Each year we take the time to review the energy price outlook – and each year we hope to bring our customers good news. Last year, as anticipated we saw hikes Australia-wide in $kWh with the average increase netting in at 26% with bottom lines for both small and large commercial businesses all around the country taking the hit.
So is there light at the end of our electricity tunnel in 2024? And what factors should we be watching to determine what happens next?
The lay of the land
Before looking at what’s likely to happen next, it pays to understand the variables that have been affecting energy prices around the world over the last few years, both in Australia and around the world. Aside from temporary factors such as war, the pandemic and natural disasters, at the core of our current energy price situation are three main factors:
- The retirement of fossil fuels – as nations around the world have united to address climate action and global warming, coal has been unanimously identified as the culprit and action has been gaining momentum to phase it out completely.
- The advancement of renewable energy – with fossil fuels facing their death knell the more reliable and sustainable renewable energy sources of solar, wind, and gas are the energy heroes set to take their place. However, making them readily available is a huge job; as they’re amping up and fossil fuels are turning down, a supply gap has been emerging, keeping energy prices hotter than global warming.
- Global supply & demand – the final kicker is that energy is something that everyone, everyone, everyone needs! Global energy consumption is tipped to grow by 1.8% in 2024, largely driven by strong demand in Asia. The laws of supply and demand dictate that when demand is high and supply insufficient to meet it, prices go up, up, up!
Therein lies the energy price storm businesses have been weathering over the last few years in Australia and around the globe. So what’s in store for 2024? More price hikes or an easing of the surge? Will renewables gain enough ground for us to start seeing the energy rate utopia we’ve been promised shining through the clouds? Here are some of the factors that will affect the energy price outlook for the coming year.
Global renewables ramp up
In December 2023 at the COP28 United Nations climate talks in Dubai, a historic agreement was made signalling the “death knell” of fossil fuels. Countries committed to “triple global renewable energy capacity by 2023”, with Australia committing to play its part, despite being singled out as “the world’s third largest fossil fuel exporter” by Climate Council Senior Researcher Dr Wesley Morgan.
Dr Morgan commented, “The science has been clear for some time – we need to stop pollution at its source. Every step we take to stop pollution across electricity, transport and industry helps secure all of our futures.”
Australia is both determined and perfectly positioned to commit to and lead the global renewables charge, and the latest Australian Energy Market Operator (AMEO) roadmap proves it. The latest updates show an acceleration of renewable energy investments and a forecasted shortening of the timeline to the retirement of all coal-fired power stations – to 2038, which is 5 years earlier than 2022 predictions.
Renewables like solar and wind, are in fact already providing for 38.9% of our energy needs in Australia. Said Climate Councillor and environmental economist Tim Nelson, “Australia is a lucky country. We’ve got some of the best solar and wind resources in the world. It’s a smart play for us to power our country off clean energy.”
And what about the effects of moving from coal to renewables on our economy? Nelson cited that the renewables industry will create 30,000 jobs for Australians over the next 20 years, including in regional Australia, not to mention cheaper and less volatile energy prices for all.
So what does all this mean for our 2024 energy bills?
We’ve looked at the macro picture, but bottom line – what does all this mean for energy prices 2024? The energy experts at Zembl recently conducted their own review of the national energy outlook and noted that, despite the best intentions of governments, renewables projects are not without their challenges.
Said Zembl’s April McBride, “Wind farms and solar farm implementation involves getting the buy in of whole communities which is intrinsically tricky – especially if they’re blocking views or needing buy-in from multiple independent parties. This can slow progress with these projects.”
The good news is, wholesale electricity prices in Australia – or the cost for big companies to supply homes and businesses with power – have halved since this time last year. This sharp decline does not change retail energy rates immediately however. Why? Because of a thing called the DMO (Default Market Offer).
The DMO is reviewed and set every July 1 by the AER (Australian Energy Regulator), effectively creating a 12-month lag before impacts of shifts in wholesale electricity prices can be felt by consumers. It caps the maximum retail price that can be charged for electricity in Australia, and is determined by multiple factors each year, including inflation targets and other economic factors not isolated to the energy market.
All eyes will be on the DMO this July 1. With everything we know, experts are predicting it will drop, creating a fresh opportunity for businesses and households to review what they’re paying and seek deals that keep pace with the evolving market.
And who will be watching extra hard? The energy experts at Zembl of course! Every opportunity to save our customers money and improve their bottom line makes our day, so we’ll be kicking in to help our customers maximise the opportunity, whatever 2024 brings.
We wish everyone a good one!
Save more in 2024 with Zembl
Zembl is an Australian energy broker that has saved businesses a total of $9.5 million* off their energy bills and bottom lines since July 2023, and we’re chomping to save businesses even more in 2024.
By filling out our contact form and uploading your bill, our team will get in touch with you and present the most competitive options available.
So why wait? Let’s make your 2024 the best your bottom line has seen yet!
*$9.5 million is the total estimated average annual energy bill savings for Zembl business customers from 1 July 2023 to 23 Jan 2024.
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