Australia’s Soaring Energy Prices and the Future for Businesses
In its recent Electricity Forecasting Insights, the Australian Energy Market Operator (AEMO) has forecast electricity consumption rates to remain flat, despite a projected 30% increase in population. AEMO points to the uptake in distributed solar generation and use of energy efficient appliances as key factors in keeping growth of traditional grid-supplied electricity consumption at less than 6% over the next 20 years.
Conversely, the traditional electricity grid will still remain and as a result, will require huge price hikes in electricity bills to support the infrastructure for on-grid electricity. Recently Energy Australia, Origin and AGL all announced there would be price increases for energy prices from July 1, 2017 with Energy Australia providing details to news.com.au that businesses in NSW and SA should expect an increase by almost 20% to their electricity bills and QLD businesses should expect an almost 12% increase.
Energy retailers have attributed this increase in cost to the rising wholesale price of electricity driven by the upkeep required for their distribution network. In addition, uncertainty over of the future of energy generation and surrounding government policy for our changing energy environment means it is difficult to get a read on what price increase are necessary.
With the Australian Competition and Consumer Commission (ACCC) not due to publish their final report on electricity prices and supply until mid-2018 and government debates continuing on the next steps forward following the Finkel Report, traditional electricity prices continue to rise.
Many businesses have come to this conclusion as well and are taking control of their energy bills and consumption with the implementation of renewable energy technology and power saving initiatives. The latest Australian Renewable Energy Agency (ARENA) study found that almost 50% of Australian businesses are using some form of renewable energy, with 90% of these businesses intending to implement more.
Those same businesses are revisiting the business case behind solar power as a result of a 60% drop in the cost of solar PV between 2010 to 2015. Combined with increasing grid energy prices, it comes as no surprise that over 80% of these businesses are prioritising Solar PV as a part of their planning to increase their uptake of renewables. Business of all sizes say they prefer solar because of its quicker pay-back compared to other technologies as well as its ease of installation and long equipment life cycle and exceptionally low maintenance requirements.
With many different financing systems such as leasing, PPA’s as well as government funded programs and incentives, many systems are installed with a zero upfront cost and are cash-flow positive from day one.
For businesses that are feeling the pinch and don’t know what to do, you are not alone. Of the businesses that don’t have renewable energy in their mix, the majority admitted that they have just not considered renewables as an option. If your business’ electricity bills are of concern, now is the time to investigate the very real business opportunities that renewables can deliver – just in time for the peak solar generation period.