Why Is Australia Facing Rising Electricity Prices?

 

Solar Panels Homes Australia
  • Australia’s energy retailers AGL, Energy Australia and Origin Energy are increasing power prices this year.
  • Increasing prices are because of the rising costs of generation and distribution of electricity.
  • But there is no evidence that renewables like solar energy are to blame for price hikes.
  • Outline of some ways that people can manage their electricity use during peak times.
  • People can also combat increasing retail prices by installing solar panels and battery storage.

Some of Australia’s biggest energy retailers AGL, Energy Australia and Origin Energy are hiking up their electricity prices in 2018, yet again. It’s a recurring trend and one that is here to stay, according to energy experts, and burgeoning power bills are causing people to seriously consider installing a solar panel system.

So what are the reasons behind the price increases?

There are several. For a start, nearly a quarter of the average bill is the cost of generating energy, or the ‘wholesale electricity price’. This has risen dramatically in the past couple of years because there is less electricity supply in the market and prices have subsequently been pushed up. This is due mainly to the rising cost of gas affecting power produced by gas power plants and old coal power plants closing in South Australia and Victoria.

The price of distributing energy has also increased and is being reflected in rising network charges. This is because Australia has an extremely large electricity network and a lot of money goes into maintaining poles and wires that convey electricity from power plants to homes and businesses.

Building and installing new parts for the network isn’t cheap by any means either, but a lot of upgrades and investments to the network, especially in NSW and Queensland, haven’t been deemed necessary and have been described as “gold plating”. This is due to forecasts for electricity demand being too high after the global financial crisis.

By far and away the smallest component of the average bill is the cost of generating electricity through renewable sources. This includes the cost of meeting the nationwide Renewable Energy Target (RET) (aiming for 20% of the country’s electricity supply from renewable sources by 2020), plus ongoing costs of rooftop solar power schemes. The cost of rooftop solar power schemes varies from state to state as each government sets a feed-in tariff.

So accusations by detractors, who say that solar energy is to blame for price hikes, aren’t seeing the full picture. There is no evidence that renewables like solar energy are to blame for price increases. In fact solar energy is a very small part of the issue.

So what can people do on an individual level?

Reducing or better managing electricity during peak demand times is one suggestion to help lower your power usage. For example, turning off appliances if they’re not being used and doing the laundry at low peak times when power is cheaper. Another suggestion is using a Smart home system that can remotely cycle air-conditioners on and off.

If your power bill is still getting you down then the best way to combat rising retail prices is to install solar panels and battery storage. Even if you still need to use some power from the grid to top up, solar panels will help to significantly reduce your electricity usage. Many homeowners are finding that switching over to solar panels is a lifesaver when peak demand electricity prices are going through the roof.

 

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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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