Rising Renewable Energy and Falling Prices to Benefit Australian Consumers
Power prices on Australia’s east coast are expected to drop from July, thanks to increased output from wind generation and batteries, as well as falling electricity contract prices. This could lead to savings of up to $1,320 for some small businesses.
In a draft decision released on Thursday, the Australia Energy Regulator (AER) proposed a price reduction for customers on standing electricity plans—known as the “default market offer”—ranging from 1.3% to 10.1% for residential customers, and between 8.5% and 21.2% for small businesses, depending on the region. If these changes are implemented, households in New South Wales and Queensland could save more than $200, while small businesses in NSW might see savings exceeding $1,300.
Clare Savage, chair of the AER, described the draft decision as “welcome relief” for customers after years of rising prices, especially following the Russia-Ukraine conflict. The regulator will closely monitor the global energy situation before finalizing its decision in May.
Every year, the AER sets a default market offer in New South Wales, South Australia, and south-east Queensland, while Victoria’s Essential Services Commission does the same within that state. These offers serve as a safety net for customers who haven’t found a better deal from their electricity retailer and act as a reference point for comparing other offers.
Savage noted that reduced wholesale prices were the main factor behind the proposed changes for the 2026-27 period. “We’ve seen a lot more renewables come into the market,” she said, citing good performance from wind, solar, and battery systems.
Victorian customers on standing offers could also expect lower prices, with the Essential Services Commission recommending a decrease in its recent draft determination. If adopted, annual bills for Victorian customers would be approximately $46 lower than in the 2025-26 period.
New Solar Sharer Offer to Help Households Save
The draft determination also introduces a new “solar sharer” offer, an opt-in plan that provides three hours of free power during the day to take advantage of abundant solar energy. This initiative aims to share the benefits of Australia’s growing solar capacity.
Energy Minister Chris Bowen explained that the solar sharer offer was designed to help households reduce their bills by shifting some usage to the free power period. “This could mean real savings on bills, whether it’s running the dishwasher, doing the washing, or heating hot water during the day,” he said.
Free usage periods would be set between 11am and 2pm in New South Wales and south-east Queensland, and noon to 3pm in South Australia. According to the AER, the overall cost would remain the same as the default offer, but with free energy during the day and slightly higher prices at other times.
More than 4.2 million Australian households already have solar panels installed. However, not everyone can install solar panels, according to Greg Bourne, a councillor with the Climate Council. “With solar sharer, they can still gain some benefit in the middle of the day,” he said.
Default Offer as a Safety Net
The default offer is an important safety net for consumers, as the energy market is complex and difficult to navigate. “You almost need a PhD to work out whether you’re getting a good deal or not,” Bourne said.
Approximately 8% of residential customers and 15% of small business customers are on the default offer, according to Savage. She encouraged people to shop around, as some deals offer up to 23% below the default price.
Louisa Kinnear, chief executive of the Australian Energy Council, emphasized that the default offer is a safety net, not the best price. “Rather than waiting for cheaper prices to flow through in July, we encourage consumers to take the opportunity to save through a lower market offer today.”
Despite the potential for lower prices, Savage remains cautious about global events, particularly in the Middle East. “It’s a very uncertain time,” she said. While Australia continues to invest in renewable energy sources, the electricity system remains significantly exposed to the international prices of fossil fuels like coal and gas.
