Electricity prices across countries around the world vary due to factors like infrastructure maintenance, government energy and climate change policies, local energy resources and diversity in generation assets. As reported in the Energy in Australia 2015 report, Figure 1 shows electricity prices in 2014 from leading economies worldwide. As can be seen, Australia’s power prices, (at equivalent purchasing power exchange rates) were lower than the OECD average of 23.03 US cents per kilowatt-hour (c/kWh). At 20.47 US c/kWh Australian 2014 electricity prices are also low by overall international standards.
Purchasing power parity (PPP) is used to adjust the data to exchange rate differences and ensures a like-for-like comparison when purchasing the equivalent quantity of goods or services in all countries[i].
From this comparison, electricity for household consumers was the most expensive in Germany, Portugal, and Poland, while it was cheapest in the United States, Canada and Norway. There was a significant gap of around 29 US c/kWh between the least and most expensive power prices.
Source: OECD website
The average day of electricity usage is 15.52kW, according to Electricity Gas Australia 2015.
Figure 2 shows the amount of a day’s wage to cover the cost of an average day’s electricity consumption. The figure uses average annual wages in US dollars (on a PPP basis) to calculate an affordability rate for electricity.
As shown in Figure 2, Australians use only 2.27 per cent of their daily wages to meet their power bills with the average daily income calculated at US$140.13. This is amongst the best affordability ratings when compared to the other 29 countries shown.
Affordability is a bigger challenge in European nations. The Portuguese, for example, had to use 8.84 per cent of their daily wage to meet their power bills. And while Germany has the highest electricity prices (Figure 1), given its higher average annual salary levels, the daily household electricity bill only accounts for 4.89 per cent of a day’s wages.
Source: ABS (2015) cat no 6401, Consumer Price Index, Australia
While Australia enjoys relatively low electricity prices in comparison to other countries, over the 2004-2014 period, retail electricity prices for households nearly doubled. Increases were largely caused by the need to invest in network infrastructure due to the need to replace aging assets[ii]. Residential electricity prices fell in 2014/15 following the abolishment of the Australian Government’s carbon tax.
Industrial prices are important for the competitiveness of energy-intensive businesses. International consulting group NUS has carried out a survey of industrial prices (which are based on individual contracts and so not necessarily publicly disclosed) for many years. The repeal of the carbon price has returned Australia to the lower end of the 18 surveyed countries, after two years amongst the more expensive countries. Industrial prices are more sensitive to wholesale prices than household tariffs.
[ii] Energy In Australia 2015, Office of the Chief Economist, www.industry.gov.au/oce
The IEA's latest electricity market report shows the impact of the COVID-19 pandemic, as well as a rebound in electricity demand in some regions. What may come as a surprise is an anticipated increase in coal-fired generation, which is expected to surpass pre-pandemic levels in Asia Pacific over the next two years.
The European Commission unveiled a suite of new environmental policies under its “Fit for 55” legislative package, highlighting the EU’s attempt to meet its 55 per cent net emissions reduction target for 2030. The package includes a range of policies but the carbon border adjustment mechanism - or CBAM - received the most media attention, including within Australia.
The latest assessment of consumer sentiment shows record levels of satisfaction with energy retailers and a “growing belief that consumers are getting better value for money”. The data released by Energy Consumers Australia shows a steady improvement in the satisfaction trendline since December 2017.
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