The Truth About Australia’s Soaring Electricity Prices

Wind and solar has again been blamed for SA’s high power prices. Just because this is often repeated, it doesn’t’ make it true – in SA or elsewhere in Australia.

A spike in the costs of wholesale power last week – which saw prices hit $14 per kilowatt hour at times – was due to a combination of factors: a cold snap, maintenance on an interconnector between South Australia and Victoria and the cost of gas generation; which has been steadily creeping upwards.

Even this weekend saw a couple of brief spikes above $10,000 per megawatt hour; between 6pm and 7pm on Saturday:

Electricity price and demand - South Australia

“The reasons for South Australia’s high power prices compared to the rest of the country remain the same as they were before a single wind turbine or solar panel was installed there – a heavy reliance on expensive gas power plants and only a small number of companies generating that gas power in the state’s energy market,” said Clean Energy Council Network Specialist Tom Butler.

Oddly enough, it seems that in Japan, they pay a lot less for Australian gas than we do in Australia.

Far from being the culprit behind the recent volatility, if anything, wind power helped keep wholesale electricity prices down in SA during periods last week.

South Australian Treasurer and Energy Minister Tom Koutsantonis warned late last week that South Australia’s experience would become an Australia-wide one and it was in part due to an inefficient National Electricity Market.

“This is coming to Victoria, this is coming to NSW … every jurisdiction is facing what we’re facing now,” he said.

“If you want a true national electricity market, you really need to have all of the states interconnected.”

The South Australian Government recently announced funding for feasibility study to examine options for enhanced energy interconnection with the Eastern states.

As we moved toward a carbon-constrained world, Australia doesn’t just need a greener electricity system, it needs a smarter one too – and the price gouging on gas needs to stop.

South Australians aren’t the only ones suffering yet another electricity price increase from the beginning of July. The new financial year also brought new power price pain in New South Wales and Queensland.

Last week, a report was released indicating Australia has the world’s most overpriced electricity before taxes.

Households aren’t alone in suffering higher electricity bills. Business is spending big on electricity as well, forking out around $19 billion in 2014-15.

It’s no surprise then that increasing numbers of Australians and Australian businesses are turning to solar power systems and interest in battery energy storage is building.

According to the latest data from Australia’s Clean Energy Regulator, there are now more than 1.55 million solar power systems installed across Australia.


National Electricity Market Price And Demand Graphs

Top Right Image Credit: BigStock