Why Your Power Bill Is So High In Australia And What You Can Do About It

Added: 2026-05-30

[00:00:00]Your power bill in Australia is not high because of one simple reason. It's high because Australia's energy system is expensive. It's complicated and it's changing really fast. By the end of this video, I'm going to show you how to reduce the damage using solar batteries, better tariffs, and even new electricity plans that give you free power for certain times during the day.

[00:00:28]Hi everyone, Dan here from GI Energy.

[00:00:30]We're talking about high power prices today. Most Australians have opened a power bill recently and thought the same thing. How can electricity possibly cost so much in a country like Australia?

[00:00:41]We've got coal, we've got gas, we've got obviously some of the best sunshine anywhere in the world. We've got wind.

[00:00:49]We've got huge amounts of land for vast solar arrays. And we even export energy to other countries. So why then are Australian households getting smashed by such high power bills? Well, the answer is not as simple as saying it's because of renewables and blaming those. It's not as simple as saying it's because of gas or even retailer margin. Um, and it's certainly not as simple as saying it's because of a government policy. All of those things obviously play a role.

[00:01:21]Um, but your power bill is a result really of a much bigger system than that. It's the cost of generating electricity first of all, but it's also the cost of moving that energy through the network. It's also the cost of maintaining the network. So, maintaining poles, wires, transformers, and substations. The cost of managing peak demand is factored in. The cost of retailer risk and billing, of course, is factored in. and the cost of transitioning from one old system to a new energy system. So, in this video, I want to break this down properly for you. Not in any kind of political way.

[00:02:02]Um, not in any kind of emotionally charged way, just in a real practical simple way that everybody can understand. Because once you start to understand what is driving the cost of your power bill, you can start making much smarter decisions about basically what you can do next. So let's start with the big question. Is Australia actually one of the most expensive countries in the world for electricity? The honest answer is no.

[00:02:31]Not quite.

[00:02:33]Australia is often described, and I hear this all the time, as the most expensive country for electricity anywhere in the world. But honestly, that's mostly overstated.

[00:02:44]Recent international comparisons put Australia's household energy prices slightly above average for developed countries. So, we're definitely not the worst in the world by any stretch of the imagination. However, doesn't mean that we're cheap either. And that obviously matters because energy bills are landing now on top of everything else. So in recent times we've seen much higher mortgage rates and I know we're all feeling the pinch for those. Higher rent if you're renting has gone up along with those mortgage rates. Higher insurance costs significantly. Um groceries. I can't believe how much I spend in Woollies these days on a weekly shop.

[00:03:25]Higher fuel costs particularly very recently.

[00:03:29]So even if Australia is not technically the most expensive country in the world for buying electricity, householders, households and businesses are absolutely right to say they're feeling the pressure there. Here's the part that really frustrates people. Australia feels like really it should have cheaper energy. We're energy rich in many ways.

[00:03:50]We obviously have lots of natural resources here. That's a pretty commonly well-known fact. We have abundance of sunlight as I mentioned earlier almost perfect conditions when you compare it to other countries for solar generation.

[00:04:03]We have heaps of space for vast solar arrays and other types of generators.

[00:04:08]But being rich in energy resources does not automatically mean that your home or business gets cheap electricity.

[00:04:15]This is one of the biggest misunderstandings in this whole debate.

[00:04:19]The price you pay at home or in your business depends on the whole system. It depends first of all on how energy is generated. Of course, it depends when it's generated. That plays a big part.

[00:04:34]Um, and it also depends on how it's going to get to your home or get to your business. It depends on how much peak demand there is at any one time, and I'll explain a little bit more about what that means shortly as well. Um, and it depends how reliable you want the network to be as well. Um and obviously then how much investment is involved to keep that system stable. So let's look at what is actually inside that household or business energy bill. Most people think that the energy bill is made up mainly of the cost of producing electricity, which is a fair assumption to make, but that is only part of it.

