The cost of energy for households in Australia has increased over recent years. Combined with wider cost-of-living challenges this has resulted in a greater number of Australian households in, or near, energy bill stress.
More renewables hasn’t meant lower energy costs
As Australia scales up its transition to a low carbon future there have been statements made by policy makers and leading energy researchers that as more renewable energy enters the energy market the cost of energy for households will decrease. This is a similar approach to that being followed around the world, on the basis that decarbonisation of energy networks will also lead to more affordable energy for consumers.
In the lead up to the 2022 federal election in Australia the then opposition party (Labor) stated that with, their plan for increasing renewable energy, it would see a decrease in the average household energy bill of AU$275 a year by 2025 and AU$378 per year by 2030. While the Labor government won the federal election in 2022, these financial energy savings have not eventuated for households. There are a range of factors why this is the case including impacts of events across the globe such as the Russia-Ukraine war and increasing network costs.
Interventions to reduce energy bill stress
Direct and indirect financial rebates and subsidies have been used in recent years around the world to help make energy more affordable for consumers. In Australia, to help address energy bill stress the federal Labor government announced two rounds of energy bill rebates. The first round was for up to $250 for households who held a state or Commonwealth concession across the 2023-24 financial year. The second round was for every household with an active electricity account who would receive $300 across the 2024-25 financial year. These payments were typically applied quarterly and taken directly off the energy bill by the energy provider.
Australians are heading to the polls again in May 2025 and the current Labor government has announced another package of energy bill support. This time it will be $150 for each household to be applied to energy bills in the second half of 2025.
In recent years, various Australian state governments have also offered financial rebates to directly reduce energy bills. For example, between 2018 – 2023 the Victorian government offered of four rounds of financial support of $250 (per year) for all households who used their energy comparison website. The aim was to help reduce energy bills through the direct financial support and to guide households to lower cost energy plans.
While these financial support programs have been welcomed by struggling households it is doing little to reduce energy bills or achieve wider sustainability goals longer term.
How else could the money be spent?
In recent analysis the Energy Efficiency Council of Australia looked at what the AU$6.8 billion of energy bill rebates by the federal government in the past 3 years could have achieved in terms of retrofit activities. They found that the money could have delivered:
- 930,000 9kW rooftop solar systems
- 523,000 13kW home batteries
- 1.6 million heat pump hot water systems
- 600,000 household electrification packages
- 2.4 million household insulation upgrades
- 2.9 billion split cycle air conditioners
As the Energy Efficiency Council note, this analysis is not to say that financial support is not needed or beneficial. It is simply calling out that we need to do more to help households reduce their energy consumption to begin with.
Moving towards a more holistic approach
Analysis by the Australian Energy Market Commission notes that energy prices are now stabilising in Australia and are predicted to fall over the coming decade. While this will be good news for households we need to ensure that we shift the focus from short-term band aid solutions to reducing energy bills to longer term benefits. We probably also don’t need to be giving energy rebates to higher income households when so many lower income households are struggling.
This means that more support (financial and otherwise) is required to help grow a retrofit industry in Australia that can deliver lasting change. While there are a range of financial subsides and rebates available for retrofit activities at a federal, state or local government level in Australia, these have typically been focused on households who already have resources (e.g. home owners). We must do more to further support these retrofit initiatives but also ensure that any support helps those households who are least able to engage. This will deliver better outcomes for households who are most in need and achieve wider environmental and community outcomes across the short and longer term. Finally, if direct energy bill relief is to be provided into the future there should be considerations given to means testing who is eligible to ensure the money is being spent where it is most needed.
Dr Trivess Moore in Co-chair of FPRN and Associate Professor at the Royal Melbourne Institute of Technology, where he is Associate Director of the Sustainable Building Innovation Laboratory.