Why Electricity Prices Keep Rising in Australia - And Why It's Likely to Continue

If you’ve been wondering why your power bill keeps going up, even with all the new solar and wind farms, you’re not alone. Many Australians are asking the same thing.

This article explains the deeper, long-term reasons behind rising electricity prices. These are structural issues, meaning they’re built into how the system works. They're not just temporary. These issues help explain why power bills are likely to stay high (or go even higher) in the coming years.

Let’s unpack the five main reasons.

1. Australia’s Coal Power Stations Are Old — and Breaking Down

Most of Australia’s electricity still comes from coal-fired power stations - go to the AEMO website and click on Fuel Mix to see the ratios. But here’s the problem:

• Many of them are more than 30-50 years old
• They are becoming less reliable, with more breakdowns
• Repairs and unplanned outages cost money and cause price spikes

When these old stations fail — especially during hot days or cold nights — we need to quickly bring in backup power, often from gas-fired generators.

Gas is much more expensive to run than coal, and Australia’s east coast gas prices have been high due to global demand and limited local supply. When gas steps in to cover outages, wholesale electricity prices spike — and that flows through to your bill.

2. Retailers Are Passing on High Costs — and Making Profits Too

Retail electricity providers buy power from the wholesale market (this is like the regular stock market but for energy) and sell it to you. When wholesale prices go up, they increase your bill.

But that’s not the full story.

Some retailers:

• Add large margins to protect themselves from market volatility
• Offer confusing plans with discounts and conditions that are hard to compare
• Rely on customers not switching — so many people are stuck on expensive legacy plans

Even with dozens of energy retailers in Australia, the market is complex and not very transparent. This means that:

• Some people are paying much more than they need to
• Others don’t realise they can switch or negotiate
• Many customers don’t benefit from falling wholesale prices when they happen

The Australian Competition and Consumer Commission (ACCC) regularly reports on how much electricity retailers are charging compared to their costs. In its most recent report from December 2023, the ACCC found that retail margins remained significant across many areas, even as wholesale prices fluctuated. According to their findings, electricity retail margins rose in Queensland and South Australia during the 2022–23 financial year. This means that, in some regions, retailers have been increasing the amount they keep as profit, rather than passing savings on to customers.

For everyday Australians, this shows that even when energy becomes cheaper to buy on the wholesale market, electricity bills don't always follow. Retailers have flexibility in setting their prices — and in some cases, they use that flexibility to maintain or grow their profit margins. This is one of the reasons why your bill might stay high, even when the energy itself costs less. (Source: ACCC NEM Inquiry Report, December 2023)

3. Poles and Wires (Network Costs) Are a Big and Growing Chunk of Your Bill

When you pay your electricity bill, about 40–50% of it goes to the companies that manage the poles and wires that deliver electricity to your home (officially known as Distributed Network Service Providers or DNSPs. 

What’s happening now:

• They’re building new transmission lines to link solar and wind farms in remote areas to the main grid
• These projects cost billions of dollars
• The cost gets passed directly onto consumers through network charges

Renewable energy from these large centralised energy systems is cheaper to generate, however the infrastructure needed to access it and move it around the country is expensive and takes years to build. Conversely, this infrastructure is already in place on everyone's home thus making domestic renewable energy more economical.

Network costs are regulated, but governments have approved large increases to help pay for this transition — which is why you’ve likely seen higher charges even if you use the same amount of electricity.

4. The Transition to Clean Energy Is Expensive Upfront

Australia is moving away from coal and gas to more sustainable energy sources like:

• Solar farms
• Wind farms
• Big batteries
• Rooftop solar and home batteries

This is a good thing — cleaner, greener, and in the long term, often cheaper. But the transition costs money right now.

Here’s why:

• New wind and solar farms need approval, land, and transmission lines
• Big batteries are still expensive
• The old coal plants are shutting down faster than expected, which causes supply gaps and price spikes
• There’s uncertainty around market rules, which makes investors cautious and pushes up prices

So even though renewable energy is technically cheaper to generate, we’re paying now to build the system that will support it — and those costs are showing up on your power bill.

5. Uncontrolled Rooftop Solar Can Add to Rising Costs

While rooftop solar is helping many households reduce their bills, the rapid growth of uncontrolled solar exports is starting to put pressure on the grid.

Here’s what’s happening:

• Solar systems generate the most power during the middle of the day, when electricity demand is often low
• That unused energy gets exported to the grid (hence the name solar exports)
• Traditional power stations (e.g. coal) can’t react fast enough and reduce their power output, so the grid is trying to cope with more electricity than it needs
• Across Australia, the volume of rooftop solar exports is now so large that it's causing reverse power flows

This means electricity is flowing in ways the grid wasn't originally designed for, especially from homes back to the main network. To manage this, electricity infrastructure upgrades are required, which adds to infrastructure costs — and those costs are passed on to all consumers.

At the same time, the large volume of midday solar generation can create oversupply, pushing the wholesale electricity price into negative territory. When prices go negative, it actually costs money to export energy to the grid. This creates a situation where the more uncontrolled solar we have, the more pressure is placed on the electricity system.

Because rooftop solar is now relatively cheap and system sizes are growing fast, the scale of this issue is increasing quickly. If it isn’t properly managed, this could mean we need to build more grid capacity to deal with the reverse flows — and households may one day have to pay to export their solar power.

Managed well, this growth in rooftop solar could be a huge benefit to the system. But left uncontrolled, it adds real and rising costs for everyone.

What Can You Do?

While you can’t change how the system works, there are smart ways to take back control of your energy bill:

• Compare electricity plans — You could save hundreds by switching
• Use more power during off-peak times (if your plan supports this)
• Install rooftop solar — still one of the best long-term savings strategies
• Add a battery or join a VPP (Virtual Power Plant) — let your system trade energy for you
• Track your usage using apps, smart meters, or energy dashboards

Even small changes to when and how you use electricity can add up.

Final Thoughts

Electricity prices in Australia are rising — and they’ll likely keep rising for a while.

Understanding the structural issues that drive these rises, and the reasons they aren't going away anytime soon, helps you make better energy choices and keep a lid on your electricity costs.