Retail Power Rates Set to Rise Despite Wholesale Price Drops


WalMart Solar Australia
  • NSW energy minister Josh Frydenberg’s plea for big retailers to cut tariffs is likely to go unrealised, despite wholesale price drops
  • Retail prices are instead estimated to rise by 3.6%, according to Bank of America Merrill Lynch analysts
  • But this is still less than the price hikes of 14-19% households experienced last year
  • Australia has some of the world’s highest power prices compared to countries like the U.S.

Wholesale prices in the National Electricity Market (NEM) have fallen by almost a fifth from their extreme highs last winter. But despite NSW energy minister Josh Frydenberg’s plea for big retailers AGL Energy, Origin Energy and Energy Australia to cut their tariffs, it seems prices will rise instead.

However, according to Bank of America Merrill Lynch analysts Simon Chan and Lauren Berry, retail electricity prices for the new financial year are based, not on the most recent NEM prices, but on the average NEM price over the previous 11 months. So in this case they expect the price rise to be around 3.6%.

Power prices are a hot political topic at the moment with a federal election next year and Mr Frydenberg aiming to navigate the government’s National Energy Guarantee (NEG) policy.

The draft NEG policy by the Energy Security Board outlines a ‘light touch’ approach in favour of small retailers taking on big power companies who, up until now, have had market dominance.

Households can at least breathe a sigh of relief at least that this years’ increases are significantly less than the price hikes last year of 14-19% due to the closure of the Hazelwood brown coal power plant in Victoria.

Australia’s power prices are among the world’s highest, in some cases two or three times more than that of the U.S. and just above Denmark, Germany and Italy. South Australia pays 47.13, NSW pays 39.10, Queensland pays 35.69 and Victoria pays 34.66 ¢ per kilowatt hour. As a comparison the U.S. pays 15.75 ¢ per kilowatt hour.

Andy Vesey, AGL Energy’s chief executive,

admitted last year that big power companies were guilty of not looking after their customers

. He said people were lured in by deep discounts then pushed onto higher payment plans after a year or two, or a plan with a much lower discount.


Australia Financial Review


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Understanding Batteries

Off-Grid Systems

For some households a battery system can be of great benefit and minimise a home’s reliance on the grid. However, it’s important to understand for a battery to be useful your solar system needs to be generating excess energy for the battery to store, which you can then use at night or when the sun is not out.

When selecting a battery, you’ll want to invest in a system that is most suited to your home and can drive the best return on investment (ROI). Despite a larger upfront cost, a higher quality battery may significantly increase your ROI.

    Battery systems start from $6,000 and costs can vary greatly based on the following factors:

  1. Cycle Life-Time

    The number of times a battery can fully charge and discharge.

  2. Battery Power (kW)

    How fast it can be charged or discharged.

  3. Storage Capacity (kWh)

    The maximum amount of energy a battery system can store.

  4. Battery Management System (BMS)

    An electronic ‘smart’ system that gathers data and manages the battery ensuring it does not overload or operate outside of its safe functioning zone..

  5. Inverter

    Battery systems require their own inverter if your solar system does not have a hybrid inverter.

  6. 'All-In-One Unit’

    A system which includes the battery, BMS and an inverter all in one unit.

  7. Warranty

    Length of time or cycles the battery system is under guarantee.

  8. Blackout Protection/Backup

    It’s important to note this is not a common feature of a battery system and could cost thousands of dollars to include. Blackout protection not only requires additional components but also a specialised installation and rewiring. For grid-connected homes, the cost for blackout protection can outweigh the benefit.

Additionally, if your purpose for adding battery is to go Off-Grid and become completely independent from the grid you will need to ensure your solar system can generate enough energy to power your home and your battery system is large enough to store this energy. For homes in metro areas going Off-grid is not cost effective and is only recommended for those in remote areas with limited access to the grid. Off-grid solar systems with battery start at approximately $30,000.

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