The Australian Energy Market Commission predicts that electricity prices may plummet by approximately 20 percent due to growing wind and solar investments. Such investments will drive down wholesale prices of electricity.
In its latest electricity price trends report, the AEMC forecasted that the prices of household electricity could decline by 20 percent in southeast Queensland by 2021 to 2022. Other states such as New South Wales, Victoria, Tasmania, and South Australia could also experience a fall in electricity costs.
Tasmania and the Australian Capital Territory are the two areas with the highest renewables uptake. They will continue to pay the cheapest and second-cheapest electricity tariffs, respectively.
A report on the RenewEconomy website states that the AEMC projects the average Australian energy user will pay $97 a year less for their electricity by 2021 to 2022.
However, the AEMC also warns that the energy market could divert from the forecast because of unforeseen developments.
According to John Pierce, AEMS Chairman, “More supply puts downward pressure on prices. But it’s important to note that over a decade of analysis we have seen trends change sharply in response to factors such as sudden generator closures and implementation of new policies. As such, all price projections should be seen as just that, projections.”
Green Schemes and Committed Renewables Projects
The cost of “green schemes” will plummet over the next few years. These include federal and state renewable energy targets and energy efficiency schemes.
The article on the website also gave projections on the costs of green schemes. “With the federal renewable energy target to fall by 23.9 percent by 2021 to 2022, mostly driven by a fall in large—scale Generation Certificates, saving the average household $22 a year.”
Additionally, the AEMC highlighted the strong lineup of confirmed renewable energy projects. These include 2,338 megawatts of new solar projects, 2,566 megawatts of wind, and 210 megawatts of new gas generation capacity.
Furthermore, the AEMC expects an additional 1,555 megawatts of new battery storage capacity to be added to the system in the next few years.
Such wind and solar investments will be responsible for over half of the reductions in electricity costs. These are possible through cheaper wholesale electricity prices. The declining costs of network infrastructure and environmental schemes also add to the positive outcome for consumers.
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