[00:05:14]Your bill is generally made up of five key areas. So first, wholesale electricity. That's the one that most people think is the whole cost. That's the cost of basically buying electricity from the market. Secondly is your network costs. These are often put on the bill as standing charges, service fees, that type of thing. This is the cost of maintaining the poles, the wires, the substations, the transformers, obviously paying maintenance crews, storm repairs, uh grid upgrades. Um, and then third is your retailer costs and obviously the retailer margins. That includes things like sending you your bills, customer service, even though that's not usually that great, uh, marketing, compliance, risk management, um, and all of those things. Fourth is your government uh, and environmental scheme costs. And then lastly is your GST and any other sort of pass through charges. So the important thing to understand there is this the cost of making electricity is definitely not the whole bill. A very large part of that bill is actually the cost of delivering electricity safely and reliably to your home or to your business. And this is where Australia faces a real almost unique challenge.

[00:06:28]We're a huge country and we have a relatively small population. This means that we have a lot of network, a lot of poles and wires and other infrastructure that we have to pay for and not that many people to pay for it basically. So you've got all the poles and wires over a really really long distance which obviously equals a lot of maintenance.

[00:06:49]Also in Australia we have a lot of um weather exposure, lots of storms, floods, things like that. U lots of really hot weather as well which has a big difference and I'll explain that shortly. And a lot of the infrastructure that has to work obviously during the worst conditions, not just on an average day. We all want power all the time. So the grid has to be built for peak demand. Not average demand, peak demand.

[00:07:16]So the way to think about that is a really hot summer's evening. Let's say it's 38°. You've come home from work.

[00:07:23]You've picked up kids from school.

[00:07:25]Everyone else is doing the same thing.

[00:07:27]Solar production is obviously dropping off for the day around that time.

[00:07:30]Everyone's getting home, flicking on the air con, cooking dinner, uh potentially plugging in an electric vehicle. A lot of businesses at that time of day are obviously still operating and drawing a lot of power as well. So the whole system basically is under an immense amount of pressure at that time. That demand, that peak demand is really expensive. Even if it only happens for a very short period of time, the network has to be able to handle it. And that's where the costs add up.

[00:08:00]This is also why solar batteries for homes, businesses, and large utility scale batteries are becoming more and more important. A battery is not just useful for the home or the business that owns the battery. The battery can also be immensely useful for the overall grid itself. So if you think about it, when thousands of batteries are installed and controlled corrupt properly, they can reduce evening peak demand, absorb excess solar during the day that's not needed, and release that energy into the grid when it's under stress or potentially under stress. That overall helps stabilize the system. And in the long term, anything that reduces peak demand and improves grid stability can help reduce pressure on future infrastructure costs. So, let's talk about wholesale prices. Wholesale prices move around a lot. You can find this information out yourself online. They're affected by lots of different things.

[00:08:58]They're affected by gas prices. They're affected by coal prices. They're affected by um generator outages.

[00:09:05]They're they're affected by heat waves, um storms. They're affected by transmission constraints.

[00:09:13]Uh they're affected by obviously the amount of renewable energy available as well.

[00:09:18]and also then of course how much energy people actually want at a particular moment. This is why if you look at a wholesale price of electricity throughout a day, it's usually really cheap in the middle of the day, especially on a sunny day, but really expensive in the evening. So at lunchtime, for example, there may be huge amounts of solar from everybody's home and business getting pumped back into the grid. But at night, when that solar drops off, the system then obviously needs more alternative sources of power. And this is where the demand usually arises and that's obviously then when prices can become very very expensive. This is one of the big reasons that solar over helps the overall grid not just the people who have solar installed. And when rooftop solar is producing energy during the day, those homes are buying less power from the grid. That reduces demand on the system during daylight hours and it can reduce the need for more expensive generation.

[00:10:16]Batteries then help out later and I'll explain a little bit more about that in a minute. Overall, it can reduce stress on parts of the network. So what that means is it can help lower wholesale prices during the day with solar generation during the day.

[00:10:31]So, what that really means is cheaper energy during the day that everyone should be able to access and I'll explain how you can shortly. So, even if you don't have solar, widespread rooftop solar generation can still reduce pressure on the overall electricity system. But there is a catch. If we're producing too much solar at the wrong time without storage or without flexible demand, that creates another challenge.

