Part 2 of a 2-part blog
In Part 1, we saw that since 2010, Australia’s electricity demand has been consistently decreasing (thanks to greater energy efficiency). At the same time, power prices have been rising, so the net result to consumers is our household electricity bills have (on average) neither increased nor decreased. Will this stalemate continue?
Probably not; because at the beginning of 2015 demand started to pick up again, and Australia used more electricity that it had for the previous year. This trend is forecasted to continue until 2020.
Why is electricity demand increasing?
Total electricity usage, as reported by the National Electricity Market (NEM), includes both business and residential usage. So when we say demand is increasing, it’s worth considering whether this is coming from businesses, or households.
In this case, it looks like business and government spending is to blame. For example, in Queensland, the state has built some flashy new Liquid Natural Gas (LNG) processing plants, and they use a lot of electricity to run.
In contrast, it is predicted we are going to see a continued decrease in household electricity use. This will partly (but not fully) offset the growing demand in the business sector and keep Australia’s usage around a steady 0.4% annual growth.
The reason that household usage is decreasing is because every year our toasters, microwaves, and ovens– and other appliances – tend to get more energy efficient. On top of that, we’re collectively installing more and more rooftop solar, and energy that we generate ourselves (and in some cases, put back into the grid) via solar is subtracted from total predicted usage. In fact, the federal government has set a renewable energy target, that by 2020 the country will produce 33TWh of clean energy, although this is far from a sure thing.
What does all this mean for the consumer?
So what should you expect the next time you open your power bill?
The short story, is electricity demand is increasing and prices are expected to rise, as illustrated by the attached graphs. (The long story involves wholesale prices, the cost of the various green schemes and feed in tariffs, network charges, market charges, and whatever taxes the government feel like imposing on the cost after everyone else has taken their share!)
That hike around 2013 was caused by the carbon tax’s brief stint. When that was abolished we saw decline but there is still a predicted upwards trend.
That electricity prices will continue to rise may be a fact of life, but there are still opportunities to get ahead. Firstly, as we proved in Part 1, those little energy stars on your appliances make a heck of a difference – use them as a guide to make smart decisions when purchasing (the more stars, the better, it’s up to 10 stars now!) and be more energy efficient. With rising prices, efficiency has never been more important.
Secondly, depending on where you live and your circumstances, consider an investment in solar power, although be aware this is a long-term strategy and it can take 6 or 7 years to pay back the initial investment in savings and get ahead.
Thirdly, consider using the services of an electricity broker, like Bulk Energy, to review your bill and identify opportunities for savings. Our service is free for you (we’re paid by the retailer if you renew your contract, or switch to a new retailer), and it’s amazing how often we can save money.