AEMC predicts power prices in Australia to fall significantly
Australian household electricity have risen exponentially in the last decade, however new data shows that they could drop by as much as 20% by 2022 in some areas.
Modelling conducted by the Australian Energy Market Commission (AEMC) indicate that a wave of new renewable energy entering the electricity grid is pushing down retail prices.
Retail electricity bills are projected to fall nationally at a 7.1% average between 2019 and 2022.
In south-east Queensland, household bills are expected to fall by 20% in that time - an average annual saving of $278. Falls in other states are projected to be smaller.
The National Electricity Market (NEM) is one of the largest interconnected electricity systems in the world.
It comprises approximately 40,000 kilometres of transmission lines and cables, supplying nine million customers in all states and territories other than Western Australia and the Northern Territory.
Prices have risen since 2009, after more than half a century of consistently cheaper electricity year-on-year, due to a significant and largely unnecessary rise in spending on network infrastructure, uncertainty about climate policy, and a large increase in wholesale prices.
The latter was triggered by both rising coal and gas prices and sudden exit of coal-fired power generators, and created a disorderly transition to firmed renewables.
The recent modelling however showed that additional electricity supply is now putting significant downward pressure on wholesale prices.
This is due to a very large quantity of new renewable projects coming online, adding much-needed supply.
The sudden closure of coal-fired power stations such as Hazelwood in Victoria took a lot of electricity from the system, leading to higher wholesale prices.
This drove new investment in gas, wind and solar generation, which is projected to cause prices to fall.
Modelling shows wholesale costs falling by 10-17% by 2022 across the NEM, which should flow on to the retail price paid by households.
