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Australia’s 2024 Electricity Price Forecast – What To Expect

The Australian electricity price forecast for 2024 is shaping up like a corporate thriller on Netflix.

For what it’s worth, though, there are two sides to a story, and that makes it even more interesting. Downright unpredictable, the East Coast is caught up in a whirlpool of energy costs. In the West, it’s the same old tale of energy economics that you love and hate. For energy managers, it’s a stark contrast with valuable insights into energy procurement strategies. No wonder it will impact decision-makers to manage energy costs more efficiently.

It Takes Three To Tango – Wages, Inflation, and Electricity

First things first, there’s the RBA (Reserve Bank of Australia) taking the lead with a peak inflation of 8% ever since the end of 2022. All credit goes to rising energy costs, which, in turn, is expected to affect wage increases to a mere 4% by the end of June 2024. Notably, the Consumer Price Index (CPI) is expected to reach 4.25% simultaneously. This is where the real drama unfolds.

With costs of living on the rise compared to income, households and businesses alike will have to curtail electric usage. With the Australian government already eyeing renewable energy stocks, we might have a winning window when you compare gas and electricity head-to-head.  

Meet Australian Energy Market Operator-The Ultimate Puppet Master 

Undeniably, AEMO is pulling the strings from behind as ancient coal mines face a dance-off against emerging renewable energy brands. The situation is intense, as highlighted in the 2023 ESOO Report. In all probability, Australia’s primary electricity grid might be able to evade supply shortages during the summer of 2024.

Take Victoria and South Australia, for instance, where wind, gas, and battery projects are anticipated to witness supply gaps across 2024-25. With coal-driven power stations dropping out of the electricity market, it’s an unexpected twist in the plot for energy managers with a long-term strategy.

Can the Energy Saga of the Labour Government Be The New Hope?

The Labor Government had ambitious plans for renewable energy when they took the oath in May 2022. However, as renewable energy continues to expand, power prices are expected to fall by the end of 2025. Some market pundits believe just the opposite will happen – that power prices will escalate instead.

In October 2022, the government forecasted a 56% rise in coal prices and a 44% rise in gas prices over the next two years. By all means, the twist in the plot can be easily attributed to the gas and coal prices skyrocketing worldwide since Russia invaded Ukraine. It’s only a matter of time before the traditional and renewable energy market faces a showdown.

Coal and gas together remain at the heart of all energy narratives. So, when the prices witness a surge, the entire Australian power market goes for a ride. This is a classical demand and supply conflict, making it difficult for energy procurement tasks. In essence, it’s an unwanted scenario impacting the entire energy business.

A Dig at Price Drivers of Electricity in 2024

As the end of the year approaches, there are multiple variables that can be the ultimate price drivers for electricity in 2024. These include dying coal plants, the availability of domestic gas, and rising gas and coal prices. However, the real underdog here is renewable energy sources. With their increasing share of energy generation needs, it could be an unexpected ending to this intricate game.

Whatever the outcome, energy management strategies will invariably need to be highly responsive. The faster businesses understand the price divers of electricity, the better they will become in the face of uncertainties. For what it’s worth, they could even find a way to bring down the energy costs.

Well, here we are, anticipating an electricity storm and eagerly waiting to witness how events change the landscape in 2024. It could be the start of a compelling story that can change the fabric of the industry like never before.