Australians are facing a sharp surge in power bills, with new research revealing electricity prices have jumped nearly 8 per cent in just two years, amid warnings that the shift to green energy will keep costs climbing.
Energy comparison service iSelect compared year-on-year household electricity prices and found the average cost rose from 36.1 cents per kilowatt-hour in June 2023 to 38.9 cents in June 2025.
That spike outpaces Australia’s 2.1 per cent inflation rate recorded in July, intensifying pressure on families already feeling the cost-of-living squeeze.
MacroBusiness chief economist Leith van Onselen said the transition to renewables was driving up household energy costs, despite Labor’s 2022 pledge to deliver a $275 cut to power bills under its climate plan.
‘Labor lied when it promised that power bills would fall,’ he said.
‘The enormous costs of transmission associated with renewables are lumped onto household bills via increases in the regulatory asset base.
‘The phasing out of baseload coal power in favour of intermittent, weather-dependent solar and wind also makes the grid more reliant on expensive gas, battery, and pumped hydro generation, which drives up overall power bills.’
Mr Van Onselen said the rise in power bills was permanent and would continue as long as the renewables expansion continues.
‘The hundreds of billions of dollars of investments in renewables transmission will ultimately be capitalised into higher energy bills due to increases in the regulatory asset base. Households will also pay via their taxes for renewables subsidies.’
Anthony Albanese’s (pictured) pledge in 2022 that Labort would deliver a $275 cut to power bills under its climate plan has failed to eventuate
He said it was no coincidence that South Australia, which has the highest penetration of wind and solar at 75 per cent, also has the highest retail power bills.
He said that big renewable companies, transmission developers, and consultants were benefiting from the Albanese government’s green transition, while renters, pensioners, and low-income households were bearing the brunt.
‘There is a massive rent-seeking renewables industry benefiting from taxpayer subsidies and mandates, and households and businesses are bearing these costs,’ he said.
‘Growing up, the electricity bill was nothing. It was never an issue. Now it costs an absolute arm and a leg and is getting worse.
‘You have to ask yourself, why are we doing this [clean energy rollout] when we export seven times more coal than we burn ourselves, and four times more gas than we use ourselves?’
Mr Van Onselen said Australia only makes up a negligible one per cent of global emissions, so even a radical switch in energy policy would do almost nothing to reduce global CO2 levels.
Australia’s share has fallen from 1.5 per cent in 2000 to 1.1 per cent today, while China now accounts for 31.5 per cent and India’s emissions continue to surge.
‘China and India have about 1,400 coal-fired generators. Australia has 18. They are expanding their coal plants every year, while we’re shutting ours down. China burns 30 per cent more coal than the rest of the world combined,’ he said.
‘Australia should be an energy superpower with the lowest energy prices in the world, but instead, we’ve given ourselves the highest. We’ve made everything more expensive, from housing construction to manufacturing, because energy is the bedrock of the economy.’
Rising bills are here to stay according to respected economist Leith van Onselen (pictured)
Australia also has a ban on nuclear power, despite being home to a third of the world’s uranium reserves, while countries like the UK and Canada are looking to build new reactors.
‘We’ve also banned even looking at nuclear despite holding about 30 per cent of the world’s uranium reserves,’ he said.
‘We could be totally energy self-sufficient, but we’ve banned going down that road while the UK, Canada, and the rest of the world are embracing it.
I argue, why not just burn the coal that we’ve got – which we sell seven times more than we use domestically?
‘While you’re doing that, build some nuclear generators, which are the most environmentally friendly option out of the lot. They’re cheap to run over the long term and they last a hell of a long time. They have the smallest environmental footprint and they are zero emission.’
CBA’s August Household Spending Insights report found utilities spending surged 2.9 per cent, marking the biggest hit to household budgets.
Clean Energy Council policy chief William Churchill said Monday’s federal climate report, which warned millions of Australians could lose their homes to rising seas, shows the urgent need to fast-track clean energy.
‘The need to prepare and act is now beyond question,’ he said.
Sheep graze near solar panels at the Williamdale Solar Farm (pictured) near Canberra
‘The risks outlined show why we need to speed up the rollout of clean energy projects and stay on track for net zero.’
Institute for Energy Economics and Financial Analysis energy finance analyst Jay Gordon said upgrading household energy systems could cut bills by 80 to 90 per cent for a typical Australian home.
‘Rapid take-up of solar has driven daytime wholesale electricity costs to record lows, but a combination of rising fossil fuel prices, high network costs and an ageing generation fleet means Australian households continue to see rising energy bills,’ he said.
‘The response has been dominated by short-term fixes, such as one-off power bill subsidies, or even debates over slowing the rollout of large-scale renewables, in favour of alternatives that would actually increase power prices.
‘These debates ignore the fact that our energy bills are not just a product of the price of energy, but also the amount of energy we are purchasing.
‘And reducing the energy households consume from the grid – while using it more smartly – is one of the most effective ways to reduce energy costs.’
Gordon said the introduction of federal battery rebates was an important step but missed an opportunity to extend support to other upgrades, such as thermal solutions, that also reduce bills, lower emissions, and strengthen the grid.
‘Household energy upgrades could form the core of a federal and state government strategy to halve household energy bills,’ he said.