Accelerating the buildout of renewable generation, transmission, and battery storage is essential to keep residential electricity prices affordable over the next decade, according to the Australian Energy Market Commission’s (AEMC) latest Residential Electricity Price Trends report.
The independent report, aligned with AEMO’s Integrated System Plan projections, forecasts residential electricity per unit prices (not bills) will fall by around 5% over the next five years, supported by new renewable generation growth.
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However, those prices risk rising by 13% from 2030–2035, unless new renewable generation, battery, and transmission projects are delivered at a faster pace than currently projected.
AEMC chair Anna Collyer said increasing momentum in renewable deployment and batteries now and through to 2030’s would be crucial to keeping prices affordable.
“Our price outlook highlights a critical five-year window: residential electricity prices are projected to fall through 2030 as renewable generation and batteries ramp up, but then rise through 2035 if the pace of new investment doesn’t keep ahead of growing electricity demand and planned coal retirement,” she said.
“Our analysis clearly shows renewable energy and batteries drives prices down, we see this in the first five years. The risk of prices rising after 2030 only emerges if we slow down renewable deployment just as coal plants retire. This is a timing challenge, not a technology cost issue. With the right pace of investment, we can manage the energy transition while keeping prices stable.”
The scenario analysis found:
- Delays to wind and transmission projects could increase annual household electricity prices as much as 20%.
- Poor coordination of consumer energy resources could add up to 13% to electricity prices.
- Prolonging the life of existing coal plants to meet future demand growth could pose significant price risks, with increased outages potentially adding up to 5% to prices.
- Conversely, faster wind and transmission delivery could reduce prices by up to 10%.
The report also finds that many households can significantly reduce their total spending on electricity, gas and petrol by electrification, with savings typically exceeding upfront costs within 10 years.
The analysis shows households that electrify could see:
- Electric vehicles: an approximate 40% reduction in annual vehicle running costs (around $1,400 per year in fuel and maintenance savings).
- Gas appliance electrification: an approximate 60% reduction in heating and cooking costs (around $1,400 per year for a household currently only using gas for these purposes).
- Solar panels: approximately $1,000-$1,200 per year in electricity savings for typical households.
- Home batteries: additional $600-$900 per year in savings when combined with solar.
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“A household that fully electrifies could reduce total energy costs by up to 90%, with typical payback periods of four years,” Collyer said.
Beyond grid-scale infrastructure, the report highlights the growing importance of storage, such as home batteries and other consumer energy resources, in managing peak demand and reducing system costs for all consumers.
