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Do renewable energies reduce the cost of electricity? Savvy has reviewed Australian energy prices, how we use renewables now and in the future and what this all means for you. How can we save money while doing the right thing?
- Australia’s total energy consumption fell by -2.9% in 2019-20
- 7% of all Australian consumption is from renewables
- Renewable electricity energy generation increased by 15% to contribute to 23% of Australia’s total
- 75% of Australians concerned about climate change, 63% prefer investment in renewables
COVID-19 has changed everything, including energy consumption
Since 2020, most of us have spent more time at home and many are now permanently working from there. Therefore, our energy consumption has switched from commercial (which dropped -3.1%) to residential usage (increasing 2.7%).
In 2019-20 Australia’s total energy consumption fell -2.9% overall, mainly due to the repercussions of COVID-19, with total energy consumption being 6,013.8 petajoules (PJ) (one petajoule equalling the electricity usage of 19,000 homes per year). Of this figure, renewable energy represented 7% of all consumption.
However, of all the petajoule energy consumption in Australia, residential usage only represents 7.9% of this, positioned fifth after transport (26.5%), electricity supply (25.5%), manufacturing (17.1%) and mining (14.2%).
Australian energy consumption by fuel type
| Fuel type | PJ | Share | Annual growth 2019-20 |
|---|---|---|---|
|
Oil |
2,241.2 |
37.3% |
-6.9% |
|
Coal |
1,207.6 |
28.4% |
-5.3% |
|
Gas |
1,647.2 |
27.4% |
3.8% |
|
Renewables |
418.8 |
7.0% |
4.6% |
|
Total |
6,013.8 |
100.0% |
0.2% |
The 7% of Australia's total renewable energy consumption is made up of many sources. It includes the ones that come to mind when we think of green sources (hydropower, wind and solar), but also includes biomass, biogas and biofuel. These are fuels derived from plants, including the breakdown of organic matter (such as animal and food waste).
Consumption from renewable sources saw a large increase of 4.7% growth in 2019-20 on the previous year. This was mainly driven by solar photovoltaic (PV) (the panels you see on homes and businesses), which increased by 41.7% and wind by 15.2%.
Australian renewable energy consumption by fuel type
| Renewable fuel | PJ | Share | Annual growth 2019-20 |
|---|---|---|---|
|
Solar PV |
75.7 |
18.1% |
41.7% |
|
Wind |
73.4 |
17.5% |
15.2% |
|
Solar hot water |
18.5 |
4.4% |
4.8% |
|
Biogas |
16.7 |
4.0% |
2.1% |
|
Hydro |
54.5 |
13.0% |
-5.1% |
|
Biomass |
169.3 |
40.4% |
-5.7% |
|
Biofuels |
6.6 |
1.6% |
-10.5% |
|
Municipal and industrial waste |
4.0 |
1.0% |
-13.2% |
|
Total |
418.8 |
100% |
4.6% |
Let’s talk about the renewable energy we generate
Generation by renewables increased by 15% in 2019-20 on the previous year, representing 23% of all energy generated in Australia. This figure increased further in 2020 to 24%.
Solar production experienced a massive increase of 42% and wind increased by 15%. Overall, of the 23% of renewable energy produced, solar and wind contributed 8% each to total generation. Solar PV is the darling of Australians, as it was the fastest-growing source of renewable energy over both periods.
Australia energy production by fuel type
| Fuel | PJ | Share | Annual growth 2019-20 |
|---|---|---|---|
|
Liquefied petroleum gas (LPG) |
151.0 |
0.8% |
47.8% |
|
Oil and natural gas liquids (NGL) |
798.4 |
29.6% |
7.9% |
|
Natural gas |
5,944.9 |
29.6% |
7.9% |
|
Renewables |
418.8 |
2.1% |
4.6% |
|
Black coal |
12,316.8 |
61.4% |
-2.2% |
|
Brown coal |
425.4 |
2.1% |
-4.3% |
|
Total |
418.8 |
100% |
4.6% |
Australian renewable electricity generation by fuel type
| Renewable fuel | PJ | Share of total production | Annual growth 2019-20 |
|---|---|---|---|
|
Solar PV |
21,033 |
7.9% |
41.7% |
|
Wind |
20,396 |
7.7% |
15.2% |
|
Bioenergy |
3,352 |
1.3% |
-4.1% |
|
Hydro |
15,150 |
5.7% |
-5.1% |
|
Total renewables |
59,930 |
22.6% |
15.2 |
Governments tackling climate change, renewables and the cost
In 2020, there was much buzz about COP26 in Glasgow, Scotland, which brought together over 190 world parties to thrash out how to achieve net zero targets by 2050 and limit the world’s average temperatures to an increase of 1.5 degrees Celsius. Although the Australian Government was heavily criticized for its lack of aggressiveness in the talks, it has released its ‘Long Term Emissions Reduction Plan’ in which renewables play a part.
