Rooftop solar, home batteries and EVs will slash energy bills, but Australia still needs a carbon price

Increasing numbers of household solar panels and batteries are set to slash power bills in half by 2050, according to new modelling by the Grattan Institute. 

The Bills down, emissions down report, released by the independent think tank says that energy bills averaging around $5800 nationally could be cut to less than $2900 over the next 25 years thanks to the growing uptake of green energy such as solar panels and batteries. 

It will also be driven by the fall in petrol costs as people switch to electric vehicles and the shift from gas stoves and water heaters to electric. 

Those savings, according to the report, create room for more climate action from the federal government, like cutting greenhouse has emissions from coal-fired power plants, without affecting the cost of living. 

The biggest savings are expected in gas-reliant Victoria, where modelling suggests an average annual spend on petrol, gas and electricity could fall from $6036 to $2767. 

The institute’s energy and climate change program director, Alison Reeve, said how Australians used energy was changing, and because of this policies to reduce emissions should too. 

“For too long, federal governments of both political colours have avoided pricing carbon because they fear higher electricity prices,” she said.

“Our report shows that the source of that fear is becoming outdated.” 

The Coalition introduced a safeguard mechanism when it was last in power, and Labor revamped it in 2023. 

It requires industrial facilities that release more than 100.000 tonnes of carbon dioxide in Australia each year, to reduce emissions by 4.9 per cent each year until 2030.

Those cuts can be made on site or buying carbon offsets. 

“Introducing a carbon constraint into the electricity sector would increase Australia’s chances of finding the least-cost road to net zero, and could be done without hurting households,” the report said. 

“This report shows how.”

A review of the safeguard mechanism is planned for 2026.

The report recommends a three-pronged strategy to accelerate the push to net zero while keeping the lights on and household costs down:

* Use the 2026 planned review of the safeguard mechanism to explore how it can help the electricity sector get to net zero at lower cost.

* Maintain and extend programs to ensure the benefits of electrification are available to all households, particularly those on low incomes and in rental and multi-unit properties.

* Continue reforms to make planning approvals for transmission faster and easier, and build social licence in host communities.

AAP