Australian Energy Retailers are Scaring Their Customers Away

26th Jun 18

Cameron Quin

Written by Cameron Quin

Australians no longer trust the electricity sector: According to a survey by the Australian Energy Market Commission (AEMC), which has been carried out since 2014, consumer trust in electricity retailers fell from 50% in 2017, to only 39% in 2018. Of course, the main issue bothering consumers is the constant increase in kWh prices, which has doubled power bills for some users in just a decade. Australians are also overwhelmed by the wide range of electricity plans, which don’t always have clear rules – users often end up with plans that work against them and make them pay more than necessary.

Between 2017 and 2018, electricity prices for Australian homes increased almost everywhere. The AEMC reported power bill increases ranging from $110 to $320 per year. They only reported lower tariffs in south-east Queensland, where power bills dropped by around $70 per year.

It should come as no surprise that Australians are preferring solar power, and the country now has over 1.8 million households with a photovoltaic array. More than 154,000 Australian homeowners deployed solar panels in 2017, with the main goal of lowering electricity expenses. Unlike the electricity plans available from local energy companies, solar electricity is predictable:

  • If you purchase a photovoltaic system, generation is free after assuming the upfront cost. You need proper maintenance, but photovoltaic systems are characterised by being very simple to service compared with other energy systems.
  • If you sign a solar PPA, you don’t pay anything upfront. The system provider assumes responsibility for financing and maintenance, while you pay for the electricity supplied at a massive discount with respect to your normal tariff.

Rising Electricity Prices are Shrinking the Pie for Power Retailers

Australian energy retailers increase their prices each year, with the intention of boosting their revenue, but they have achieved just the opposite. The value of one kWh produced by a commercial solar system is equivalent to what you would otherwise pay to your energy provider. Therefore, expensive electricity improves the business case for solar power.

In fact, electricity prices are being pushed so high that they are now creating a viable market for battery arrays. For Australians subject to the highest kWh prices, storing solar generation in batteries for nighttime is cheaper than relying on the grid after sunset. Also consider that feed-in tariffs for surplus solar generation are being reduced drastically in 2018, lowering the income from exporting electricity to the grid. This provides yet another reason to use batteries if you have solar panels; in 2017 alone, home battery installations soared by 275% in Australia.

Solar panels are already affordable, and their price continues to decrease. Batteries are still expensive, but drastic cost reductions are expected in the near future. On the other hand, electricity from the grid is becoming more expensive, and the reward for exporting your surplus solar generation is shrinking. In their attempt to charge more for electricity, Australian power companies have created the ideal business opportunity for solar systems with battery arrays.

 

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