![\"Australian](\"https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2022\/03\/2022-elec-prices.jpg\")
<\/p>\r\n<\/p>\r\n
Wholesale electricity prices increased across most of Australia this financial year. Retail electricity prices should soon follow.<\/p>\r\n
A regional Queensland price hike<\/a> and a Victorian solar feed-in tariff reduction<\/a> have already been announced.\u00a0<\/p>\r\n Compared to the previous financial year, the National Electricity Market (NEM) — every state except Western Australia — has seen the following changes in average wholesale electricity market spot prices:<\/p>\r\n The financial year still has three and a half months left, so this could change, especially with Russia invading Ukraine<\/a>. Australian natural gas prices could rise and push up wholesale electricity prices1<\/a><\/sup>.<\/p>\r\n Western Australian wholesale electricity spot prices are secret. Still, their Premier has promised electricity bills will only rise at the inflation rate for the next two and a half years<\/a>.\u00a0 I’m not expecting an increase in WA’s unfairly low solar feed-in tariff<\/a> — not even to keep it in line with inflation.\u00a0<\/p>\r\n I also don’t have information for the territories, but changes in the ACT are likely to be similar to NSW.\u00a0<\/p>\r\n Below I’ll go over…<\/p>\r\n I’ll even speculate on what might happen over the next few years.\u00a0 But don’t rely on me getting it right because prediction is hard — especially about the future.<\/p>\r\n If you only care about what electricity prices will do in your corner of Australia – feel free to jump straight to your state or territory.<\/p>\r\n If you are interested in the whole of Australia, keep reading.<\/p>\r\n Late last year, the worldwide economic recovery increased demand for Australian exports and pushed up electricity prices.\u00a0<\/p>\r\n I was expecting across the board increases, but two factors prevented this:<\/p>\r\n I didn’t think COVID would get as bad as it did.\u00a0 I knew our leadership was incompetent, but I assumed they wouldn’t just let it rip when vaccines and public health measures were available that could have prevented most of the suffering.\u00a0<\/p>\r\n In South Australia, we went from four COVID deaths in December to around 220 now.\u00a0 If any of the politicians responsible are reading this, I’ll mention it knocked $84 million<\/a> off the state’s Christmas spending. \u00a0Perhaps that news might bring a tear to your eye.\u00a0 The reduction in economic activity reduced the electricity demand.<\/p>\r\n Australia had a cool summer thanks to the La Ni\u00f1a<\/a> climate pattern.\u00a0 We had the coolest summer in nine years.\u00a0 While it sounds much cooler than normal, it was still slightly warmer than the 110-year average.\u00a0 When I was born2<\/a><\/sup> it would have been an average summer, but it’s now a nine-year low thanks to global warming.<\/p>\r\n The flooding in Queensland and NSW is likely to reduce electricity demand.\u00a0<\/p>\r\n From the CSIRO’s Climate Change in Australia page<\/a>.<\/p><\/div>\r\n An increase in the average wholesale electricity spot price of one cent per kilowatt-hour from the year before does not mean households will pay exactly one cent more per kilowatt-hour on their retail tariff.\u00a0 This is because…<\/p>\r\n Wholesale electricity prices are only around one-quarter of typical household electricity bills.\u00a0 Other major components are long-distance transmission, local distribution, and retailing costs.\u00a0 If these change, it can cause electricity prices to rise or fall even if wholesale prices stay the same.<\/p>\r\n Another reason spot prices aren’t a perfect indicator of what will happen with electricity prices is that only some wholesale electricity is traded on the market.\u00a0 The rest is set through contracts, the details of which are kept hidden.\u00a0 Contract prices usually average a little lower than spot prices, but sometimes they are way off.\u00a0 These kinds of mistakes will keep happening until psychics stop working on hotlines for $3 a minute and go where the real money is.\u00a0<\/p>\r\n Solar panels provide power when the sun is up.\u00a0 If you didn’t know this, the word “solar” should have been a big hint.\u00a0 The more solar generating capacity is built, the lower daytime electricity prices will be.\u00a0 As the cost of electricity falls during the day, it will reduce solar feed-in tariffs. This process will have up and downs, but the overall downward trend will be gradual for three main reasons:\u00a0<\/p>\r\n I don’t expect solar feed-in tariffs to become very low for a decade or more, and I don’t expect them to ever disappear<\/a>.<\/p>\r\n After falling below 2% for six years in a row, Australian inflation is now back up to around 3%.\u00a0 While this still seems low to someone alive in the 70s3<\/a><\/sup> it is enough to have a noticeable effect on electricity bills.\u00a0 Inflation can make it appear the cost of grid electricity is increasing even if, in real terms, it’s holding steady or even falling.\u00a0<\/p>\r\n As a large state with a moderate amount of industry, Queensland has fairly consistent average wholesale electricity spot prices.