Australians could face higher power prices for years to come as ageing coal-fired power generators exit the energy grid and authorities grapple to deliver transmission projects, the energy regulator says.
The stark warning comes in the latest ‘State of the energy market’ report for 2023, released by the Australian Energy Regulator (AER) on Thursday.
It finds that while consumers have been shielded from even higher energy prices in the past year, they could soon face much greater power bill pain in the near future.
While rebates from federal, state and territory governments alongside Commonwealth intervention in the coal and gas market, have shielded households and businesses from the worst price increases, many of the vulnerabilities in the energy market remain, the report says.
In 2022, the federal government legislated a renewable energy generation target of 82 cent of the country’s electricity by 2030, paving the way towards meeting its 2050 net-zero targets.
But the country is struggling to build renewable energy generation quickly enough, with big projects suffering from rapidly escalating costs, the report states.
At the same time, the rollout of approximately 10,000km of transmission infrastructure that is required to carry green energy across the has been delayed in the face of sustained community opposition.
The AER’s latest report also finds that alongside the closure of the Liddell in NSW, a further four coal-fired power stations are scheduled to close in the next decade, necessitating the urgent investment in generation, storage and transmission capacity to fulfil forecast shortfalls.
“There are also major and urgent pressures for investments to keep pace with the energy transition and retirement of coal generation,” it says.
AER chair Clare Savage said while the market had generally enjoyed “better market outcomes this year” challenges continued to compound the delivery of low-cost and reliable energy supply in coming years.
“Work still remains to address energy affordability for consumers, co-ordinate the entry and exit of generation sources and ensure the timely and least-cost delivery of major transmission projects,” Ms Savage said.
“These projects face challenges including escalating costs, slower than planned progress and the need to address the concerns of the communities that host them.”
Additionally, the report shows that shortfalls in electricity supply are accelerating in response to growing demand for electricity which will necessitate increased generation capacity.
Measures by state and territory governments to phase out gas usage, combined with the take-up of electric vehicles, would have a material impact on electricity demand, it states.
The impact of the renewable generation also continues to grow – with rooftop solar output accounting for 9 per cent of total generation in 2022 – 15 per cent more than in 2021, and more than double that in 2018.
