The price of electricity doesn’t have to be a burden for your business. With the right strategies—such as choosing the best contract type, leveraging PPAs, optimising ToU pricing, and working with expert advisors—you can take control of your energy costs and turn a potential liability into a competitive advantage.
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The price of electricity is a major operational expense for Australian businesses. With market fluctuations, government policies, and evolving energy technologies all impacting electricity costs, it’s more important than ever for businesses to understand how to manage their energy spend.
From Power Purchase Agreements (PPAs) to forward contracting and demand management, there are smart strategies to reduce electricity expenses while enhancing sustainability. This article will guide you through five essential insights every business must know about the price of electricity—and how to use this knowledge to unlock long-term savings.
The price of electricity in Australia is influenced by various factors including:
| Factor | Impact on Price |
| Wholesale electricity prices | Influenced by supply, demand, and fuel costs |
| Network charges | Costs to maintain transmission and distribution |
| Environmental policy costs | Carbon pricing, renewable targets, and LGC schemes |
| Retailer margin | Administrative costs and profit for energy retailers |
Fluctuations in these areas can cause sudden rises in energy bills—something many businesses experienced during recent wholesale market spikes.
Electricity pricing can also vary between Australian states and regions. For example, businesses in South Australia and Queensland often face higher wholesale prices due to grid constraints and generation mix.
To protect against such variations, businesses need tailored procurement strategies that match their usage profile and location.
One of the most important decisions a business can make is choosing the right electricity contract structure.
| Contract Type | Features | Best For |
| Fixed Rate | Locked-in rates for contract duration | Predictable budgeting, long-term users |
| Variable Rate | Rates fluctuate with the wholesale market | Businesses able to manage risk |
| Hybrid | Mix of fixed and variable rates | Balanced risk and flexibility |
Fixed-rate contracts offer stability, while variable rates might bring savings if market prices fall. A hybrid model allows businesses to capture the benefits of both worlds.
Regular contract reviews and market monitoring are critical to ensure the chosen structure continues to provide value.
A Power Purchase Agreement (PPA) is a long-term energy contract where a business agrees to purchase electricity from a renewable energy generator—such as a solar or wind farm—at a predetermined price.
| Benefit | Description |
| Long-term price certainty | Avoid market fluctuations with stable rates |
| Sustainability alignment | Source renewable energy and reduce carbon emissions |
| Access to government incentives | May include LGCs or state-based energy rebates |
| No upfront infrastructure costs | Especially in retail or virtual PPAs |
PPAs are particularly attractive for businesses with high or consistent energy demand. They also support ESG commitments, which are increasingly important to investors and customers alike.
Some electricity tariffs are based on time-of-use (ToU), meaning the cost of electricity changes depending on the time of day. Rates are generally higher during peak periods and lower during off-peak.
| Time Period | Typical Cost per kWh (Averaged) |
| Peak (3 PM – 9 PM) | $0.35 – $0.45 |
| Shoulder (7 AM – 3 PM, 9 PM – 10 PM) | $0.25 – $0.30 |
| Off-Peak (10 PM – 7 AM) | $0.15 – $0.20 |
Time-of-use optimisation is a cost-effective way to reduce your price of electricity without changing suppliers or contracts.
Many businesses sign an energy contract and forget about it—missing opportunities to renegotiate for better rates or new structures like PPAs or green energy plans.
Regular reviews allow you to:
Partnering with an experienced energy procurement advisor, such as Energy Action, ensures that your contracts are competitive, future-proof, and aligned with your operational goals.
The price of electricity doesn’t have to be a burden for your business. With the right strategies—such as choosing the best contract type, leveraging PPAs, optimising ToU pricing, and working with expert advisors—you can take control of your energy costs and turn a potential liability into a competitive advantage.
Energy Action is here to help. As Australia’s trusted energy partner, we provide expert guidance on electricity procurement, contract negotiation, and sustainable energy solutions. Visit Energy Action to unlock real savings and secure your energy future.
The price of electricity in Australia is rising due to several factors, including increased wholesale energy costs, limited supply from traditional power stations, and higher demand. Regulatory and environmental policies can also add costs through schemes like the Renewable Energy Target. Volatility in global energy markets, especially gas prices, further impacts electricity costs domestically.
A fixed electricity contract locks in a set price per kilowatt-hour for the duration of the agreement, offering budget certainty. A variable contract, on the other hand, allows prices to change based on wholesale market conditions. While fixed contracts reduce risk, variable contracts may offer lower rates when market prices drop—though they also carry the risk of price spikes.
Power Purchase Agreements (PPAs) offer businesses the ability to secure long-term electricity at a fixed price, often from renewable sources. This not only protects against market volatility but can also be more cost-effective over time, especially with government incentives. PPAs also align with sustainability goals, helping businesses improve their ESG performance.
Time-of-use pricing can be more economical for businesses that can shift their electricity consumption to off-peak periods. However, it may not suit operations that run predominantly during peak hours. A careful analysis of your usage profile will help determine which structure offers better savings for your business.
It is advisable to review your electricity contract annually or ahead of any renewal period. Energy markets fluctuate regularly, and businesses that remain on outdated or auto-renewed contracts may be missing out on better deals. Regular reviews ensure you're not overpaying and can help you take advantage of new technologies or energy solutions.