\u00a0 Year on year changes are usually under a couple of cents, as this graph using information nabbed from the AEMO<\/a> shows:<\/p>\r\n This financial year has been exceptional, with an average 5.3 cents higher than the previous year.\u00a0 The two main reasons for this large increase were:<\/p>\r\n I mentioned we had a cool summer, but Queensland wasn’t as cool as the rest of Australia, as this map shows:<\/p>\r\n I acquired this map from ABC news who snagged it from the Bureau of Meteorology.\u00a0 It shows that not even La Nina and the Tonga eruption<\/a> working together could make Queensland cooler than other states…<\/p><\/div>\r\n As you can see, Queensland and the most populated parts of WA were hotter than the rest of the nation.\u00a0 But the map is a little hard to read.\u00a0 Over the past 10 years, the temperature anomaly for Australia has averaged over 1 degree, so the light yellow parts were still cooler than usual for summer these days.\u00a0<\/p>\r\n A big reason for the large increase in Queensland wholesale electricity prices was an explosion<\/a> at the black coal Callide Power Station 80 km from Gladstone in May last year.\u00a0 A 405-megawatt generator decided to blow itself up.\u00a0 It’s not known if it was depressed<\/a> or, in the race to destroy the planet, it simply decided to come first.\u00a0<\/p>\r\n Despite coal being on the way out, $200 million is being spent to repair it4<\/a><\/sup>.\u00a0 This is not money well spent, given coal’s significant negative externalities. This is a fancy way of saying it pollutes the air and contributes to global roasting.<\/p>\r\n Here’s the generator at Callide Power Station that exploded. Clearly, it did a good job of it. Thank god no one was killed. On the bright side, maybe a few more people in Bangladesh will live as a result.\u00a0 (Image:\u00a0 CS Energy)<\/p><\/div>\r\n This increased spot prices in all the NEM states, but the main effect was in Queensland.\u00a0 The Queensland Competition Authority (QCA) has said tariff 11, the most common flat retail tariff in regional QLD will rise by about 20.8% in July.\u00a0 This is an increase of 5 cents — very close to the increase in the average wholesale electricity spot price so far this year:<\/p>\r\n This is a part of figure 4.4 ripped from the Queensland Competition Authority draft determination report:\u00a0 Regulated retail electricity prices in regional Queensland 2022-23<\/a>.<\/p><\/div>\r\n Because almost all the increase has been due to higher wholesale electricity prices, I expect an increase in Queensland solar feed-in tariffs<\/a> of 4 cents or more.\u00a0 This will make Queensland’s the highest in the nation.\u00a0 Despite the increase in electricity prices, most homes with large solar systems will come out ahead.\u00a0 Rooftop solar in Queensland<\/a> is about to go from a great investment to a superb one.<\/p>\r\n This graph of the monthly average wholesale electricity spot price shows them shooting up in May last year with the loss of 405 megawatts of coal generating capacity at Callide Power Station.<\/p><\/div>\r\n South Australia has a small population of 1.8 million, little industry, inadequate competition in the electricity market, and extremely high electricity consumption in summer heatwaves.\u00a0 This means the average annual wholesale electricity spot price can vary greatly from year to year:<\/p>\r\n Fortunately, South Australia has invested a lot in wind and solar energy generation, with most of the solar installed by households.\u00a0 Because these renewable sources of generation have zero fuel cost, they are very good at pushing down electricity prices. They have reduced South Australia’s from the highest in the nation to the middlest.<\/p>\r\n Because SA generates more electricity from gas than any other, it is more vulnerable to invasion related gas price increases..<\/p>\r\n Compared to the previous financial year, wholesale spot prices have increased by 0.9 cents.\u00a0 All else equal, I’d expect to see electricity prices increase by around that much, with solar feed-in tariffs in SA<\/a> increasing by close to that amount.\u00a0<\/p>\r\n This graph shows average spot prices by month were much higher in summer this financial year than the one before, but they would have been higher still with a hotter summer.\u00a0 SA also had the lowest monthly average of any state.\u00a0 This occurred in October due to solar and wind capacity’s ability to push wholesale prices down.<\/p><\/div>\r\n NSW is the largest state by population, has plenty of industry by Australian standards, and — most importantly — the majority of inhabitants live in a climatic cheat zone of beautiful weather.\u00a0 This makes their wholesale electricity prices the steadiest in Australia.\u00a0 They generally change by under one cent per year:<\/p>\r\n So far, the state’s wholesale electricity market spot prices are up 0.6 cents over the previous financial year.\u00a0 Assuming other components of electricity bills remain the same, electricity prices are likely to rise by around this amount and solar feed-in tariffs in NSW<\/a> by almost the same.