Australian household electricity prices jump nearly 8% in two years as debate over green transition intensifies

Household electricity prices in Australia have risen sharply in the past two years, increasing nearly 8 percent from June 2023 to June 2025, according to research by energy comparison service iSelect. The group found the average residential price climbed from 36.1 cents per kilowatt-hour to 38.9 cents per kilowatt-hour, a rise that outpaces the country's 2.1 percent inflation rate recorded in July and adds pressure to household budgets already strained by cost-of-living increases.

The rise in power costs is being felt across the country. Commonwealth Bank of Australia data showed utilities spending surged 2.9 percent in August, marking the largest hit to household budgets in recent reporting. The increase comes as policymakers, industry groups and economists debate the drivers of higher bills and the policy responses needed to address both affordability and climate risks.

MacroBusiness chief economist Leith van Onselen attributed the higher household costs to the transition to renewable energy, saying investment in transmission, the phasing out of baseload coal and greater reliance on gas, batteries and pumped hydro have lifted the regulatory asset base and been passed on to consumers. "Labor lied when it promised that power bills would fall," he said, referring to a 2022 pledge by Prime Minister Anthony Albanese that the government would deliver a $275 cut to power bills under its climate plan. Van Onselen said the rise in power bills was permanent and would continue so long as the renewables expansion persists.

Van Onselen pointed to South Australia, where wind and solar account for about 75 percent of generation, as an example of high retail prices coinciding with high renewable penetration. He said major renewable developers and transmission companies have benefited from policy settings while renters, pensioners and low-income households have borne a disproportionate share of the cost. He also argued Australia’s small share of global emissions — which he said has fallen from 1.5 percent in 2000 to about 1.1 percent now — limited the climate impact of domestic action and questioned policy choices such as a continued ban on nuclear generation despite large uranium resources.

Advocates for accelerating decarbonisation urged a different reading of the data. William Churchill, policy chief at the Clean Energy Council, said a recent federal climate report that warned many Australians could face property loss from rising seas underlines the need to speed up the rollout of clean energy. "The need to prepare and act is now beyond question," he said, arguing that faster deployment of low-emission generation would help manage long-term climate risk.

Analysts from the Institute for Energy Economics and Financial Analysis said household-focused measures could substantially reduce bills. Energy finance analyst Jay Gordon said rapid uptake of rooftop solar has pushed daytime wholesale prices to record lows and that targeted household upgrades could cut grid energy use by 80 to 90 percent for a typical home. Gordon added that rising fossil fuel prices, high network costs and an ageing generation fleet are also factors pushing bills higher, and that short-term subsidies have dominated policy responses rather than measures that reduce consumption and strengthen system resilience. He welcomed federal battery rebates but said broader support for household upgrades, including thermal solutions, would be more effective in lowering bills and emissions.

The divergence in explanations highlights trade-offs facing Australia as it balances affordability, energy security and climate objectives. Policymakers must weigh the timing and scale of grid investment, the design of network charges and subsidies, and incentives for household-level efficiency and storage as energy markets evolve. Industry data and debate over the cost implications of transmission, generation mix and export-oriented fossil fuel industries are likely to shape political and regulatory decisions in the months ahead.