Australia’s wholesale electricity prices could be close to doubling by 2029, just over two years from now, according to new modelling, which threatens to turn Chris Bowen’s energy transition into an even bigger political liability for Labor.
The warning from consultancy firm Rystad Energy goes to the central weakness in the government’s electricity strategy: coal power is heading for the exit faster than replacement generation is being built.
For households promised cheaper electricity, this is a deeply unwelcome development with serious political consequences for Labor.
Rystad projects wholesale prices could rise from about $60 per megawatt hour to $110 as the gap between retiring coal-fired power stations and inadequate new renewable generation squeezes supply.
Household bills won’t necessarily double, however. Wholesale electricity is only part of what determines the final price, alongside network charges, retail costs and various other expenses.
But it will clearly push prices much higher in the coming years.
Labor went to the 2022 election promising a $275 reduction in average household electricity bills by 2025. That promise was broken, with prices continuing to rise.
Labor went to the 2022 election promising a $275 reduction in average household electricity bills by 2025, but household electricity prices have since risen, while wholesale prices are projected to increase by 2029
New modelling has intensified scrutiny of Chris Bowen’s energy transition plans. He is pictured with Danish Minister for Climate, Energy and Supply Samira Nawa and Queen Mary of Denmark in Türkiye this week at the COP31 climate change summit
Now the government faces a warning that the next stage of its transition could put further upward pressure on prices.
Bowen’s response is that wholesale prices have already fallen and there is more work needed to get those benefits through to consumers.
For a government with a serious trust deficit and penchant for breaking election promises, the rhetoric feels hollow.
The problem is that an electricity system can’t run on ministerial spin. It needs to be powered by something more than that.
The government’s published figures show how much delivery remains to be done, and how far behind schedule the energy transition really is.
Of the projects in its Capacity Investment Scheme portfolio, 59 were in development, 22 were under construction and just one is operating.
It highlights just how heavily the government’s promises depend on works yet to be completed.
A coal-fired power station’s retirement date can’t be treated as a political milestone to celebrate in the quest to lower emissions when its replacements aren’t even ready to go.
Wholesale electricity prices could almost double as the gap between retiring coal-fired power stations and new renewable generation squeezes supply. Pictured, Yallourn Power Station
The government needs to explain which projects will arrive before coal capacity disappears, the Daily Mail’s Peter van Onselen writes
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How should Australia fix rising power bills amid the energy transition and broken political promises?
This comes as the population swells and energy consumption rises, including from the roll out of power guzzling AI data centres.
Labor points to record investment decisions and says much of the new capacity was always expected to come online at the end of the decade.
And of course despite being in power for more than four and a half years, Labor is once again passing the buck, blaming the former Coalition energy minister (and now Opposition Leader) Angus Taylor for the weak position it inherited.
The Coalition’s energy record deserves scrutiny. It was pretty appalling, frankly. But Labor has now been in office since 2022 and is more than half way into its second term.
Why is the government’s first response to always play the blame game? No wonder trust in our political leaders is at an all-time low.
Renewables can deliver cheap electricity. Really, they can. The challenge is building a complete system that delivers dependable power at an affordable total cost, including transmission, storage and backup.
Bowen should be judged on achieving that.
Instead, he and Albanese are attending yet another international climate summit while Australians are being warned about the domestic consequences of a transition falling behind schedule as prices continue to get jacked up.
The government needs to explain which projects will arrive before coal capacity disappears, what happens if they don’t arrive on time, and what failure costs households.