[00:10:54]Now, we've got too much going back into the grid. So we end up with lots of cheap power in the middle of the day, but still excessively expensive power at nighttime. This is why the next phase is not just about solar. It's about smarter energy use. It's about adding more batteries to the overall network. It's about looking at better tariffs for your usage pattern. It's about trying to be really flexible with the loads that you can be flexible with. So things like charging your electric vehicle if you have one at the right time, running your hot water and heating your hot water at the right time if you have a pool, putting your pool pump on at the right time. And homes using more electricity when the grid basically has cheap energy available are going to get cheaper overall bills. And this is where the system is basically heading now. And this is where a household or even a business can really benefit. So some retailers are now offering plans where you can have very very cheap or even free electricity for a few hours during the day when energy at wholesale rate is really cheap. Usually this is designed to encourage people to use power when solar generation is high and when the grid has more supply than demand. Then that can be a real opportunity whether or not you have solar panels installed.

[00:12:17]But only if your home is set up to take advantage of it, and only if you think about it intelligently.

[00:12:22]So, if you can run your pool pump, if you can heat your hot water, even things like put your dishwasher on a timer or or a delay start, your washing machine, your dryer, your EV, uh even precool your home with air con during those cheaper periods, you may be able to reduce your bill significantly without sacrificing any comfort at all. But if most of your energy is always going to be used in that peak time in the evening, then the benefit of any of these free windows is going to be really really limited. That's why understanding your usage pattern matters so much. It's not just about how much power you use.

[00:12:59]It's about when you use that power. So let's just zoom right back out for just a moment. And I want to just focus on why this matters for the overall economy in Australia. Because electricity is not just another household bill. Energy is one of the core inputs into pretty much anything you can think of.

[00:13:18]Manufacturing, any product needs lots of energy. Mining uses lots of energy.

[00:13:26]Agriculture uses lots of energy.

[00:13:29]Transport needs lots of energy.

[00:13:32]Refrigeration, big cold storage facilities use heaps of energy.

[00:13:36]Construction, building, anything needs energy. data centers which are coming whether people like it or not. They need vast amounts of energy. Shops, offices, schools, hospitals, every everything needs energy. So when energy becomes more expensive, the costs do not just stay inside that one bill, that one energy bill. It flows through to the whole economy. It affects business overheads directly and drastically. It affects product prices as a result of that directly. It affects overall inflation when energy costs are high. It affects obviously your household disposable income. If you're spending more on power, you have less to spend on other things which then affects the economy. It affects how competitive Australia can basically be. So it doesn't necessarily mean that high energy prices automatically can just destroy an economy. The relationship is obviously a lot more complex than that.

[00:14:34]But cheap, reliable energy has always been one of the foundations of a really productive economy.

[00:14:40]When energy becomes expensive, businesses and households have to respond. They either pay more, use less, become more efficient, shift their usage, or invest in technology that gives them more control over that overhead. And that brings us to the practical part of this video. What can you actually do about it? Well, before you go and get a solar assessment and try and put a battery in, the first thing to do is just check your electricity plan. There's comparison sites online, but then what you want to do is have a look at it yourself. Um, most people have no idea whether they're paying a competitive market offer, an old offer, a standing offer, a flat rate, a time of use, demand tariff. All of this stuff matters, so you should take some time to understand it. Two exact identical homes can use the same amount of electricity and have massively different bills depending on their tariff structures. So look at first of all your usage charge which is kilowatt hours. Look at your daily supply charge or service fees. Look at your peak demand um your off- peak rates and your peak rates. Um some people are on a demand tariff, some people aren't. and then look at whether your plan actually allows actually suits the way that you're using energy. The second thing then is to shift those flexible loads where possible to where power is cheaper. So if you're on a time of use tariff, use that cheaper energy. As I mentioned earlier, there's a window of time, but a lot of retailers are offering now with free power during the day usually. So if your retailer has that offer, take them up on it. If they don't, it's probably coming soon. And then, as I said earlier, just simple things. Run the dishwasher. Run the washing machine. If you're using a dryer for your clothes, run the dryer. Most of these things have delay start function, so you don't need to be there when it happens. Pool pump is the obvious one.

