Are coal and gas to blame for my rising energy bills?

Posted in Electricity Bill

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Are you shocked by your electricity bill, but know you’re doing everything you can to keep your energy use down? 

Maybe you already have solar panels and feel like the amount you’re using from the grid just doesn’t add up to the big dollars you’re paying. It’s no wonder – did you know that Australian energy prices actually reached a record high in May this year? 

 

Does rooftop solar have anything to do with prices going up?

In its latest report released earlier this year, the Australian Energy Market Operator (AEMO) pinned our escalating costs on a combination of really hot weather, the rising cost of hydro power caused by drought, and dramatic increases in the cost of gas and coal.

These factors then push up the retail electricity price, and that’s what we feel when we see our bills.

The one thing AEMO says is definitely not responsible is renewable energy like rooftop solar – just the opposite in fact. It says that if not for Australian’s increasing use of solar for electricity, the country’s demand (and prices) would be even higher. 

That’s because the growing use of rooftop solar in summertime actually reduces peaks and operational demand, especially at the hottest times of day when people are most likely to crank up their air-con. 

AEMO’s data shows that air-con use during the first quarter of 2019 averaged 515MW a day but the grid only had to handle an increase of just over 240MW because solar homes generated the rest.

 

Are coal & gas responsible for rising prices?

Generators, like big power plants, that provide coal, gas, and hydro-generated electricity are charging us more – increasing their ‘baseload’ price from under $100/MWh to over $100/MWh

Retail electricity prices have been going up consistently over the last decade, especially in the last few years.

It is important to understand the significance of the rising cost of coal and gas, particularly because our politicians keep telling us that these are the cheapest ways to generate electricity. 

The record level of ‘underlying’ prices in the wholesale market make it very clear that this simply isn’t true anymore.

To put this in perspective (and allowing for the general price increase of all goods and services), the electricity price for Australian households increased on average by more than 70% in the 10 years before 2013.

 

Demand for electricity is higher than supply

That rate of increase in prices jumped even more in the last six or so years because less electricity is being produced compared to overall increases in demand.

 This is mainly because a number of big polluting coal plants have closed and the cost of gas (for plants using that generate electricity using gas) has gone up.

Higher maintenance costs for the networks (fixing up poles and wires) have been added on to the cost of getting energy from the power plant to your home or business, plus it’s not cheap to build and install new parts of the network.

To give you an example, the NSW and Queensland networks have had lots of upgrades of this kind in the last year or more. Not everyone thinks these improvements are necessary, which is why they’re often called ‘gold plating’.

 

Are prices going to come down?

According to AEMO and other experts, the cost of coal is likely to stay high into 2020 so when it comes to the extreme price of electricity from the grid we should prepare ourselves for even more ‘bill shock’ to come. 

There is one solution of course – solar panels and a battery can insulate you from future price hikes. With a battery, you can use up to 80% or more of your solar system’s capacity, compared to around 25% without it. 

This set up makes sense now if you can afford it, and with government subsidies coming in it’s going to make sense for even more of us.

 

Are you ready to get solar panels and/or a battery?

With our aerial mapping technology, you can size up your roof, find out how much solar could save you and speak to an expert, all online. 

We offer independent advice, quality products and experienced installers, and all of our products are covered by warranties. Because at DC Power Co, we want to make getting solar and/or a battery easy.

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