Every year, energy retailers make billions of dollars from the electricity they offer to their customers.
This isn’t always a negative thing; they provide a valuable service that keeps the lights on (literally). However, how energy retailers sell and buy power during peak and off-peak hours can differ significantly.
Electricity rates, as we’ve all observed, are quite unpredictable due to a wide range of variables outside your control.
Nevertheless, why is this happening and what can you do to better safeguard yourself?
Rising Energy Costs
According to a report by the Australian Parliament, power costs grew by 72 percent on average between 2003 and 2013. And, according to ABC and the consumer price index, power costs climbed by 117 percent from 2008 to 2018. When compared to other similar categories, energy prices increased by more than four times the average price rises during that time.
This isn’t to say that power costs will constantly rise; rather, it emphasises the volatility of electricity pricing. Outside variables such as coal plant decommissioning, network maintenance expenses, wholesale power pricing, high grid demands, and energy retailer processes and costs all influence whether they increase or not.
With solar farms being built around the country, solar is likely to help ease growing power bills in the future. Homeowners’ use of solar power is also a factor. However, owing to the volatility of electricity rates, there is no certainty.
How Energy Companies Buy And Sell Their Electricity
Many individuals are unfamiliar with how the electricity market operates. The National Power Market is where the majority of electricity is traded (NEM). This is where energy merchants buy and sell electricity.
When demand is great, prices tend to rise, but when demand is low, prices tend to fall.
The grid in Australia can be stressed by events that result in a large overload, leading prices to rise and wholesale purchasers to benefit. Wholesalers can simply wait for peak times to sell their power if their timing is good.
The NEM is governed by an AEMO (Australian Energy Market Operator), whose duty it is to forecast how much electricity the grid will require due to the NEM’s inability to store energy. So that everyone on the grid has access to enough power.
These AEMO operators might make mistakes from time to time, and unanticipated occurrences can cause costs to spike. For a particular amount of time, causing unanticipated electrical expenses. As an Australian homeowner, this is another element over which you have no influence.
What Can You Do?
Owning and producing as much power as possible is one of the greatest strategies to defend yourself. Using solar energy to future proof your home against rising costs and volatility in the energy market.
Battery technology is rapidly advancing, boosting storage capacity while decreasing prices. Making it more economical and cost effective for Australian residents while almost eliminating their reliance on the electrical grid itself.
Speak with one of our friendly specialists now to obtain a free property assessment.
