Stalling on renewables will see power bills jump this decade, new study shows

Domestic power bills could jump 30 per cent by the end of this decade and for small businesses by up to 41 per cent if renewable energy isn’t rolled out faster, according to new modelling.

The Clean Energy Council released the figures on Tuesday (4 March) in its report The Impact of a Delayed Transition on Electricity Bills, outlining just how much a stalling on renewables would aggravate a national cost-of-living crisis.

The modelling was independently prepared by global engineering and professional services firm Jacobs and shows the real potential for markedly higher power bills by 2030.

It compares the Federal Government’s current ambition of 82 per cent renewable energy by 2030 with the alternative (modelled by Frontier Economics for the federal Coalition), which limits renewable energy at 54 per cent and relies on coal and gas while waiting for nuclear power.

The modelling found that relying on coal power and significant amounts of gas generation for longer would increase the average household bill by $449 a year in 2030 and $877 for a small business.

CEC chief executive Kane Thornton said the council’s recent polling also shows energy bills rank among the top three priorities of Australian voters, who rate cost of living as a key election issue.

He said halting renewable energy deployment while waiting years for nuclear power would be a disaster for Australian power prices.

“Under this scenario, Australia would have to increase its reliance on increasingly expensive and unreliable old coal generation, as well as significantly increase gas generation which is a much more expensive energy source,” Mr Thornton said.

“The net impact is higher power prices for all Australian homes and small businesses.”

The modelling also looked at the impact of a coal-fired power station experiencing a significant outage in the next five years.

It found that household bills would increase by as much as $606 per annum in 2030, and small businesses would be hit with an additional cost of $1182.

“Forecasting price outcomes in the National Electricity Market is always challenging,” the report states.

“The system is complex, and the further into the future the forecast is projected, the more subject it becomes to the assumptions underpinning a particular future view of the world and the behaviour of market participants in that future.

“By focusing on a medium-term timeline and by employing a snapshot approach, looking at the 2030 financial year in detail, and running multiple scenarios for this year, we can test potential market outcomes under a multitude of potential futures.

“In this report, we tested 100 potential price paths in financial year 2030, to test outcomes under different market conditions, and gain greater confidence about the potential impact on consumers between 2025 and 2030.”

The modelling shows, however, that continuing to deploy renewable energy will keep wholesale electricity prices as low as possible.

“Clean energy not only works for Australia but it’s the cheapest path forward for our electricity bills,” Mr Thornton said.

“Getting more renewables into our system, such as solar and wind and backed by pumped hydro, batteries and small amounts of gas, is the cheapest and most reliable way to keep energy bills as low as possible for Australians.

“We have coal-fired power stations across Australia reaching the end of their intended lifespan with 90 per cent due to retire by 2035 and 60 per cent are now over 40 years old.

“As they age, they are becoming increasingly unreliable, resulting in pressure on the electricity grid. This means higher electricity prices.

“Australians simply can’t afford to put the handbrake on renewables and choose a path of more expensive electricity while we sit and wait for nuclear plants that are at best 15 to 20 years away.

“Renewables are here right now and we should be using as much of this cheaper energy as we possibly can.”

Opposition Leader Peter Dutton, however, doesn’t accept any modelling showing renewables to be the most cost-effective energy plan for Australia.

He estimates that his seven proposed nuclear reactor sites would cost the nation far less in the long run.

Pointing to his Frontier Economics analysis, Mr Dutton said the Coalition’s balanced energy mix, including zero-emissions nuclear power, offers a cheaper, cleaner and more consistent alternative, delivering massive savings for Australian families and businesses.

“The Coalition’s energy plan will save Australians up to $263 billion compared to Labor’s renewables-only approach – a 44 per cent saving for taxpayers and businesses,” he said at the time of releasing his costings.

The modelling estimates that the Coalition’s nuclear plan will cost $331 billion over 25 years, which Mr Dutton says is $263 billion less than Labor’s renewables transition plan.

The Coalition’s policy would have renewables provide 54 per cent of the nation’s electricity by 2050, with nuclear providing 38 per cent, and storage and gas providing 8 per cent.

Labor wants 82 per cent renewables by 2030 and almost all energy generation from renewables by 2050.