Energy wholesale costs, renewable energy policy, and annual networks and default offer repricing are three big influences in energy costs today. Find out if they’re set to make your energy bills higher or lower – and what the outlook is for the next 12 months.
While almost everyone agrees that renewable energy is the ideal way forward, the path towards an eco-driven energy infrastructure is certainly challenging.
Globally, in 2020 around 29% of all energy produced was generated from sunlight, wind, rain, tides, waves and geothermal heat, up from 27% the year before.
Origin’s coal plant closure
One such example of this is Origin Energy’s decision to close their coal-fired power plant – Australia’s largest one – seven years early.
In February, the energy retailer confirmed its plans to retire Eraring Power Station, which has been operating for 35 years in the central coast, in 2025, ahead of its previous retirement target of 2032.
The company will repurpose the Eraring site to install large-scale battery storage of up to 700 megawatts, in alignment with their push into renewables. Similar battery site plans are underway for the shuttered Hazelwood (2017) and Wallerawang (2014) coal power stations.
While this is undeniably a positive move towards a more renewable energy market, it highlights the risks of Australia’s clean energy transition, which is currently without a national or regulated plan for the exit of coal.
Right now, consumers are benefitting, as renewable energy grows as the cheapest form of electricity generation. But we’re at risk of future closures without clear government policy and oversight, which could have significant impacts on electricity prices, and on regional economies that depend on coal.
Energy repricing in 2022
Meanwhile, another big influence impacting your energy bills is the annual repricing by networks (the owners of the poles and wires) and of the default market offers by the regulators, which happen every July.
Energy retailers use these two important changes to update the rates they charge, reviewing their entire energy supply chain including wholesale, operational and environmental costs.
In 2021, this saw energy prices fall. Statistics from the Australian Energy Regulator (AER) confirm that on average, in the fourth quarter of 2021, energy prices decreased in all regions except Queensland and Tasmania compared to Quarter 3 2021.
In addition to energy wholesale prices, your current usage, contract benefits period and whether you have solar and/or gas will also impact your bill. In the current climate, if you haven’t reviewed your business’s energy contract in the last 12 months, there could be an opportunity to save.
The latest data from the Australian Competition and Consumer Commission (ACCC) reveals energy is currently the cheapest it’s been in eight years, but with all the uncertainty in the market it’s difficult to predict with confidence how long this can continue.
Get an obligation-free energy review
At Make It Cheaper we constantly review the energy market, working with businesses to help them take control of their energy bills and achieve potential savings. Contact us for an obligation-free review today on 1300 957 721.