As we traverse 2023, Australian businesses continue to grapple with the surge in energy costs. With Australia's energy prices peaking at unparalleled levels nationwide, it's high time we reevaluate the energy price landscape. It's also important to ponder whether there's a beacon of hope on the horizon.
Retail prices for gas and electricity are shaped by several core elements. These include wholesale energy costs, renewable energy policy, regulatory caps, and annual network charges. These factors, seemingly in a sinister alliance, propelled energy prices to stratospheric levels across Australia in 2022. In turn, it squeezed the life out of business energy budgets.
Futures markets offer trustworthy insights into investor expectations regarding energy prices over the approaching months and years. According to futures data from the Australian Competition and Consumer Commission (ACCC), wholesale electricity prices in SA, VIC, and QLD are predicted to continue their ascent for the next four years. Meanwhile, prices in NSW are anticipated to escalate into 2023 before reaching a plateau.
In tandem with the ACCC's forecasts, Cornwall Insight Australia's modelling portrays a similarly daunting scenario for energy-consuming businesses. It predicts that all states in the NEM "will have an annual median price of around $200/MWh, up until FY2025." The median electricity price across states in 2021 was approximately $40-80/MWh.
Given these forecasts, it's apparent that Australia's energy price outlook doesn't bode well for the next few years. However, the beacon of hope that might lead us out of this darkness is renewable energy.
The majority of experts concur that the energy outlook is likely to brighten once renewable, non-carbon-emitting modes of energy production become the norm in Australia. The dwindling supply of coal and liquefied natural gas (LNG) available for domestic energy generation is widely recognized as the primary factor driving up both wholesale and retail energy costs.
The question isn't when will energy prices descend, but rather, how swiftly can Australia transition to renewables and sever its dependence on fossil fuels?
In the interim, businesses can undertake measures to mitigate their energy costs. At EnergyAction, we continually scrutinise the energy market. We assist businesses in comparing options and taking charge of their energy bills to accomplish savings. We do this through effective energy management and renewable energy procurement. Contact us for a no-obligation review today on Energy Action.
In conclusion, although Australia's energy price outlook for the forthcoming years appears grim, it's vital to investigate renewable energy alternatives, work towards a net zero target, and manage energy bills to attain savings. Get in touch with Energy Action today for a no-obligation review of your energy usage and embark on your journey towards cost reduction and a greener future.