[00:16:34]The EV, I've mentioned a couple of times. They use loads of power and it's still cheaper than fuel, but if you can do it during a very cheap time to purchase energy, all the better. Your hot water can be put on a simple timer or an intelligent relay to run during certain times. um if you possible to do pre-cool your house before that evening peak and during those free or very cheap windows of electricity. The goal here basically is to move as much flexible usage as possible away from the most expensive times and into the most cost effective times. Um one important thing out of all of that I think the most important one that most people have is air conditioning. A lot of Australian homes air conditioning is the biggest expense. I know it is for me. Uh ducted air con in particular if you've got it throughout the home can be very very expensive if it's not managed correctly. So just doing basic things like making sure your filters are clean.

[00:17:27]Close off rooms you're not using. Um use sensible temperature settings. Don't have it blasting on 21° all the time.

[00:17:33]Once the house is cool, flick it up to a higher temperature. Avoid cooling the whole house if you don't need the whole house to be cool. Improve shading, insulation, and ceiling where possible in the home. um because a poorly perform performing house turns an aircon into a really really expensive appliance.

[00:17:52]Um the fourth thing there is to find hidden loads. So if you've got like a really old pool pump, it might be worth replacing it. If you've got a second fridge and you don't really need it, then that probably using a bit of power.

[00:18:05]Um older inefficient hot water systems can drastically increase consumption. um any old appliances really that that could be replaced with energy efficient ones over time. Um even standby loads, things like having a bunch of TVs and whatever else you've got on standby that aren't used, just turn them off. These things are sound small, but they can all quietly add up, especially over the years. Sometimes the power bill can feel obviously a little bit mysterious and hard to understand, but when you look closely and you look at your use, there's usually a few major causes that can be managed more efficiently.

[00:18:42]And then we get to solar and batteries.

[00:18:44]So solar can help reduce your energy bill because it obviously produces energy during the day and then you don't have to buy energy during the day. That can reduce your bill in a very very direct way. It also helps the broader grid by reducing daytime demand and adding lowcost generation where close to where energy is actually being used. Uh batteries can help because they allow you to store that cheap energy from your solar and use it later, usually during the evening when the peak power is very expensive. Um which means they can obviously help reduce peak demand directly if you have that charge on your bill. And if the systems designed correctly, they can provide backup power if the grid fails and there's a grid outage. The key though here is the right design. Solar and battery are not magic.

[00:19:29]They need to be matched to your use, your tariff, your roof, your budget, and of course your backup requirements. And then you need to consider not just today, but your long-term plans. So these cheap systems don't tend to solve the real problem. They're just poorly designed often. So before making any real major decisions, I think um you should understand three things, three core things. Obviously, how much energy you use, when you use that energy, and then how you're paying for that energy and what you're paying for that energy.

[00:20:03]Once you understand that, you can make much smarter energy decisions. So, you might need to change tariffs. You might need to shift some loads. there's a very good chance that you could benefit from having solar installed. You may need a small, medium, or large battery depending on that design. You might need a bigger battery than you think. That's often the case. Um, but it needs to be designed correctly. You might need to use that free daytime window more intelligently if that's available to you. And if it's not, it's hopefully coming soon. Or, you know, you might need a combination of of all of the above.

[00:20:41]But the households that will win over the next decade are not ones chasing the cheapest headline offer. Typically, they're the ones who actually take the time to understand their energy use, understand the market, and build a proper energy strategy for their home or business. Because your power bill is not like other bills. It's not just a bill.

[00:21:01]It's a signal. It tells you how your home interacts with the overall energy system. And once you start to understand that, you can actually start really taking control. So if you want to take control of your energy costs instead of just, you know, reacting to those bigger bills, subscribe to our channel and watch some of our other videos next.

[00:21:23]Thanks for watching.