<\/p>\r\n You can clearly see the NSW monthly average spot price rising in May as prices were pushed up in neighbouring Queensland because of the Callide coal power kablooey .<\/p><\/div>\r\n Tasmania’s electricity prices can show a lot of variation from year to year:\u00a0<\/p>\r\n Factors affecting Tasmanian wholesale prices are:<\/p>\r\n The Basslink interconnector conked out in December 2015 and was repaired in June 2016.\u00a0 High prices in the 2016-17 financial year were mostly because they were high in Victoria.\u00a0<\/p>\r\n So far this financial year, mainly by chance, average wholesale spot prices are the same as they were the previous financial year.\u00a0 This may change over the next few months, but I don’t expect any real shift in Tasmanian electricity prices and no significant change in feed-in tariffs in TAS<\/a>.\u00a0<\/p>\r\n With the second-largest population, a considerable amount of industry, and a climate that isn’t extreme5<\/a><\/sup>, you might expect Victoria to have fairly steady average annual wholesale electricity spot prices like NSW.\u00a0 But this hasn’t been the case lately:<\/p>\r\n Victorian wholesale electricity prices were high five years ago because the brown coal Hazelwood Power Station<\/a>\u00a0closed down with only a few months’ warning.\u00a0 The horribly polluting power station was simply too unsafe to operate.\u00a0 I’d say this applies to every coal power station but in this instance, it applied to the people inside the power station, not outside it. \u00a0\u00a0<\/p>\r\n Between COVID, a cool summer, and a little help from increasing renewable generation, Victoria had a slight fall in its average wholesale electricity spot price.\u00a0 So far it has fallen 0.36 cents from last financial year.\u00a0 This decrease won’t be very noticeable on bills, but Victoria’s Essential Services Commission has announced a significant cut in the state’s minimum feed-in tariff<\/a> from 6.7 cents to 5.2 cents in July. The reasons given for the 1.5 cent drop were low daytime wholesale prices and expected low wholesale prices next financial year.\u00a0 But this is only the minimum feed-in tariff.\u00a0 Some retailers are offering more.<\/p>\r\n Despite the coming fall in the minimum feed-in tariff in VIC<\/a> and the least sunshine of any mainland state, solar can still make excellent financial sense in Victoria.\u00a0 This can be especially true with the $1,400 Victorian Solar rebate<\/a>.\u00a0 This amount is available for most homes that don’t already have solar until the 30th of June.\u00a0 After this, it shouldn’t disappear but it will be reduced.<\/p>\r\n I know I said prediction is hard, but If economic growth is as strong as\u00a0predicted in February,<\/a> I’d expect further wholesale price increases in the 2023-24 financial year.\u00a0 But with Russia starting a land war in Eurasia, what the world economy will be like in a year is anybody’s guess6<\/a><\/sup>.\u00a0 I’m going to cross my fingers and hope for peace and a healthy world economy.<\/p>\r\n\r\n
\r\n
![\"crystal](\"https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2022\/03\/fortune-teller-and-crystal-ball.jpg\")
<\/p>\r\nSummer Breeze & Summer Disease<\/h2>\r\n
\r\n
COVID Reduced Demand<\/h2>\r\n
A Cool Summer<\/h2>\r\n
![\"Summer](\"https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2022\/03\/whole_mean.jpg\")
<\/p>\r\n![\"Climate](\"https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2022\/03\/whole_csiro.png\")
How Wholesale Spot Prices Affect Retail Prices<\/h2>\r\n
\r\n
Solar Power Reduces Daytime Prices<\/h2>\r\n
\r\n
Inflation<\/h2>\r\n
QLD Prices Will Jump<\/h2>\r\n
![\"Average](\"https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2022\/03\/whole_qldyears.png\")
<\/p>\r\n\r\n
![\"Mean](\"https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2022\/03\/whole_qldmap.jpg\")
![\"Callide](\"https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2022\/03\/whole_callide.jpg\")
![\"Queensland](\"https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2022\/03\/whole_qac.png\")
![\"Average](\"https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2022\/03\/whole_qldmonth.png\")
South Australia Will See A Modest Increase<\/h2>\r\n
![\"Average](\"https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2022\/03\/whole_sayears.png\")
<\/p>\r\n![\"SA](\"https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2022\/03\/whole_samonth.png\")
NSW Retail Prices To See A Small Increase<\/h2>\r\n
![\"Average](\"https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2022\/03\/whole_nswyears.png\")
<\/p>\r\n![\"NSW](\"https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2022\/03\/whole_nswmonth.png\")
Tasmania — Meh…<\/h2>\r\n
![\"Average](\"https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2022\/03\/whole_tasyears.png\")
<\/p>\r\n\r\n
![\"TAS](\"https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2022\/03\/whole_tasmonth.png\")
<\/p>\r\nVictoria Will Get A Small Decrease<\/h2>\r\n
![\"Average](\"https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2022\/03\/whole_vicyears.png\")
<\/p>\r\n![\"VIC](\"https:\/\/www.solarquotes.com.au\/blog\/wp-content\/uploads\/2022\/03\/whole_vicmonth.png\")
<\/p>\r\nFuture Trends<\/h2>\r\n