Household power prices in Australia climb amid renewables rollout, research shows

Australians are facing a sharp rise in household electricity costs, new analysis shows, with prices increasing faster than overall inflation as the nation expands its renewable energy system.

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, an increase of nearly 8 percent. That jump outpaced Australia’s 2.1 percent annual inflation rate recorded in July and comes amid pressures on household budgets from rising living costs.

Economists and industry analysts differ on the causes and remedies. Leith van Onselen, chief economist at MacroBusiness, said the transition away from baseload coal to intermittent wind and solar has increased costs that are passed on to households. He said transmission investment associated with renewables is being capitalised into the regulatory asset base and recovered through higher retail bills.

"Labor lied when it promised that power bills would fall," van Onselen said, referring to the Albanese government’s 2022 pledge to deliver a A$275 reduction in annual household power costs as part of its climate plan. He added that the system’s greater reliance on gas, batteries and pumped hydro to back up variable renewable generation has increased overall costs.

Van Onselen pointed to South Australia — which he said has a 75 percent penetration of wind and solar — as an example of a state with both high renewable uptake and high retail power bills. He also framed the issue as a matter of national policy choices, noting Australia’s ban on nuclear power despite large uranium reserves and arguing that global emissions would be little affected by changes to Australia’s domestic fuel mix.

CBA’s August Household Spending Insights report found utilities spending surged 2.9 percent, marking one of the biggest hits to household budgets in recent months. The rise in electricity costs has prompted calls for a range of policy responses from industry groups and analysts.

William Churchill, policy chief at the Clean Energy Council, said the latest federal climate assessment — which warned that rising seas could put millions of Australians at risk — underlines the need to accelerate the rollout of clean energy. "The need to prepare and act is now beyond question," he said, arguing that faster deployment of renewable projects is necessary to meet climate and adaptation goals.

Analysts at the Institute for Energy Economics and Financial Analysis also emphasised that household-level measures can play a major role in reducing bills. Energy finance analyst Jay Gordon said rapid home upgrades — including rooftop solar and storage — could cut a typical household’s energy bills by 80 to 90 percent in some cases. He said daytime wholesale prices have fallen to record lows because of solar but that rising fossil fuel prices, high network costs and an ageing generation fleet are keeping retail bills elevated.

Gordon welcomed federal battery rebates as an important policy step but said support could be broadened to other energy-efficiency and thermal solutions that reduce consumption, emissions and pressure on the grid. He said debates that focus solely on slowing large-scale renewables in favour of alternatives risk missing opportunities to reduce household demand and costs.

Policy choices over transmission, network charging and the pace of new renewable build are likely to shape retail prices in the coming years. Van Onselen warned that higher bills could be a long-term feature while substantial investments in transmission and new generation are capitalised into regulated networks. Others argue that accelerating clean energy and supporting household upgrades can ease upward pressure on costs over time.

Australia’s role in global emissions is small by volume: van Onselen noted that the country’s share of global emissions has fallen from about 1.5 percent in 2000 to roughly 1.1 percent today, while China accounts for more than 30 percent. Experts disagree on how that fact should influence domestic policy, with some urging faster decarbonisation to manage local climate impacts and others stressing affordability and energy security.

As the nation navigates grid transformation, policymakers face trade-offs between the speed of the transition, the cost of necessary network and backup investments, and measures to shield low-income households from price shocks. Industry and advocacy groups continue to press for a mixture of system-level reforms and household-focused support to try to reduce bills while meeting climate and reliability objectives.