Accelerating Australia’s rollout of clean energy generation, transmission and battery storage is central to keeping residential electricity prices affordable across the next decade, according to a recent Australian Energy Market Commission’s (AEMC) Residential Electricity Price Trends report.
The AEMC is the independent statutory authority responsible for developing the rules that govern Australia’s National Electricity Market and providing evidence-based analysis to support energy ministers.
The Commission’s recent independent report, aligned with the Australian Energy Market Operator’s 2025 Integrated System Plan projections, finds that residential electricity prices per unit are expected to fall by around 5 per cent over the next five years. This downward trend is mostly driven by the increasing contribution of large-scale solar, wind and battery projects, which continue to replace ageing coal units at lower operating costs.
However, the report signals a turning point early in the next decade. Without faster delivery of clean energy battery and transmission infrastructure, electricity prices could rise by up to 13 per cent between 2030 and 2035 as demand grows and coal exits accelerate.
Anna Collyer, Chair at AEMC believes that Australia faces a critical timing challenge that will shape future household affordability.
“Our price outlook highlights a critical five-year window: Residential electricity prices are projected to fall through 2030 as renewable generation and batteries ramp up, but then rise through 2035 if the pace of new investment doesn’t keep ahead of growing electricity demand and planned coal retirement,” she said.
“Our analysis clearly shows renewable energy and batteries drive prices down – we see this in the first five years. The risk of prices rising after 2030 only emerges if we slow down renewable deployment just as coal plants retire. This is a timing challenge, not a technology cost issue. With the right pace of investment, we can manage the energy transition while keeping prices stable.”
The AEMC’s scenario modelling highlights several system-wide risks that could have an impact on electricity affordability over the coming decade.
Delays to new wind generation and transmission infrastructure remain one of the most significant threats, with projections showing prices could rise by as much as 20 per cent if these projects fall behind schedule.
The report also warns that insufficient coordination of consumer energy resources (CER) could add up to 13 per cent to household electricity prices if these technologies are not integrated effectively into the grid.
Furthermore, AEMC estimates unplanned outages could add up to 5 per cent to electricity prices.
In contrast, the modelling shows that accelerating the buildout of wind projects and transmission infrastructure beyond current projections could reduce prices by up to 10 per cent.
What can drive household energy savings
Beyond the grid, the AEMC emphasises the large and fast-growing benefits for households that electrify their energy use.
The report finds that families who adopt electric vehicles, switch from gas appliances, and install rooftop solar and home batteries can significantly reduce their ‘energy wallet’ their combined annual spending on electricity, gas and petrol.
Key savings identified include:
- Electric vehicles: Around 40 per cent reduction in annual running costs, or around $1,400 per year.
- Switching gas appliances to electric: Around 60 per cent reduction in heating and cooking costs (around $1400 per year for gas-only households).
- Solar panels: $1000-$1200 per year in electricity bill reductions.
- Home batteries: $600-$900 in annual savings when coupled with solar.
“A household that fully electrifies could reduce total energy costs by up to 90 per cent, with typical payback periods of four years,” Collyer said.
These savings remain consistent across jurisdictions, although households in states with higher gas use stand to benefit most from electrification.
The report highlights the growing importance of household-level storage, EV charging optimisation and demand flexibility as renewable penetration increases.
“Well-coordinated consumer energy resources – like charging electric vehicles during the middle of the day when there is plentiful solar, and using batteries to reduce evening demand when prices are higher – can lower costs and reduce network investment. However, poor coordination could add to household electricity costs,’ Collyer said.
The AEMC has introduced new rules enabling households to take advantage of price-responsive technologies, while its ongoing Pricing Review is examining how retail and network tariffs can better incentivise behaviour that benefits the entire system.
The report identifies three priority areas for policymakers, industry and market bodies: Reduce barriers to new renewable and transmission buildout, encourage coordinated uptake of consumer energy resources, and enable all households to electrify.
“The energy transition requires action on multiple fronts. Governments, industry, the AEMC and other market bodies all have roles to play,” Collyer said.
“But the fundamental message remains consistent: with the right pace of renewable investment and enabling households to electrify, we can deliver an affordable energy transition.”
Regional price outlook
Electricity price trajectories differ across the National Electricity Market.
New South Wales and the Australian Capital Territory (ACT) are projected to see stable or falling prices, while Victoria, Queensland, South Australia and Tasmania are expected to experience increases later in the decade.
Despite these variations, the outlook for total household energy costs appears to be positive. Electrification (particularly the shift away from petrol and gas) means households in every region are expected to see net energy savings over time. These reductions range from 16-21 per cent in New South Wales, the ACT, Victoria and South Australia, and 6-7 per cent in Queensland and Tasmania.
To read the Residential Electricity Price Trends report, click here.