With the cost of living at an all-time high in Australia, the steady increase in Australian energy costs is a source of pain for many of us. From the 1st of July 2023, home owners and businesses are facing eye-watering hikes in energy prices, in the range of 14-24% (depending on region and controlled load status). Bill shock is likely to reach record levels!
But why are costs rising so much? And is there anything we can do about it? In this blog, we delve into the reasons behind rising energy costs in Australia — and why solar power is proving itself to be the most practical solution.
Why Are Australian Energy Costs Increasing?
As the Australian Parliament has warned us all, “indications are that prices will continue to increase” for electricity and gas”.
The underlying causes of these price hikes vary, however, with the weighting of each factor depending on your state and territory.
One of the most prevalent reasons behind Australian energy cost increases is rising wholesale costs – the price of electricity generated or gas extracted that is paid by retailers. Average wholesale gas prices per gigajoule have more than quadrupled, from roughly $6 in 2020-21 to more than $25.50 in 2022. Similarly, coal prices went up from $75 per tonne in 2021.
These increases are linked to a range of factors, such as inflation, resource scarcity, government policy and global events As your energy provider has to pay more and more for energy, these prices get passed on to you – explaining the huge increases in electricity and gas prices as of late.
The Role of Solar Power
Given the sharp increases in gas and electricity prices, solar power stands out as a promising solution to take the sting out of energy bills. Harnessing the virtually limitless energy from the sun, solar systems offer a cost-effective alternative to traditional energy sources.
Here are just some of the reasons why solar installation in Australia is a sensible decision for homes and businesses right now:
- Renewable resilience & independence: Unlike fossil fuels, which are subject to volatile international market dynamics and other unpredictable factors, solar power provides a stable and consistent source of energy. By generating their own electricity, homeowners and businesses can shield themselves from the impact of future energy price hikes, providing a sense of stability and control in an uncertain energy market.
- Reduced grid power reliance: The traditional energy grid also often faces strain during peak demand periods, leading to even further surges in energy prices. The installation of a solar system allows a portion of your energy needs to be met completely independently – reducing the strain on the grid and mitigating the impact of peak prices.
- Financial benefits: One of the most compelling reasons to embrace solar energy is the potential for long-term financial savings. Although the initial investment may seem a little pricey, this can be offset by reduced electricity bills over time. In fact, the payback period for solar installations has been steadily decreasing – due in part to advancements in technology and government incentives, but also to the extreme rising cost of energy.
- Government initiatives to sweeten the deal: The Australian government has introduced multiple incentives to promote solar power installations. These range from tax credits to rebates and feed-in tariffs, making the transition to solar even more financially attractive.
Conclusion
As energy prices continue to spike, the financial pressure on both households and businesses remains a critical concern. The good news is that solar power is the most promising way to combat the rising costs of energy in Australia (see here for more reasons solar could be your ideal solution).
If you’re ready to take the next step, Think Renewable’s team of solar specialists are here to help. As experts in solar in Australia, we’d love to help you get the best deal possible and assist you with meeting your household or business’ solar needs – please don’t hesitate to contact us!
