generation Certificates (LGC) in line with the amount of energy they produce. Electricity retailers then buy the certificates to meet their LRET obligations.
However, the LRET probably will not drive investment beyond 2020. That’s because the LRET will gradually phase out by 2030, which will reduce the value of certificates, therefore increasing the cost to the installer.
The influx of renewables forces wholesale electricity costs down, but it needs to be managed. It therefore leads to market volatility if the Federal Government has no policy to replace generation and firm capacity.
Most states look forward to lower electricity bills
South Australia is expected to see the biggest price drops. This is due to a big renewable pipeline and structural change in the energy market. Flatter demand will also take the pressure off energy prices.
Prices will also drop in Victoria, where falling wholesale and environmental costs will offset rises elsewhere. NSW will also enjoy lower prices despite rising environmental and transmission network costs.
Three states are likely to see slight rises in electricity costs. These are the ACT, Western Australia and the Northern Territory.
The Canberra Times reports annual power bills in the ACT will rise by 5 per cent between June 2019 and June 2021.
This is due to rising network and environmental policy costs, despite the ACT having a strong renewable energy track record.
Renewable influx outweighs other power costs
Overall, the drop in wholesale prices due to incoming renewables more than balances other power bill increases.
These include ‘poles and wires’ network charges and costs relating to state renewable energy targets and environmental policies.
New renewable generation of 9,732 MW is expected before 2021, the AEMC report shows.
Most of this will come from solar panel systems and wind. Commercial battery storage and thermal generation like coal and gas-fired plants will make up the rest.
