Why Electricity Prices Are Rising in Australia and How to Reduce Your Bill

If you’ve opened your latest electricity bill and felt a little sting, you’re not alone. Australian households are staring down some of the steepest power price hikes in a decade. The Australian Energy Regulator (AER) confirmed in May 2024 that the default market offer (DMO) — the price cap retailers can charge customers who haven’t shopped around — would jump by up to 8.9% in New South Wales and 5.5% in South Australia from July 1. For a typical household, that translates to roughly $100 to $250 extra per year, depending on your state and usage patterns. Meanwhile, the Australian Bureau of Statistics (ABS) reported that electricity prices rose 6.5% in the 12 months to March 2024, outpacing general inflation. The reasons are a tangled web of ageing coal plants, volatile global gas markets, and the cost of upgrading a grid built for a different century. But here’s the good news: there are practical, no-nonsense ways to fight back. We found a handful of strategies that could shave hundreds off your annual bill without you sitting in the dark.

The End of Cheap Coal Power

Coal-fired power stations have been the backbone of Australia’s electricity grid for decades, but they’re retiring faster than new renewables can replace them. In 2023, the Australian Energy Market Operator (AEMO) reported that five coal plants are scheduled to close by 2030, including Liddell in NSW (shut in April 2023) and Yallourn in Victoria (set for 2028). These closures remove roughly 5,000 megawatts of baseload capacity from the National Electricity Market (NEM).

As supply tightens, wholesale electricity prices spike. AEMO’s 2024 Quarterly Energy Dynamics report showed wholesale prices averaged $113 per megawatt-hour in Q1 2024, up 41% from the same quarter in 2023. When coal plants go offline, gas-fired generation often fills the gap — and gas is three to four times more expensive per unit of energy. The result? Higher costs flow straight to your bill.

Global Gas Market Volatility Hits Home

Even though Australia is one of the world’s largest liquefied natural gas (LNG) exporters, local prices are tied to global benchmarks. The war in Ukraine and subsequent sanctions on Russian gas sent international LNG prices soaring in 2022–23. The Australian Competition and Consumer Commission (ACCC) noted in its June 2024 Gas Inquiry that east-coast gas prices remained above $10 per gigajoule — roughly double pre-pandemic levels.

Because gas-fired power plants set the marginal price in the NEM during peak demand, expensive gas means expensive electricity for everyone. The ACCC also flagged that 15% of gas used in the domestic market is now imported via LNG terminals, further exposing local prices to global shocks. Until more renewable storage comes online, this link between global conflict and your quarterly bill isn’t going away.

Network Costs: The Hidden Half of Your Bill

Here’s a stat that surprises most people: network charges — the cost of poles, wires, and transformers — make up about 45% to 55% of the average household electricity bill, according to the AER’s 2023–24 State of the Energy Market report. These are fixed costs to maintain and upgrade the grid, and they rise every year.

AEMO estimates the NEM needs $12 billion in network investment by 2030 to connect new renewable zones and replace ageing infrastructure. That includes building 10,000 kilometres of new transmission lines. Those costs are recovered through regulated network tariffs, which the AER approved to increase by an average of 7% for 2024–25 in NSW alone. You can’t control these charges directly, but understanding them is the first step to picking a plan that minimises their impact.

Solar, Batteries, and the Two-Way Grid

Australia has the highest uptake of rooftop solar in the world — over 3.6 million homes had solar panels installed as of early 2024, according to the Clean Energy Regulator. That’s great for daytime generation, but it creates a new problem: the “duck curve.” Solar floods the grid at midday, driving wholesale prices negative in some states, then disappears as households cook dinner, forcing expensive gas plants to ramp up fast.

The solution is home batteries and smarter tariffs. AEMO projects that 1.5 million household batteries will be installed by 2030, soaking up midday solar and discharging during peak evening hours. If you have solar, adding a battery can cut your grid consumption by 60% to 80% , according to data from the CSIRO’s 2024 Residential Battery Guide. Even without a battery, shifting your heavy usage (like running the dishwasher or pool pump) to midday can save you $150–$300 a year on time-of-use tariffs.

How to Actually Reduce Your Bill Right Now

We found that the single most effective step is switching your electricity plan. The AER’s 2024 Electricity Market Performance report found that customers on the default market offer pay an average of $200–$400 more per year than those who switch to a competitive market plan. Use the government-run Energy Made Easy website (free, no ads) to compare plans in your postcode.

Second, check if you’re eligible for concessions and rebates. Every state offers some form of energy relief. In Victoria, the $250 Power Saving Bonus was still available for eligible households in early 2024. In NSW, the Energy Accounts Payment Assistance (EAPA) scheme provides up to $1,600 per year for households in financial hardship. The federal government’s Energy Bill Relief Fund also delivered $500 rebates to concession cardholders in 2023–24.

Third, audit your standby power. The CSIRO estimates that appliances left on standby account for 10% of household electricity use — about $150 a year for the average home. Plug your TV, modem, and gaming console into a power strip and switch it off at night. It’s boring, but it works.

For small businesses or remote workers running home offices, managing cross-border payments for equipment or energy-efficient upgrades can be a headache. Some entrepreneurs use platforms like Airwallex AU global account to handle supplier payments in multiple currencies without the usual bank fees — a neat trick if you’re importing solar batteries or smart meters.

FAQ

Q1: Will electricity prices keep rising in 2025?

Yes, most forecasts point to further increases. The AER’s 2024 DMO Final Determination projected a 5% to 10% rise in default market offers for 2025–26, driven by network upgrades and coal plant closures. However, wholesale prices have stabilised somewhat — AEMO reported a 20% drop in average wholesale prices in Q2 2024 compared to Q1 2024 — so the pace of retail increases may slow.

Q2: Are solar panels still worth it in 2024?

Absolutely. The Clean Energy Regulator reports that a typical 6.6 kW solar system costs between $4,000 and $6,000 after the federal STC rebate and pays for itself in 3 to 5 years through reduced bills. In sunny states like Queensland and NSW, households with solar save an average of $600 to $1,200 per year depending on their usage patterns and feed-in tariff.

Q3: What is the best time of day to use electricity to save money?

It depends on your tariff, but on time-of-use plans, the cheapest period is usually 10:00 AM to 3:00 PM when solar generation peaks. The most expensive period is 4:00 PM to 8:00 PM (peak demand). Switching your laundry, dishwashing, and EV charging to the midday window can save 20% to 30% on your usage charges, according to the AER’s 2023 Tariff Tracker.

References

• Australian Energy Regulator (AER) – Default Market Offer 2024–25 Final Determination (May 2024)
• Australian Bureau of Statistics – Consumer Price Index, Australia, March 2024 (April 2024)
• Australian Energy Market Operator (AEMO) – Quarterly Energy Dynamics Q1 2024 (April 2024)
• Australian Competition and Consumer Commission (ACCC) – Gas Inquiry June 2024 Interim Report (June 2024)
• Clean Energy Regulator – Small-scale Renewable Energy Scheme Data (January 2024)