Chapter 1: Why have Australian power bills increased significantly in recent years?
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It feels almost impossible for the cost of anything to come down. So how is it that our power bills are about to fall? Well, it has a huge amount to do with renewables and our growing love of batteries. Today, energy reporter Dan Mercer on the changing power dynamics. I'm Sam Hawley on Gadigal land in Sydney. This is ABC News Daily.
Dan, when it comes to power bills, Australians have had a pretty rough ride in the last few years. We have seen prices soar, haven't we?
We certainly have, Sam. I mean, conservatively, they've jumped about 40% or $600 for the typical household over the last five years. Now, it has to be said that much of that increase came immediately in the wake of Russia's invasion of Ukraine, which sent energy prices soaring all over the world.
skyrocketing gas prices. They've been pushed up internationally by the war in Ukraine. Wholesale electricity prices along the East Coast have soared from a daily average of less than $100 per megawatt hour to more than $700.
Insanely high coal and gas prices had a massive, massive effect on us at that time. And to be honest, we're still paying for it now because the contracting and hedging arrangements in the electricity market, they tend to take a while to wash through.
And of course, the government did try and come in and help for a bit, right, with a generous rebate. It made it easier, but you're still paying a lot of money.
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Chapter 2: What impact did the Ukraine war have on energy prices?
The savings can be big if you shop around, but typically only if you really kind of make those calls and you do hustle. These companies won't just pass on savings to you.
Yeah, right, so you need to shop around. Okay, but it is good news. Our power bills are about to start falling rather than rising, which they usually do. So let's delve now, Dan, into why that is. Now, part of this has to do with batteries.
Well, we alluded to this earlier, Sam, when we were talking about the difference between this year's crisis and the one in 2022. And a big explanation for that difference is batteries. It's really quite extraordinary how quickly and how seriously they've come onto the scene in Australia. Four years ago, there basically weren't any big batteries in Australia's major grids. And now there are heaps.
I mean, in Western Australia, where I live, there's now so much battery capacity in this state's main grid that they're able to meet about 40% of peak demand. The eastern states, I'm told, are about 18 to 24 months behind WA, but the same story is playing out there and the eastern states will catch up for sure.
In simple terms, those batteries are taking excess solar power from the middle of the day and discharging it in the evening as the sun sets. The effect of this is we simply need less gas power to meet peak demand.
OK, and the Energy Minister, Chris Bowen, he says that these batteries are working to flatten the peak.
If we're saving more of the renewable energy from the day and using it more to flatten out that night-time peak and reduce prices, that is the system working.
But what does he mean by that?
It just means that prices are not rising nearly as high as they were, you know, short-term spot market wholesale prices are not rising nearly as high as they were when the market depended much more on very expensive gas power. Because there are now so many batteries and they have such a collective capacity, albeit restricted to about four hours when they run out,
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Chapter 3: How are renewable energy sources and batteries affecting power prices?
As mentioned already, prices are not going to go back to the way they used to be when we ran almost solely on cheap coal. We had very low power prices, but we're just not going to go back there. That's not going to happen. In the long run, a better question might be whether our energy costs come down.
In other words, if we no longer have to pay for petrol or diesel for our cars or gas for our heating or cooking, and we can run everything on electricity, will our energy bills be lower? Some people, and some real experts in this space, certainly think the answer is yes, they will be.
Dan Mercer is the ABC's energy reporter based in Western Australia. This episode was produced by Sydney Peed. Audio production by Sam Dunn. Our supervising producer is David Cody. I'm Sam Hawley. Thanks for listening.