Australians are struggling with the cost of living, and rising power bills are putting even more pressure on household budgets. Three in 10 parents say they’re struggling to afford food, power bills or insurance. The key question is: how did we get here, and what can actually be done about it?
While power prices are complex, the short answer is that Australia’s reliance on polluting and expensive coal and gas is a major driver of high power bills. They are driving up wholesale power prices (the prices our electricity retailers pay), which make up up to 40% of bills. On top of this, millions of Australians are paying too much for electricity because the system penalises loyalty.
Read our report Power Games: Who’s driving high power bills?
key reasons your power bills are sky high
1. Expensive and polluting gas is the main reason electricity prices are so high
Many Australians will remember a time when fossil gas was an abundant, low-cost source of energy. But this all changed in 2015, when the east coast gas market opened and we started shipping huge amounts (more than 80%) of our gas overseas. Now, even though we produce far more gas than we need, gas prices in Australia have skyrocketed. Prior to 2015, gas prices had stayed consistently around $3-5 per gigajoule (GJ). Ten years on, gas prices are steadily sitting up to four times higher: around $13-15/GJ.
As a result, electricity generated with gas has become extremely expensive, and has been a major factor in the tripling of wholesale power prices over the same period. Because gas is so expensive, it sets the price of electricity up to 90% of the time – despite providing only about 5% of our power.
Our exposure to global markets also means that the price of gas is more volatile, and vulnerable to events around the world – like Russia’s invasion of Ukraine in 2022. Companies exporting fossil gas have made close to $100 billion in extra revenue since the Russia-Ukraine conflict began in 2022, at the expense of Australian families and businesses.
To make matters worse, gas companies pay royalties on less than half of the gas exported from Australia, effectively giving Australian gas – a public resource – to multinational corporations for free. They also use all kinds of accounting tricks to reduce their tax bill – often paying less tax than an average Australian worker, and in many cases barely pay any tax at all. The Australian Government makes more money from beer excise than from the Petroleum Resource Rent Tax (PRRT) that gas producers pay.
Read more: 5 reasons Australia needs to break up with gas.
2. Our ageing and polluting coal power stations are driving the biggest electricity price spikes.
Most of Australia’s coal generators are now more than 40 years old – some of them have been operating since the 1970s, when they were largely owned and funded by state governments. Just like a car, coal stations can’t run forever. In Australia, the average lifespan of a coal power station is around 45 years.
As our coal stations age, their ability to reliably produce power has dropped off dramatically. In 2025, there have been coal outages in NSW and Queensland equivalent to every unit in these states being offline for more than 80 days, while Victoria was not far behind on 70 days.
Coal outages are not only a major power outage risk, but are also causing severe price spikes. During coal outages, fossil fuel corporations take advantage of reduced energy capacity and jack up their prices to maximise profits. At the same time, expensive gas generation is increasingly lent on to meet our electricity needs. Five of the most severe electricity price spikes in recent years were caused by unexpected coal outages.
Learn why renewables are the cheapest, fastest way to replace our coal-fired power stations.
3. Millions of Australians are being overcharged for electricity in a system that penalises loyalty.
As the share of renewables in our grid goes up, wholesale prices come down. But these benefits can be slow to flow onto bills, if they do at all. There are a range of reasons for this, but one of them is simple: nearly 40% of households are paying too much for their electricity. Energy retailers are overcharging – and in some cases deliberately misleading and confusing – us, while they make huge profits.
Australia’s Competition and Consumer Commission (the ACCC)– has recently found that nearly 40% of households (2.5 million) are paying too much for electricity. Australian households who have been on the same electricity plan for several years are most at risk. Nearly a quarter of households in our main grid have been on the same plan for three or more years, and the majority of them are paying a “loyalty tax”: on average, $221 more every year than those on new plans.
What’s more, Australia’s biggest energy retailers own some of our largest coal and gas generators, and are profiting off the harm they are causing to our communities, economy and environment. The total annual profit of the big three ‘gentailers’ is enough to cancel the debt of all Aussies struggling to pay their electricity bills 7x over.
But it’s not all bad news: abundant, clean renewables put the power back in our hands.
4. Clean electricity is already cutting pollution and power bills for many households across the system.
While power prices are high now thanks to coal and gas, they would be even higher without our 40% renewable grid. On average, wholesale power from renewables costs half as much as power from fossil fuels. This is because unlike fossil fuels, Australia’s abundant wind and sun are widely available resources that never run out – and they’re free.
Research has confirmed that without renewables, Australian household power bills could have been up to $417 (22%) higher in 2024. In total, renewables saved households in Australia’s main grid (which covers NSW, the ACT, Victoria, Queensland, South Australia and Tasmania) up to $3.8 billion in 2024.
5. Aussie households can take control of their power bills by installing rooftop solar, switching to electric appliances and improving their energy efficiency
The best way governments can help Aussies struggling with rising energy costs is to deliver more lower-cost, clean power, backed by storage like batteries. But more than this, government needs to make sure all Australians can access opportunities to reduce their energy bills and make their homes more comfortable and safe to live in.
Already, more than four million Aussie households (or one in three) have taken control of their power bills by putting solar panels on their rooftops. There is now more electricity generation capacity on our rooftops than in all of Australia’s coal fleet. Each of these households are saving around $1,500 per year on average. A battery can boost the savings of a solar system, up to 90% of a typical power bill, or around $2,300, depending on your location and energy use. On top of our electricity bills, many of us also pay for the gas we directly use in our stoves, hot water heaters and other appliances. Switching from gas to electric appliances, and improving energy efficiency could save households an extra $500 and $1,900 every year. An all-electric household with solar and a battery could slash its total energy bills (electricity and gas) by more than 90%.
The path forward is clear: Accelerating the rollout of renewable energy, storage and smarter networks – while reining in unfair pricing – is the most effective way to lower power bills, protect households and cut climate pollution at the same time. Delaying this would only lock in higher costs, risk black outs and put more pressure on households already doing it tough.
Read our report Power Games: Who’s driving high power bills?
