MEDIA RELEASE: Solar is the scapegoat and not to blame for rising electricity prices

One of the nation's leading solar power providers believes solar has been made the ‘scapegoat' for the power industry, following the AIG report that revealed increasing electricity prices are not the result of solar rebates and incentives.

Daniel Edgecombe, General Manager for Solar Shop Australia, said various Government incentives, most notably the Solar Bonus Scheme in NSW, have been blamed for the increasing price of electricity however, this is not the case. 

"The study has in fact found the increasing price of wholesale electricity and rising network charges are the primary cost drivers and the various incentives have no lasting impact on long-term electricity prices," Mr Edgecombe said.

During the past four years alone, Australia's retail electricity prices have risen by approximately 30 per cent and projections indicate electricity prices will increases in NSW and QLD by more than 100 per cent by 2015.

While retail margins have increased slightly, it is the wholesale prices and network charges (approximately 40 per cent and 50 per cent of the entire cost respectively) that determine the substantial price movements.

Electricity prices in NSW and Queensland are also expected to rise from $137 per MWh in 2008, to nearly $300 per MWh in 2015, with renewable energy contributing to just 1.7 per cent of the total cost.

"Much of Australia's electrical generation capacity and electrical infrastructure is ageing and ill-equipped to deal with the rising demand for power," Mr Edgecombe said.

"Everything will need to be replaced at some point and the cost of these replacements will be significant. However, until a decision is made about the introduction of carbon pricing, investment will be withheld, prices will continue to rise and service levels will continue to decline."

The Independent Pricing and Regulatory Tribunal's (NSW) retail price regulation suggests that from 2009-10 to 2012-13 a typical Sydney household's bill will have risen from $1,257 to $2,012 if the Government's proposed carbon price is introduced.

"If the carbon price is introduced there will likely be government subsidies to support low-income households," he said.

"However, there will be nothing to protect homeowners from the inevitable increases in the price of wholesale electricity and rising network charges.

"This makes investing in solar electricity an extremely sensible option as it removes homeowners from the market fluctuations that grid-connect solar power will bring.

"The initial upfront costs can be managed through solar-specific loans such as Solar Financial Solutions', Sunworks loan, and the long-term returns will be extremely worthwhile."

Click here to read the full report; Energy Shock: Confronting Higher Prices