Australian households are set to struggle with rising power prices for the next decade, although there could be some much-needed relief in the long run, major energy bosses have warned.
The Australian Energy Council (AEC), the peak body whose members include power giants AGL, EnergyAustralia and Origin, today released a discussion paper based on a survey of industry chief executives, examining the country's energy transition.
Chief among the concerns raised in the report is affordability, with one unnamed executive warning customers are likely to see another 10 years of rising bills.
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"My feel is that bills will increase for at least the next decade, given the scale of capital being deployed in the industry," they said.
"I think it's the calm before the storm, and I think the storm is coming around cost and competitiveness," another added.
The reason for the rise is that, while renewable energy such as solar and wind has consistently been found by the CSIRO and Australian Energy Market Operator, the time and cost of getting it connected to the energy system are higher than expected.
"The infrastructure required to do the renewable transition is all far more expensive than anyone expected," the CEO of an energy generator said.
"The build-out is way behind schedule on lots of critical matters.
"The cost of this hasn't been openly discussed as well as the associated impacts on Australia's economy."
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Renewables still the cheapest option
Despite the looming cost of the transition to a predominantly renewable energy grid, the AEC said it still supports that path forward – as well as retaining the target of net zero emissions by 2050 – because it is the cheapest option.
The report states that, despite the short-to-medium-term power bill pain, "with the right market reforms and investment signals, prices could stabilise or even decrease in the long term".
"The AEC supports the transition to net zero emissions by 2050 on the premise that the least cost, lowest impact pathway is an energy system dominated by renewables (wind and solar, including rooftop solar) and firmed with battery storage, gas and pumped hydro," chief executive Louisa Kinnear said.
"There is generally broad alignment across industry about this energy mix…
"In the long run, this approach will still be cheaper than continuing to invest in existing or new coal-fired power generation."
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The timing of the report from the major industry body is far from ideal for the federal Liberal Party, coming just days after it pledged to ditch net zero in favour of trying to bring down energy prices with a "technology agnostic" approach, including potentially increasing coal power.
While the report says coal still has an important part to play in the short term, it also makes clear that the once-dominant energy source is on its way out.
"Building and connecting renewables and complementary technologies (particularly wind and gas) on time is critical to ensuring energy remains affordable and that coal can exit in a timely fashion," it states.
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Governments told to lift game
The federal and state governments were provided a raft of recommendations from the report to help ensure the energy transition runs smoothly.
They include speeding up environmental approvals and considering assistance targeted at low-income households rather than the federal government's universal energy rebates that will soon end, 18 months after they came into effect.
The AEC also called on governments to be more honest and transparent about the challenges – particularly the cost – of the transition.
"There are concerns that political rhetoric can often outpace reality, leading to fears that public confidence in the transition could quickly subside if expectations are not met that the increasing penetration of renewable energy does not result in falling energy prices," the report states.
"I think [the public] would be [ready for trade-offs] if they were given the facts as to the implications of jobs and industries in rural Australia, and potentially the rising costs that are going to flow through from networks and transmissions," a chief executive said.
"Because people don't understand electricity."
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