Electricity price pain set to continue until at least 2027
For the first time since the reports began, technology costs – that is, the price of building and maintaining new technology, such as a coal-fired power stations or solar installations – rose across every energy source.
On average, costs rose by 20 per cent – around triple the rate of inflation.
Solar saw the smallest price increases, with the cost of both rooftop and large-scale PV installations rising 9 per cent, while the cost of onshore wind farms shot up an alarming 35 per cent.
The cost of coal technologies, which still supplies around 75 per cent of the nation’s electricity market, rose by between 22 and 24 per cent.
What’s to blame?
Prices initially began to rise in 2020 due to global supply chain constraints caused by COVID-19 pandemic shutdowns.
These were exacerbated by Russia’s invasion of Ukraine early last year, which disrupted global supplies of gas in particular.
These forces have combined with a rapid evolution away from fossil fuels and towards renewables which has seen the demand for the raw materials needed to make them soar, pushing up prices.
CSIRO modelling suggests that under current government policies, Australia’s electricity prices won’t return to their pre-pandemic pathway until 2027.
However, new policies increasing the speed of energy transition could see that extend out to 2030.
In one silver lining, despite the rising costs the report found renewables like solar and wind remained the cheapest form of new electricity generation.
This is largely due to significantly lower costs of electricity generation – around $60-100/MWh for a combined solar and wind system capable of supplying 60-90 per cent of the market, compared to up to $130/MWh for black coal, or almost $250/MWh for black coal with carbon capture and storage (a more environmentally friendly approach).