Australia electricity prices to drop over supply increase

The market is expected to see an additional 5GW supply over the period.

Residential electricity prices in Australia are projected to fall 7.1% to 2022 on the back of rising supply in the electricity market and lower regulated prices for networks, according to the Australian Energy Market Commission (AEMC).

Wholesale costs are expected to drop by around $62 from FY19 to FY22 for a consumer, attributed to a higher supply and flat demand. Network costs are projected to decrease by $11, whilst environmental costs are estimated to decline by $21.

“Overall, a representative consumer will pay around $97 less than today by June 2022,” AEMC chairperson John Pierce said.

Generation costs have been falling from additional generation, and regulated network prices dropped from declining distribution costs. Green scheme costs have also been lowered by cheaper large-scale generation certificates for increasing levels of renewable generation.

“These results for FY19 to FY22 point to the state of the market over this specific period which will see significant injection of around 5,000 MW of new supply,” Pierce said.

South East Queensland is expected to see the biggest fall in prices amongst regions, at 20% or $278 over the same period. This translates to an average annual drop of 7%. Most other regions are expected to see 2-8% decline in prices, except for Western Australia where it is projected to rise 6%.

“However, actual price outcomes may be different due to different regulatory arrangements in Western Australia,” AEMC stated in a news release.