Solar Energy: The Solution to Rising Energy Costs

Australian households struggle to keep up with the cost of living as fuel and food prices escalate. Adding to the financial pressure on the budget is the rising cost of electricity and gas, which is predicted to continue its upward trend according to Barrenjoey Markets Pty Ltd. (1)

According to Barrenjoey calculations, on average, Australian families spend A$263 per month on electricity, gas and other fuel bills, equivalent to 3.1% of average earnings. A 5-10% increase equates to A$13.20 to A$26.30 per week.(2)

The three components of a standard energy bill are wholesale costs, network charges and retail margin. These cover the delivery of electricity or gas through power lines into homes – this is what we call “generation.”

There’s also an administrative fee for reading meters every month which gives consumers access to how much they’ve used over time to help them manage their spending habits more effectively. The cost of transporting energy and wholesale costs typically accounts for around three-quarters of the final energy bill.

As explained by Katja Ignatieva, a Scientia Associate Professor at UNSW Business School, whose research focuses on the dynamics and volatilities of the energy markets, the energy price increase is driven by multiple factors including rising gas and coal prices; reduction of thermal power generation due to unplanned outages at multiple generators and increasing generation cost. (3)

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What is causing Australia’s rising energy costs?

1. The days of coal-fired generators are numbered.

The coal-powered plants are failing at an unprecedented rate this year, with more than one quarter offline so far. With outages at coal-fired power stations, gas has been called on more than usual to meet our energy demands.

2. Australia’s gas supply is insufficient to keep up with the demand.

Gas shortages in Australia have been a long-term issue that may become more prevalent as traditional gas resources, mainly offshore Victoria run low. The Australian Energy Market Operator (AEMO) has warned of these impending problems for some time now.

There are fears they could lead to power outages throughout the southeast if solutions are not proposed anytime soon. The Gillard government refused the idea of securing a certain proportion for domestic consumption, feeling that this would create an uneven playing field and give an advantage to foreign companies.

3. Europe refuses to be dependent on Russia for gas. 

In the wake of Russia’s increasing reliance on piped natural gas, many European countries have been pushing up prices for liquefied petroleum gas (LNG).

The continent is now purchasing its supplies from places like the United States and Qatar at an international rate far higher than what it would cost if purchased domestically or even via pipeline transportation. Some Australian gas exporters have reported export prices four or more times higher than usual. 

4. Australia’s cold snap

With a cold snap on Australia’s east coast, the winter spike in demand for gas heating has been brought forward. With winter drawing near, energy companies in Australia are warning about a possible shortage of natural gas.

This would lead to lower temperatures and could result from decreased supply or increased demand for its use within homes.

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How to Save Money By Switching to Solar Energy

As electricity costs continue to rise, Australian consumers are looking for new ways to help them save money. One way they can do this is by switching to renewable energy, which has been proven as a one-of-a kind source due its high availability and low price compared to other forms of power production like coal or gas plants

Federal government mandated rebates

The Australian federal government provides many benefits to households that install renewable energy systems, including solar panels and water heaters.

The most popular is the small-scale technology certificates with a redeemable value, which can be used towards your electricity bill. You are eligible for a rebate depending on the size of your solar system and the number of certificates you have.

Battery systems

Home solar battery systems are being introduced in Australia to help homeowners reap solar benefits while saving money on traditional power bills. The solar panels store excess energy, which can be used during cloudy days to lower electricity costs for typical households by up to $640 a year.

Solar battery systems have been installed in more than 30,000 homes across Australia, with the number of installations increasing rapidly each year. Home solar battery systems are an excellent way to save money on your electricity bill while reducing your carbon footprint and supporting the transition to a renewable energy future.

Water and heat pumps

According to Your Home, hot water systems majorly contribute to your household’s total energy consumption. Solar hot water systems are a type of solar power system that uses solar energy to heat water for domestic or commercial use. It’s estimated that households that install solar hot water systems will save between $140 and $400 a year on electricity bills, making them a cost-effective investment with long-term benefits. Solar hot water systems use solar panels to collect solar energy and convert it into heat. (4)

The solar-heated water is then stored in a tank where it can be used for showers, laundry, or dishwashing. Solar hot water systems are an environmentally friendly alternative to traditional electric or gas-powered systems, and they have the potential to save you money on your energy bills.

Feed-in tariff payments

Feed-in tariffs are a great way to monetize your solar power. They provide you with Payments for Excess Electricity (PExE), which can be exchanged against traditional energy sources or used as payment on current bills.The price of electricity can vary depending on where you live.

The Australian government has an online database that shows the average cost per kilowatt-hour across all states and territories and what it would cost for a household to use their own solar panels in those areas.

While there are many causes for the increase in energy prices, solar power is one solution that can help offset some of those costs. If you’re looking for a way to reduce your monthly electric bill, consider investing in a solar panel system. With rising energy prices, it’s more important than ever to find ways to save on your electricity costs.


  1. https://www.bloomberg.com/profile/company/1878828D:AU
  2. https://www.bloomberg.com/news/articles/2022-05-27/australian-households-woes-seen-deepening-on-rising-power-bills#xj4y7vzkg
  3. https://newsroom.unsw.edu.au/news/business-law/energy-crisis-why-are-electricity-prices-set-rise
  4. https://www.yourhome.gov.au/energy/hot-water-service