For decades, Australia’s government owned and operated an electricity network, the National Electricity Grid (NEG). However, on 1 July 1998, the separate states and territories began to own and operate their own electricity networks. This is known as the ‘second wave of privatisation’ in the electricity industry. Since this move allowed for greater competition in the energy sector, consumers gained more choices and lower prices. However, that did not last long.
Is alternate energy the solution to Australia’s electricity needs?
When electricity prices rise, consumers turn to alternative sources. Although Australia has a rich natural resources base, many Australians turn to cheaper energy alternatives like solar energy. For instance, when coal power prices increase, people install solar panels on the roof to meet their electricity needs. Although, many energy suppliers offer discounts to customers during low-demand hours. This allows people to temporarily cut back on their energy usage without affecting the supply chain. However, these strategies have limits- rising prices often make competition too weak to provide relief.
Electricity price rise and GDP
Researchers found that when electricity prices rise, there is an immediate dip in GDP. When power prices increase, businesses can’t afford to hire new workers or increase wages. This causes a dip in economic growth immediately after a price hike. This phenomenon is directly related to raising inflation. To combat this, some countries maintain government power stations and supply cheap electricity to poorer areas during economic downturns. This allows business owners to recover lost revenue while spreading economic wealth across the board. Fortunately, Australia is blessed with abundant solar energy and businesses across the country can take advantage of it to reduce the power costs. The federal government offers eligible home and business owner’s incentives in the form of Small Scale Technology Certificates (STCs) for switching to solar and reducing the upfront cost of the solar system. This effectively makes a Solar System cheaper by as good as 40%. The value of STCs reduces each year as their validity is set to 2030. For instance if you buy a Solar System for Home or a Solar System for Business in 2022 it may cost you less by as much as $300-$500. Furthermore the prices of the raw material used for manufacturing Solar Modules is also witnessing a new high because of Global Tensions, Supply Issues and Unstable Currency Exchange Rates. Supply issues from China are an additional issue of woe contributing to the price raise. Hence, it is advisable to make a decision now and amongst the 30% (and increasing) number of Smart Aussie Households and Businesses who have already switched to solar to control their costs and are reducing their carbon footprint.
Consumers switch to cheaper alternatives or bear the price increase. When power prices rise rapidly, people switch off appliances and reduce consumption or play around with their budgets and adjust to their other desires. When they choose to go for cheaper alternatives like solar, it primarily reduces demand for coal-based power generation in Australia. The problem here is that these less-used generators aren’t being replaced with alternative power sources. Rather the load gets replaced by the excess generation of power through solar and other alternative sources and thus the grid needs are sufficed. At certain locations, there are several transformers that are overloaded with power and people may get reduced approvals and limited export systems. It is always better to get the first mover advantage and it is never too late, but the ideal time is now though.
Although consumers have more choices today than ever before, rising power prices disrupt businesses and lower economic growth rates. For that reason along with the fact that Australia has a rich natural resources base some experts believe that a mix of government owned and operated and private grids improves the economy the most efficiently. Thankfully for Australians, whether they like it or not, their country has one of the highest per capita rates of electrical use in the world.
What role does the solar industry play in the Australian economy?
Australia is working towards reducing the carbon emissions and achieving the climate change goals. Moreover, renewable energy investment has generated several jobs in the regional and metro areas. Earlier last year, RenewEconomy stated, An Australian renewable energy export industry could create almost 400,000 new jobs and become more valuable to the Australian economy than current coal and gas exports. Switching to sun in Australia doesn’t only reduce the carbon emissions and other natural calamities rates but also contributes towards a better economy and standard of living.
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