Australia’s shift to wind, solar and battery storage has shielded Australian households and businesses from much higher power bills than they would otherwise be paying, a new report has found, debunking Peter Dutton’s constantly repeated claim that renewables are to blame for rising electricity prices.
The report, released by the Clean Energy Investor Group on Wednesday, models counterfactual scenarios for 2024 where consumer demand is met by coal and gas plants, rather than firmed renewables.
The report finds that without wind, solar and battery storage, Australian households and businesses would have faced wholesale electricity prices up to between $30/MWh and $80/MWh higher than they were last year, and paid an estimated $155 – $417 more for household electricity bills.
Without rooftop solar the cost of electricity increases by a whopping $400-$3,000/MWh.
Source: CEIG
The cost of electricity has dominated debate in the lead-up to the federal election, with the Coalition opposition seizing every opportunity to blame the Albanese government’s renewable energy targets and supporting policies for any upwards movement.
Last week’s news that the Australian Energy Regulator is considering bumping up the 2025-26 default market offer for retail electricity prices by between 2.5% and 8.9% for residential customers, and by between 4.2% and 8.2% for business, added fresh gust of hot air to Dutton’s sails.
“Australians are paying more for their electricity and more for their gas because of the government’s reckless renewables-only energy policy,” he said earlier this week during a visit to the Pendle Hill Meat Market in Sydney . “It’s why Australians are really struggling.”
This is, of course, nonsense.
First of all, for those not on the retail electricity DMO – the “safety net” set by the regulator for a very small proportion of total consumers – median market offers have falled between 2% and 5% compared with July 2024, and the most competitive offers are now 19% to 25% below the current DMO price – according to the AER.
More broadly speaking – and as the CEIG report reminds us – firmed renewables with transmission and peaking gas have consistently been shown to be the cheapest way of meeting current and future electricity demand through numerous iterations of the Australian Energy Market Operator’s (AEMO) Integrated System Plan (ISP).
This is also borne out in the global investment data, the report notes, with almost 91% of new global capacity coming from solar (428 GW) and wind (118 GW) in 2023 – a record that is expected to be broken in 2024.
The findings from the CEIG report this week demonstrate that renewables have been doing their job of pushing power prices down and that, without them, the cost of electricity would be much, much higher – with little room for improvement.
According to the report, that’s because the power shortfall would likely be filled by expensive open-cycle gas turbine (OCGT) generation, increasing total system costs and making energy less affordable.
In turn – and in an already tight domestic gas market – more gas resources would be diverted away from manufacturing and industry, pushing up costs for businesses and consumers.
Source: CEIG
Meanwhile, greater reliance on ageing coal-fired plants would strain already outdated infrastructure, raising the likelihood of increased blackouts and price spikes.
Source: CEIG
The report also finds that using fossil fuels rather than renewables increases total energy system costs, with less capacity and competition causing prices to be more frequently set by bids that are above short-run marginal costs.
Without renewables, for example, fuel and variable operating costs almost double. Emission costs also increase by roughly $3 billion based on the Australian Energy Regulator (AER) value of emissions reduction.
“The cost of power is a very real issue confronting every householder but what our data makes clear is that prices would be even higher without renewable energy,” CEIG CEO Richie Merzian said on Wednesday.
“Australia needs more renewable energy, not less, to achieve sustained power price reductions.
“The challenge for government is to ensure there is a smooth transition from a costly system reliant on coal and gas to cheaper renewables backed by batteries.
“With the right policies, private investment is ready to assist but policies that undermine confidence and freeze renewable energy investment mean the taxpayer will end up footing the bill for energy production, and will then have to pay higher power prices as well.”
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