Australian households are set to face higher electricity bills in the coming months, adding to the pressure of the ongoing cost-of-living crisis. The Australian Energy Regulator (AER) released its draft decision "default market offer" (DMO), which will see price caps for customers on standing retail plans lifted starting from July 1.
Australians, it’s time to start saving as the federal government is expected to increase power prices by between 2.5% and 8.9% for residents in New South Wales, Southeast Queensland, and South Australia. Federal and state energy ministers have urged the Australian Energy Regulator to reconsider its planned hike in power prices, as it could significantly impact the cost of living for citizens.
In this critical and unavoidable situation, the question remains: Is it a good time to go solar now? The answer is: Yes, yes, yes!
Don’t Wait – Power Prices Are Rising and Solar Savings Are Shrinking
Power prices for ordinary households in NSW may increase by 8.9%. In south-east Queensland and South Australia (SA), the potential rise could be between 5% and 6%. Additionally, there are currently no announcements regarding new rebates for installing photovoltaic (PV) systems in residential homes. While the ongoing solar battery rebates and small-scale technology certificates will continue for some time. Also, lower feed-in tariffs are making it more challenging for customers, as they will receive very little credit against their electricity bills.
On the other hand, due to high fluctuations in the solar market, production and transportation costs are expected to rise soon. This will result in even higher end prices than before.
Looking at all these situations we can suggest that all those who are not unprepared for this challenge should quickly obtain a quote and complete the installation as soon as possible.
Key Energy Price Changes by State
New South Wales (NSW)
- Small businesses connected to the same network will experience an 8.2% rise in electricity costs.
- The average annual electricity bill is set to increase by $376, reaching $4,988.
Queensland (QLD)
- Small businesses will see a 4.2% rise in electricity bills.
- Average annual bills will increase by $178, totalling $4,439.
South Australia (SA)
- Small businesses will experience a 6.6% rise in electricity costs.
- The average annual bill will increase by $355, reaching $5,707.
Victoria (VIC)
- Businesses on the Victorian Default Offer (VDO) will see annual increases between $77 and $128, varying by distribution zone.
Let’s dig into the five reasons why your power bills are sky high – and how you can help bring them down :
1. Australia’s energy system still relies too heavily on expensive fossil fuels
Australia is adding renewable power, like solar and wind at record rates. Throughout the year, around 40% of our power now comes from renewables. However, most of our electricity still comes from coal and gas.
These days, electricity made from fossil fuels is far more expensive than renewable power. In 2024, the average price of electricity from fossil fuels was $137 per megawatt hour (MWh), almost twice the average price of electricity from renewables ($71 per MWh).
This is because coal and gas-fired power stations pay international prices for these fossil fuels, which have eased since the extreme spikes in 2022 but are still high. If our energy system continues to rely on fossil fuels that are bought and sold as international commodities, we will remain at risk of sudden and unexpected spikes in power prices. In contrast, the wind and sun are free, and when backed up by storage like batteries, they can provide abundant, locally produced power forever.
Modelling commissioned by the Clean Energy Council shows that if we delay the expected roll out of renewables and continue our reliance on coal and gas, power bills could increase by $449 a year for households, and $877 for a small business this decade.
2. Gas companies export the vast majority of Australia’s gas and charge us more at home
Even though Australia produces far more gas than we need to power our homes and businesses, gas prices remain high. This is because we are one of the largest exporters of gas in the world – we export around 80% of our gas, which means we have to compete with global export prices. Gas companies ship so much of their gas offshore because that’s how they maximise their profits. Because gas is so expensive, electricity made using gas has a disproportionate impact on overall power prices.
As gas prices rise, so do our overall power prices. Even though only about 17% of Australia’s electricity comes from gas, research from Griffith University shows that because gas is so expensive, gas prices drive 50-90% of pricing periods in the National Electricity Market.
On top of this, gas companies pay no royalties on the majority of the gas they export, pay very little income tax, and employ only a small number of people. Subsidies to fossil fuel producers and major users from state and federal governments totalled $14.5 billion in 2023-24.
These multinational corporations are making billions while providing almost no benefit to our economy and costing us thousands of dollars every day. At the same time, they are responsible for huge amounts of climate pollution both in Australia and worldwide.
3. Our ageing and unreliable coal-fired power stations are driving severe price spikes
The majority (more than 60%) of the coal capacity in our main national grid is over 40 years old, and the ability of our generators to reliably produce electricity has dropped off dramatically. For example, Australia’s largest coal-fired power station, the 43-year-old Eraring Power Station in NSW, had more than 6,000 hours of planned and unplanned outages in 2024, equivalent to each of its four units being down for two months on average.
