Australia’s energy landscape is at a critical juncture where the need for affordable electricity meets ambitious emissions reduction goals. The myth that these two objectives are incompatible has been debunked by IEEFA, which found that improving energy affordability does not require sacrificing environmental targets.
Consider the story of families in regional areas who rely on coal-generated power but face rising costs and reliability issues as plants age. A recent example is the Muja AB plant’s refurbishment, which cost $400 million with no guarantee of long-term viability. Such investments are not only risky but also expensive.
Renewables offer a more sustainable path forward. The National Electricity Market (NEM) shows that 96% of new projects are in renewables and storage, signaling the direction of future energy generation. These technologies promise lower costs compared to coal by 2030, making them an attractive option for both affordability and emissions.
Gas-based power plants have also become less competitive due to rising prices and declining domestic supply. In fact, gas consumption in the NEM has dropped by half since its peak in FY2012-13, while wholesale electricity prices remain high at around $200/MWh compared to an average of $131/MWh.
The cost-effectiveness of renewables and storage is clear. For instance, a family might see their energy bills drop if they switch from gas or coal-based power to renewable sources backed by battery storage. This shift not only saves money but also contributes significantly to reducing carbon footprints.
Moreover, redirecting some lower-cost liquefied natural gas (LNG) feedgas from exports back to the domestic market could stabilize prices and improve energy affordability. However, nuclear power remains prohibitively expensive at 1.5 to 3.8 times higher than current electricity generation costs in eastern Australia.
