Failing coal power plants and fossil gas companies making super profits will send electricity prices higher next year.
The electricity price setter, the Australian Energy Regulator (AER), said prices may rise by up to 5% in South Australia, 6% in Queensland and 9% in New South Wales. Prices should remain flat in Tasmania and Victoria.
The energy regulator cited failing coal power plants and prolonged hikes in fossil gas prices – as well as not enough energy from clean renewable sources – as key reasons.
All 19 of Australia’s remaining coal fired power plants are due to close by 2036, due to the prohibitive cost of keeping these old failing power plants running.
Fossil gas generators, which set prices during times of peak power use, have been reaping super profits as gas prices remain elevated due to Russia's invasion of Ukraine. The war in Ukraine has disrupted gas supply chains worldwide. Around 80% of Australia’s fossil gas is exported, with domestic prices set against an international benchmark.
While 40% of Australia’s electricity came from renewables in 2024, this was not enough to force down prices during periods of peak power use.
Price volatility is increasing because many coal plants that should be able to provide ‘baseload’ electricity fail unexpectedly and are forced to shut down, introducing unexpected periods of mismatch between supply and demand.
This is the result of almost a decade of uncertainty and under investment in our power sector and the clean energy transition from 2013 to 2022.
Unnatural disasters like Cyclone Alfred also push up energy prices because strong winds knock over trees and bring down power lines. The devastation they bring will only get worse if we continue to let climate pollution rip.
It's hard to measure the cost of these increasing unnatural disasters: in human suffering, harm to wildlife and ecosystems and lost economic potential.
The Insurance Council of Australia reported that 44,000 households have already lodged claims against insurers.
Hotter air holds more moisture, so climate change means cyclones will form more often, with greater power and further south, causing more powerful and unpredictable storms and cyclones.
The solution to electricity prices rising and more frequent unnatural disasters is more investment in renewable energy.
While 40% of our electricity came from renewables in 2024, there is still more work to do. Most of our energy is still coming from finite, climate-wrecking fossil fuels.
When solar and wind are backed up with batteries and hydro, we get a cheap, flexible renewable grid that will bring prices down for families and reduce dangerous climate pollution.
There are hundreds of wind and solar farms proposed and being built across Australia, as well as almost 8 gigawatts of batteries under construction – about as much as eight very large coal fired power stations.
Batteries soak up the cheapest electricity, produced by solar during the day, and compete with the fossil gas generators at times of peak power use, pushing prices down.
The alternative to this is a future where coal and fossil gas generators continue to dominate.
In the unlikely event the Coalition’s nuclear ideas ever go ahead, we would be waiting at least 20 years for the reactors to be legalised, planned, approved, commissioned and built.
That is far too slow to be an effective response to the climate crisis and would keep polluting coal-fired power stations open for longer, adding an extra 2 billion tonnes of climate pollution to the atmosphere – the equivalent of 200 years of Australia’s emissions from aviation.
The CSIRO’s GenCost work and multiple independent analyses consistently rank nuclear as Australia’s most expensive energy option.
If we want lower electricity prices and a brighter future for families we must keep investing in an economy underpinned by clean, affordable, reliable renewables.
Jack Redpath is the Australian Conservation Foundation’s nature and renewables campaigner
This piece was published by the Canberra Times