Our decrepit coal clunkers have not only been a major driver of power outages in recent years – they have also contributed to some of the most severe price spikes. Fossil fuel companies take advantage of reduced energy capacity when these outages occur and jack up their prices to maximise profits. Expensive gas generation also increases to meet our electricity needs. Analysis commissioned by the Climate Council in 2024 shows that four of the most severe power price spikes in the past seven years have been driven by unplanned coal outages.
The Australian Energy Market Operator expects all our coal-fired power stations to close by 2038 at the latest, and 90% to shut down over the next ten years. Rapidly adding more renewable power and storage so that it’s online before more coal is retired is the best way to bring down energy prices over the long-term.
4. Renewables backed up with storage can help keep power prices in check – but we don’t have enough of them yet
All around Australia, the data shows that more renewable power in the grid puts downward pressure on power prices. In Queensland, wholesale prices (the prices our electricity companies pay, which account for up to 40% of the costs on our power bills) dropped 40% in 2023-24, with the increased solar and wind energy in the grid playing a key role. The ACT’s 100% renewable power system has reduced wholesale prices for four quarters in a row. In South Australia – which now generates 74% of its electricity from renewable sources – wholesale prices are lower when its wind generation is high, and the state is sourcing less electricity from expensive gas.
By increasing our solar and wind generation, backed up with storage like batteries, we can keep power prices in check and improve the reliability of our power system. Battery storage is already booming in Australia: battery capacity has more than doubled in the past three years and is expected to grow at least seven-fold by 2030.
5. Aussie households can take control of their power bills by installing rooftop solar, switching to electric appliances and improving their energy efficiency
Electrifying our homes, improving their energy efficiency and increasing rooftop solar uptake will help us deal with the rising costs of living while cutting our climate pollution. Households that make the switch to electric could save up to 70% on total energy costs. For example, rooftop solar can help cut bills by more than $1,500 per year and getting off gas can save the average Aussie family $200 per year, increasing to $400 in 10 years' time.
However, we know that people on low incomes, renters and social housing tenants have more barriers to overcome when it comes to installing solar and upgrading their energy efficiency. Governments have an important role to play in ensuring all Australians can access this opportunity to reduce their energy bills and make their homes more comfortable and safer to live in.
How Solar Panels and Battery Storage Can Help Offset Rising Energy Costs in Australia
With power prices across Australia set to rise by up to 9% in 2025, many households are feeling the pinch. From everyday bills to long-term budgeting, the impact of these increases is significant. However, there are sustainable solutions available that not only reduce electricity bills but also offer long-term energy independence and at the forefront are solar panels and battery storage systems.
The role of battery storage in energy savings
While solar panels help lower energy bills, adding battery storage takes savings to the next level by maximising self-sufficiency and reducing dependency on the grid.
1. Storing excess solar energy for later use
Solar battery storage allows businesses and homeowners to store unused solar energy generated during the day and use it at night or during cloudy periods. This ensures a continuous power supply and enhances solar energy savings.
2. Lowering peak demand charges
For households on time-of-use tariffs, battery storage helps avoid drawing power from the grid during peak pricing periods. Instead, stored solar energy is used, leading to significant cost reductions.
3. Providing backup power during outages
Battery storage systems also serve as a backup power source during blackouts. This added reliability ensures uninterrupted power supply while reducing long-term reliance on grid electricity.
Conclusion
With power prices in Australia set to rise by up to 9%, households and small businesses are bracing for higher electricity bills in the coming months. While these price hikes may vary across regions such as NSW, South-East Queensland, and South Australia, the impact will be felt nationwide, especially during peak energy usage seasons.
This increase, driven by higher wholesale electricity costs and network charges, highlights the growing importance of energy efficiency and long-term solutions like solar and battery storage.
While existing rebate programs such as small-scale technology certificates (STCs) and solar battery incentives offer some relief, the financial pressure from higher electricity rates may encourage more consumers to invest in renewable energy solutions to reduce their reliance on the grid.
By making the switch to solar today, Australians can take control of their energy future while contributing to a cleaner and greener planet. Now is the time to seize this opportunity, embrace renewable energy, and be part of a movement that is shaping the future of Australia’s energy landscape.
For more details you can visit - https://www.energy.gov.au/news/australian-energy-regulator-releases-new-default-electricity-prices