Briefing notes

Since the year 2000, two major trends are evident in Australia’s electricity sector: the strongly increasing share of renewables in electricity generation and the strong increase in retail electricity prices.

ELECTRICITY SECTOR: TRENDS IN AUSTRALIA SINCE 2000
12 December 2023

In Australia between 2000 and 2022:

▪ coal’s share in electricity generation fell significantly (from 84% to 47%)
▪ the share of solar and wind rose significantly, particularly from 2015, reaching 25% in 2022

 200020052010201520202022
Coal847968645447
Solar + wind1371825
Natural gas6918192019
Hydro777665
Source: energy.gov.au. Statistics are in terms of the share (%) of total generation, on-grid and off-grid.

Can coal’s role in electricity generation be reduced further? This is the subject of increasing debate in Australia, given that there is no obvious alternative to coal at present for reliable, low-cost electricity.

According to the Consumer Price Index (published quarterly by the Australian Bureau of Statistics), between September 2000 and September 2023:

▪ retail electricity prices in Australia increased a little over 3 times
▪ all consumer prices increased a little under 2 times

Why have electricity prices increased much more strongly than all prices? Over-investment in the electricity sector up to around 2014 is seen as one reason. The strong growth in renewables is likely to be another, reflecting:  

▪ the high transmission costs associated with renewables
▪ the need to backup up renewables with coal or natural-gas plants, operating at below capacity and
  thus  with high unit costs
▪ the costs entailed in maintaining frequency stability in the grid with renewables

High electricity prices are becoming an increasingly-contentious political issue in Australia.

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