The Future of Electricity in Australia: What to Expect Next

Electricity prices in Australia have been on a rollercoaster ride in recent years, with wholesale volatility, government interventions, and shifting market dynamics shaping the way households pay for power. Looking ahead, the next 12 to 18 months will see significant changes that will impact how much consumers pay, how energy is used, and how technology and competition reshape the market.

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Households have experienced a slight moderation in electricity prices compared to the sharp increases of the past two years pre-2024. Thanks to the federal Energy Bill Relief Fund, households received a ~$300 rebate in 2024, helping to ease bill pressures. However, this doesn’t mean prices are going to drop dramatically—just that the rate of increase is slowing down.

The Australian Energy Regulator (AER) has set a tighter cap on the Default Market Offer (DMO)—a benchmark price that retailers must adhere to—which has prevented extreme hikes. As a result, from July 1, 2024, most residential customers saw only small reductions (1–6%) or modest increases (2–4%) in certain areas.

Wholesale electricity prices started to fall (down 7–21% in some regions of the National Electricity Market) due to an influx of renewables. However, network costs and grid upgrades are expected to push some expenses higher. In plain terms, the cost of producing electricity is getting cheaper, but maintaining and upgrading the grid infrastructure means those savings won’t always be passed on to consumers.

Several trends will play a key role:

• Solar Energy’s Impact: Over one in three Australian homes now have rooftop solar, shifting the demand curve and reducing wholesale costs during the day.
• Coal Closures & Reliability Risks: The transition from coal is progressing, but delays in replacing capacity with renewables and batteries could result in short-term volatility.
• Increased Smart Meter Use: By 2030, smart meters will be nearly universal, enabling dynamic pricing models that reward off-peak usage and penalise peak-time consumption.

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More Choices, More Confusion?

Electricity retailers are facing intense competition, leading to more aggressive discounts, but also an explosion of complex tariffs that make comparing plans harder.

• Switching Rates  Sky-High: In July and August 2023 alone, 450,000 Australian households switched energy providers to find better deals.  This trend continue as consumers chase savings.
• The "Loyalty Tax" is Real: Staying with the same retailer for more than two years could cost you $317 more per year on average. New customers often get better rates than loyal ones.
• Retail Market Share is Shifting: While the "Big 3" (Origin, AGL, EnergyAustralia) still control ~60% of the market, smaller retailers and even tech companies are entering the space, bundling energy with broadband or offering app-driven energy management.

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Pricing Models: Beyond Flat Rates

Traditionally, households had two main choices: flat-rate electricity plans (same price all day) or time-of-use (TOU) plans (cheaper at certain hours). But new models bring more pricing complexity, and savings, including:

• Real-Time Wholesale Pricing: Retailers like Amber Electric allow customers to buy electricity at the actual wholesale market rate, meaning prices fluctuate every 30 minutes. Great for savvy consumers, but risky if prices spike unexpectedly.
• Subscription-Based Energy: Some retailers now offer fixed monthly fees for a set amount of electricity, similar to Netflix.
• "Free Energy Hours" Offers: OVO Energy’s "Free 3" plan gives three hours of free electricity daily during solar peak hours (11 am–2 pm), incentivising daytime usage.
• Virtual Power Plants (VPPs): Consumers with home batteries can join VPPs, selling excess power back to the grid. Programs like South Australia’s Tesla-backed VPP are already saving participants up to 25% on their bills.

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The Future of Cost Savings

Instead of manually switching plans, more Australians are expected to rely on automation and AI-driven energy management tools over the next years.

• AI-Powered Bill Optimisation: Some energy retailers and fintech apps will analyse usage patterns and automatically switch you to the cheapest available plan.
• Smart Home Integration: Devices like Wi-Fi-enabled air conditioners, smart thermostats, and automated EV chargers will increasingly respond to dynamic pricing in real time, shifting power use to the cheapest hours.
• Consumer Data Right (CDR) for Energy: Rolling out in 2025, this initiative allows consumers to share energy usage data with third-party apps that can continuously optimise plans.
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Consumers who adapt to smarter pricing, automation, and new models like VPPs will come out ahead. Those who stick to old habits—like ignoring their energy bill or staying on outdated plans—will likely pay the price.

The good news? With more technology like VoltaRocks and competition than ever before, those willing to engage will find plenty of opportunities to cut costs, go greener, and take control of their power usage.

Stay informed, stay flexible, and let technology do the hard work for you!