Accelerating the buildout of renewable generation, transmission, and battery storage is essential to keep residential electricity prices affordable over the next decade, according to the Australian Energy Market Commission's (AEMC) latest Residential Electricity Price Trends report released today.

The independent report, aligned with AEMO's Integrated System Plan projections, projects residential electricity per unit prices (not bills), will fall by around 5 per cent over the next five years, supported by new renewable generation growth.  

However, those prices risk rising by 13 per cent from 2030–2035, unless new renewable generation, battery and transmission projects are delivered faster than currently projected.

AEMC Chair Anna Collyer said increasing momentum in renewable deployment and batteries now and through to 2030’s will be crucial to keeping prices affordable.

“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.  

"Our analysis clearly shows renewable energy and batteries drives 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," she said.

The scenario analysis found:

• Delays to wind and transmission projects could increase annual household electricity prices as much as 20 per cent.
• Poor coordination of consumer energy resources could add up to 13 per cent to electricity prices.
• Prolonging the life of existing coal plants to meet future demand growth could pose significant price risks, with increased outages potentially adding up to 5 per cent to prices.  
• Conversely, faster wind and transmission delivery could reduce prices by up to ten per cent.

Electrification offers significant household savings

The report also finds that many households can significantly reduce their ‘energy wallet’ - their total spending on electricity, gas and petrol – by electrifying their energy use, with savings typically exceeding upfront costs within 10 years.  

The analysis shows households that electrify could see:

• Electric vehicles: an approximate 40 per cent reduction in annual vehicle running costs (around $1,400 per year in fuel and maintenance savings).
• Gas appliance electrification: an approximate 60 per cent reduction in heating and cooking costs (around $1,400 per year for a household currently only using gas for these purposes).
• Solar panels: approximately $1,000-$1,200 per year in electricity savings for typical households.
• Home batteries: additional $600-$900 per year in savings when combined with solar.

"A household that fully electrifies could reduce total energy costs by up to 90 per cent, with typical payback periods of 4 years,” Ms Collyer said.

Smart use of consumer energy resources critical

Beyond grid-scale infrastructure, the report highlights the growing importance of storage, such as home batteries and other consumer energy resources, in managing peak demand and reducing system costs for all consumers.

"Well-coordinated consumer energy resources, like charging electric vehicle’s 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," Ms Collyer said.

"This is why the AEMC has made rule changes to make it easier for customers to benefit from their price-responsive resources, and why our Pricing Review is examining how retail and network pricing can better reward customers for taking action that supports efficient use of the grid.”

Three actions to ensure affordable, equitable transition

The report identifies three priority areas for policymakers:

1. Reduce barriers to new renewable and transmission buildout:
   • Implement credible mechanisms to ensure sufficient renewable generation and firming capacity.
   • Speed up planning and approvals processes.
   • Continue building social license for new transmission projects.
2. Encourage coordinated uptake of consumer energy resources:
   • Continue to support home battery uptake while ensuring systems help smooth, not increase, peak demand.
   • Implement consistent national standards for consumer energy resources.  
   • Ensure visibility of these resources to the system operator.
3. Enable all households to electrify:
   • Address the barriers that households face, including upfront costs, rental and apartment constraints, and EV charging access.
   • Provide efficient pricing for both electricity and gas services.
   • Give consumers clear information to support long-term energy decisions.

"The energy transition requires action on multiple fronts. Governments, industry, the AEMC and other market bodies all have roles to play. The AEMC's rule changes and ongoing policy reviews are focused on the coordination and equity challenges,” Ms 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," she said.  

Regional trends  

Electricity price trends vary by jurisdiction, with New South Wales and the Australian Capital Territory prices projected to be stable or fall, while Victoria, Queensland, South Australia and Tasmania are projected to see increases, primarily in the latter half of the outlook period as electricity demand grows and the supply-demand balance tightens.

Total energy cost savings from electrification are projected across all regions: 16-21 per cent in New South Wales, the Australian Capital Territory, Victoria and South Australia, and more modest savings of 6-7 per cent in Queensland and Tasmania, reflecting lower current gas usage. 

Media:  Jessica Rich, 0459 918 964, media@aemc.gov.au

About the AEMC: We are an independent statutory authority that makes the rules for Australia's National Electricity Market and provides independent, evidence-based analysis to energy ministers. Any stakeholder can propose changes to how markets work through our transparent rule change process. Everything we do is guided by one objective: promoting the long-term interests of Australian energy consumers on price, reliability, security, safety, and emissions reduction.

About the report: The Residential Electricity Price Trends report provides a 10-year outlook (2026-2035) for electricity prices and household energy costs across Australia's National Electricity Market. It is based on Australian Energy Market Operator's latest 2025 demand projections, which reflect a slower pace of electrification compared to AEMO's 2024 projections. The projections are an outlook based on current data and assumptions, not a forecast. Actual prices will depend on how quickly the energy system evolves.
 

TABLE 1: Household Electrification Cost Reductions & Payback Periods

TABLE 2: Average Annual Electricity Price Change by State (2026-2035)

Note: Electricity prices reflect price per unit. 

A Note on terminology: Prices, bills and energy costs

This report uses three related but distinct terms:

1. Electricity prices refer to the per-unit cost of electricity (measured in cents per kilowatt-hour). This is the rate that retailers charge for each unit of electricity consumed.
2. Electricity bills refer to the total amount a household pays, which is a product of both the price per unit and the quantity of electricity consumed.
3. Total energy costs refer to a household's total expenditure on energy across electricity, petrol, and gas.