Renewable energy to drive down household power bills over next three years

Household power bills are set to fall over the next three years as state government commitments to cut greenhouse gases drive an influx of cheaper renewable power into the electricity grid.

The Australian Energy Market Commission’s price trends report, released on Thursday, found average annual residential bills in New South Wales are expected to decrease by $50, or four per cent, by mid-2024. In Victoria, bills are expected to decrease by 7.7 per cent, or $99 and in south east Queensland they will drop by $126 or 10 per cent.

The decommissioned Wallerawang coal fired power station near Lithgow, NSW was demolished on Wednesday. Credit:Brook Mitchell/Getty Images

The AEMC report said the biggest driver of price falls over the next three years would come from cheaper power sources from wind and solar projects. These weather-dependent generators are set to be supported with on-call dispatchable power from large-scale batteries and gas.

“New generators, mainly renewables, continue to expand capacity and drive significant falls in wholesale prices. We are also seeing positive early evidence of how energy storage, like batteries, is helping to lower prices,” the report said.

Across the national electricity grid there are 2671 megawatts of new solar power generation committed to come online until 2024, and 1393 megawatts of new wind power. The intermittent supply from these power generation sources will be backed up by 904 megawatts of additional gas-fired capacity and 470 megawatts of large-scale batteries.

AEMC chairwoman Anna Collyer said the findings showed that “integrating renewables in a smart way makes it possible to have both lower emissions and lower costs for consumers”.

“We can now see far enough into the future to be confident that power prices paid by consumers will
continue to trend downwards over the next three years, despite the staged exit of Liddell power station in 2022 and 2023, one of the biggest coal-fired generators in the national electricity market,” Ms Collyer said.

“We have just under 2,500 megawatts (of mostly coal power) expected to exit the grid over the next three years, there are almost 5,500 megawatts of committed new large-scale generation and storage projects coming online over the same time period.”

Energy and Emissions Reduction Minister Angus Taylor said falling power prices were “critical” for families as the economy recovers from the COVID economic downturn.

“This report shows that government’s support for new on-demand dispatchable generation, like Snowy 2.0 and the Hunter Power Project gas generator at Kurri Kurri, will put downward pressure on prices as ageing thermal generation retires.”

In a separate report released on Wednesday, the Australian Bureau of Statistics found that the amount of electricity generated by renewables in financial year 2020 had grown by 15 per cent on the previous 12 months.

Commenting on the ABS data, Climate Council senior researcher Tim Baxter said the growth in renewables is “being driven largely by state and territory governments’ energy policies, backed with enthusiastic private investment”.

“The 15 per cent growth is a huge increase in renewable supply, which is part of the literally exponential growth of renewables in Australia,” Mr Baxter said.

“Renewables keep going from strength to strength in the sunniest continent on the planet, producing cleaner, cheaper reliable energy.”

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