A recent ‘Climate of the Nation 2021’ research report from The Australia Institute uncovered that 75% of Australians are concerned about climate change and 81% think it is already occurring. They also believe it is causing or will cause the melting of polar ice caps (80%), heatwaves and extremely hot days (79%), and more extreme weather like floods and cyclones (78%).
The study found that there is ‘broad’ support for ‘de-carbonisation policies’ such as 82% of Australians believing that coal-fired power stations should be eliminated. Overall, 63% prefer investment in renewables, with 79% citing that solar is their number one referred energy source, followed by wind and hydro. Notably solar was the top choice across all ages, genders, states and political affiliations. These points prove that Australia's love affair with oil and coal could eventually dwindle, if consumers have their way.
However, 23% of respondents cited that increasing electricity prices are due to the fact that renewable energy is expensive. Is this really the case?
Are residential electricity prices really increasing?
On one hand, with pressure constantly on the household dollar, Australians could think that prices are increasing, however, it’s the opposite.
The Australian Energy Market Commission (AEMC) Residential Electricity Price Trends report for 2021 found that prices will decrease on average by 6% into 2024 due to cheaper wholesale electricity and stronger implementation of renewables (solar, wind, gas and batteries).
The Australian Competition and Consumer Commission’s (ACCC) inquiry into the National Electricity Market for 2021 reinforces the above by stating that the average residential bill in 2020–21 was $1434, having decreased by $128 or 8% from the two previous financial years. Electricity costs as a whole are the lowest in 8 years.
How to reduce your home electricity bill and do the right thing?
- Insulate, insulate, insulate! Like a hat on your head, insulation protects your house from hot and cold weather extremes. It keeps the temperature stable, decreases noise pollution, reduces your heating and cooling costs and therefore will reduce your carbon footprint too! There are many environmentally friendly and budget options available. Also, don’t forget to seal up any drafty spots around windows and doors, as they suck all the energy out of your house too.
- Make the investment: most news homes these days include rooftop solar as a given expense. This is paid for as part of the mortgage. For those in older homes, there are many finance options available, which work out to be cost effective, such as installing rooftop solar with a personal loan.
- Go renewables: Most energy providers have an option to select renewable energy to supply your electricity and all you have to do is choose one and change. Easy! The Australian Government has a program called ‘GreenPower’ which labels and rates providers on their renewable offerings and simplifies the selection process for you.
- More stars, more savings: Many of us know the energy and water-efficient star ratings seen on household appliances, which allows you to easily compare running costs and water usage of appliances, before you buy. Some products with more stars may cost more to purchase, but they will save you money in the long run.
- Reduce water usage: We live in a sunburnt country where water is precious. Reducing your usage of it will decrease your environmental impact and save you money, as water is expensive and is costly to heat too! Consider taking shorter showers, installing water-efficient tap and showerheads, using the dishwasher and stacking it fully, turning off unnecessary running water, washing your clothes in cold water and fixing those leaks!
- Turn it off! Lights and appliances can be energy sappers that can be avoided. A review by CHOICE states that turning lights off when you’re out of the room and appliances when not in use (at the power point) can save you up to 10% on electricity bills. Saving on ‘standby power’ won’t make you a millionaire overnight, but it will save money and it’s the right thing to do.
Bill Tsouvalas, Managing Director of Savvy said:
‘Bill Tsouvalas, Managing Director of Savvy said ‘These statistics show Australians are scared of what the consequences of climate change will be for the nation and globe. Therefore, they are demanding greener choices now to fuel their basic everyday living requirements - electricity. Thankfully change is happening in both the commercial and residential sectors and will only continue to increase, radically.’
He continued:
‘We have all heard it before, but change starts with us and will benefit us all - financially, psychologically and physically. You don’t have to implement huge expensive changes to your living arrangements or lifestyles. By just following the simple adjustments outlined here, you will make a huge difference.’
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