Australian household electricity prices jump nearly 8% in two years amid renewables transition

Australian household electricity prices have risen sharply over the past two years, with average retail rates up nearly 8 percent as the nation expands renewable energy and faces higher network and fossil‑fuel costs, industry and economic analysts say.

Energy comparison service iSelect found the average household electricity price rose from 36.1 cents per kilowatt‑hour in June 2023 to 38.9 cents in June 2025. The increase outpaced recent inflation — which stood at 2.1 percent in July — and coincides with government and industry moves to accelerate the transition away from coal and toward wind, solar and storage.

Economists and commentators differ over how much of the rise is structural and how much is temporary. MacroBusiness chief economist Leith van Onselen argued the move to renewables is adding permanent costs to household bills, pointing to rising transmission investment and the need for more gas, batteries and pumped hydro to balance intermittent wind and solar.

"The enormous costs of transmission associated with renewables are lumped onto household bills via increases in the regulatory asset base," van Onselen said. He also said the phase‑out of baseload coal has made the grid more reliant on higher‑cost balancing services and that these costs will be capitalised into higher energy bills. Van Onselen said South Australia, which he noted has about 75 percent penetration of wind and solar, has the country's highest retail power bills.

The Albanese government campaigned in 2022 on a promise that its climate plan would deliver a $275 cut to power bills; van Onselen said that pledge has not been realised. He also criticised Australia’s ban on nuclear power and highlighted the country's role as a major coal and gas exporter while household energy prices rise.

Not all analysts attribute rising bills primarily to the renewables transition. The Institute for Energy Economics and Financial Analysis (IEEFA) energy finance analyst Jay Gordon said wholesale daytime prices have fallen to record lows because of rapid solar uptake, but that rising fossil fuel prices, high network costs and an ageing generation fleet are keeping retail bills high.

"Rapid take‑up of solar has driven daytime wholesale electricity costs to record lows, but a combination of rising fossil fuel prices, high network costs and an ageing generation fleet means Australian households continue to see rising energy bills," Gordon said. He argued that reducing household energy consumption through upgrades and smarter use of electricity could substantially lower bills and that federal battery rebates are a useful but limited step.

Commonwealth Bank of Australia data show utilities spending has risen, with the bank's August Household Spending Insights report finding a 2.9 percent surge in outlays on utilities, the single biggest hit to household budgets in that period. The bank's findings align with consumer reports of higher bills despite broader economic indicators showing more moderate inflation.

Industry groups stressed the urgency of continuing the clean energy rollout to address climate risks. Clean Energy Council policy chief William Churchill said a federal climate report warning that rising seas could put millions of Australians at risk of losing their homes underlined the need to accelerate renewables deployment.

"The need to prepare and act is now beyond question," Churchill said, adding that the risks described in the federal report demonstrate why Australia must stay on track for net zero emissions.

Policy debate has focused on how to balance decarbonisation goals with household affordability. Some analysts say the regulatory asset base — the mechanism by which network and transmission investments are included in allowed revenues and passed through to consumers — is a key driver of present and near‑term price increases as large transmission projects are built to connect remote renewables to population centres.

Others point to questions of energy efficiency and household-level interventions. Gordon with IEEFA suggested that comprehensive home energy upgrades — extending support beyond batteries to include thermal solutions and efficiency measures — could cut typical household energy bills by 80 to 90 percent for energy used at home, though such estimates depend on installation costs, household behaviour and the mix of measures employed.

The transition is also occurring against a global backdrop in which Australia accounts for a relatively small share of global emissions. Van Onselen noted that Australia's national emissions share has fallen from about 1.5 percent in 2000 to roughly 1.1 percent today, and he used that point to argue for reconsidering the pace and form of the domestic energy transition.

Government officials have defended their climate and energy policies as balancing emissions reductions, grid reliability and affordability, and they have pointed to subsidies and rebates designed to ease the cost burden on households. Analysts and advocacy groups say policy adjustments — including broader support for household upgrades, targeted relief for vulnerable consumers, and careful management of network investment — will influence whether upward pressure on bills persists or eases as the energy transition proceeds.

As Australia builds more large‑scale renewable projects and supporting transmission, the debate over how costs are allocated and how best to protect low‑income households, renters and pensioners is likely to intensify. Industry advisers and economists say that a combination of grid investment, market reform, consumer incentives and efficiency measures will determine the outlook for household energy bills in the coming years.