Electricity Costs Predicted to Rise by Another 9% Every Year For The Next 4 years
Electricity prices for manufacturing businesses and households have significantly increased in recent years, and indications are that these costs will continue to rise.
The Australian Energy Regulator has cited rocketing wholesale power costs, which have risen more than 140 per cent in the past year. The AER has recently announced that it will pass on huge price increases for consumers, and the decided benchmark electricity prices will rise to 18.3 per cent.
The default market offer (DMO) for residential customers in the NSW area is seen to increase by up to 8.5%-18.3%. That’s much higher than the inflation rate. Though the AER has not yet released a DMO for the ACT area, the skyrocketing wholesale power cost will impact the entire country.
Factors Contributing to the Energy Price Hike
The recent jump in wholesale prices has been driven by a combination of factors, including high gas and coal prices and the effect of recent outages and repairs to as much as one-third of the coal-fired power fleet.
States with a high reliance on black coal power, such as New South Wales and Queensland, have been hit hardest by price fluctuations. Higher incidences of zero or negative wholesale prices occurred in southern states where renewable energy plays a greater role.
Why are wholesale energy prices increasing? Australia exports most of its fossil fuels—including coal and gas—to other countries. Since the cost of coal and gas is increasing worldwide, and transportation costs are going up, the electricity-generating cost from these fossil fuels is rising. This has resulted in an increase in wholesale energy prices on the domestic market.
The war in Ukraine and recent natural disasters have caused a spike in energy prices as well. This may be because of supply chain disruptions at coal plants and the increased demand for fossil fuels as a result of extreme weather events. It is likely that we will see further increases in energy prices until some resolution is met in the war, and OPEC increases its production of oil for export, which could release some pressure on prices for other fossil fuels.
The Effects on Consumers
A broader cost of living linked to the rising inflation and interest rate rises will be the biggest effect on consumers.
The Default Market Offer is usually set on the 1st of May. But last April, the Coalition government delayed its process until after the May 21 election, saying it needed more time for the regulator to compile data on recent price fluctuations. The 14 per cent DMO jump in NSW and other states will take effect on the 1st of July this year.
With electricity prices still on the rise, look at installing solar energy as a sustainable solution.
Is it a good time to invest in solar energy? This is a question a lot of people will be asking themselves, especially in the states most affected. With electricity costs predicted to rise by another 9% every year for the next 4 years, people may look to solar as an alternative solution.
Australia remains the world leader in home solar power with over 1.6 million households enjoying solar energy, reducing both their electricity bills and carbon footprints. The cost of solar power is now at a point where it is cheaper than retail electricity in most Australian capital cities – a 58 per cent estimated retail price drop. Excluding ACT (Australian Capital Territory) which has the lowest retail prices in Australia. Use Stag Electrical solar calculator to get an estimate of how much you can save by installing solar panels in your home.
Though the main focus in using solar energy is self-consumption, any boost will be convenient. Solar energy users may also enjoy a higher feed-in tariff since these rates are hugely tied to wholesale electricity prices. When your solar energy system produces more energy than your consumption, the surplus energy is transmitted to the main energy grid. Feed-in tariffs are the payment you receive when you sell excess solar energy to the grid.
BIG Financial Savings:
- Going solar is a great way to reduce your monthly electric bill. A solar panel system generates free electricity for its entire 25-year lifespan—even if you don’t produce 100 per cent of the energy you consume, solar still reduces your utility bills, meaning you’ll save a lot of money.
- Going solar can help you avoid rising energy costs. Electricity prices continue to increase every year. By investing in a solar energy system now, you can lock in the price you pay for electricity today and protect yourself against future increases in electricity costs.
- Going solar increases your property value. Solar homes sell for more than non-solar homes, and this is understandable when you consider that solar panels allow you to reduce or eliminate utility bills.
- Going solar nets you a great return on your investment, with the average Australian solar purchaser seeing a return on their investment (ROI) of 20 per cent or more. Over the course of their long lifetime, most solar panel systems pay for themselves multiple times over.
So is it a good time to invest in solar energy? Absolutely.
Solar Batteries Are Changing The Energy Market
Adding a solar battery to your solar system will let you maximise the energy that your solar system is producing, reducing your electricity bills even further. Installing a 4 kWh battery to an existing 5 kW solar system can increase the amount of self-generated solar electricity a household consumes by 30-60%.
ACT has the lowest retail prices for solar energy panels in Australia and also has one of the world’s best solar energy storage programs. The Next Gen storage program provides rebates for residential and small businesses in the ACT that avails of solar energy storage from accredited Next Gen retailers. The household battery rebate is $3,500 (excluding GST) or 50% of the battery price (excluding GST) – whichever is the lowest. The battery rebate for businesses is calculated on a case-by-case basis.
With the high cost of living in urban areas, it’s no wonder that more and more residents are seeking to save on their electricity bills. Adding a solar battery to your solar system will effectively maximise your savings and let you store surplus energy for emergency uses.
We are committed to helping homeowners and business owners save thousands of dollars every year by making the switch to clean energy.
Solar power is clearly becoming more of a ‘sound investment’, with many homeowners starting to see cost savings on their electricity bills. As the cost of solar panels and batteries decreases and the cost of producing electricity via conventional methods continues to rise, the trend toward solar energy is set to continue.
Let us be your partner in your clean energy transformation. At Stag Electrical, we make it our priority to ensure that we always deliver quality and dependable services. Our qualified technicians will offer you the best advice for your needs by conducting a free site assessment of your home, office or company. Whenever there is an issue that requires professional assistance, our staff are trained to provide a timely solution. Stag Electrical has been in the business for over 14 years and is a qualified and accredited Next Gen retailer by the ACT government Climate Choices. Call us now and start saving on your electricity bills and the planet.