The Energy Equation — Promises vs Reality
AEMC residential electricity price outlook: what the modelling actually says about the next 10 years.
AEMC's 2025 price outlook is higher than their 2024 outlook — the 10-year average wholesale cost rose from 8.0 to 13.7 c/kWh (+71%). Reason: slower renewable build-out than assumed in 2024.
Prices initially fall over 2026-2030 as new renewables come online, then rise 13% over 2030-2035 as coal retires faster than replacements are built, increasing reliance on expensive gas generation.
Victorian prices projected to rise 1.8% p.a. — the highest of any NEM state. Driven by Loy Yang A coal retirement (2034), VNI West and Marinus Link transmission costs, and tightening supply-demand balance.
Network costs projected stable at ~17 c/kWh despite massive transmission investment (HumeLink, VNI West, Marinus Link, Project EnergyConnect). These costs are passed through to consumers.
Households can reduce energy costs by up to 90% through full electrification (solar, battery, EV, heat pump). But typical payback is 10+ years and many households (renters, apartments) cannot electrify.
Why: Slower renewable build-out, weaker electrification demand, lower projected network utilisation
| State | Annual Growth | Direction | Headline |
|---|---|---|---|
| NSW | -0.6% p.a. | Stable | Strong renewable build-out puts downward pressure on prices. |
| VIC | +1.8% p.a. | Rising | Tightening supply-demand balance and transmission cost increases (VNI West, Marinus Link). Loy Yang A retirement in 2034 pushes wholesale up. Fastest rate of electrification across the NEM. |
| QLD | +1.7% p.a. | Rising | 6 GW coal capacity drop over 4 years. Slower renewable build-out. Borumba pumped hydro delayed beyond 2036. |
| SA | +0.5% p.a. | Stable | Wholesale price increase offset by reduction in network costs. Grid-scale batteries from CIS projected to smooth demand. |
| TAS | +2.7% p.a. | Rising | Transmission costs rising (Basslink, Marinus Link). Wholesale rising and aligning with Victorian prices. |
| ACT | -1.2% p.a. | Falling | Network costs falling due to ACT Large Feed-in-Tariff scheme which returns revenue to customers when wholesale prices are high. |