Rising Global Electricity Demand
Let’s start by zooming out and looking at the global picture. According to the International Energy Agency, global electricity demand is set to increase by 4% year on year. To put this into perspective, that’s around the entire energy consumption of Japan—the world’s 4th largest economy—added to global electricity demand each and everyyear.
Much of this growth is expected to come from the emerging economies of developing nations, but the rising needs of the transport industry and the construction of so many electricity-hungry data centres will also be key contributors.
Why Does This Matter For Australia?
What does this mean for our little corner of the globe? Well, we are part of the global ecosystem, and as electricity demands rise elsewhere, so too does competition for fuel and energy infrastructure.
This, among other things, is likely to lead to increased prices for the technology used to produce electricity. This is something that Australia’s leaders are hoping to offset with the rapid adoption of renewable energy (or nuclear) as we aim to achieve net zero emissions by 2050, and 82% renewable energy consumption by 2030.
But in the short term, this is going to require significant energy infrastructure investment. And at a time when competition is going up, this is likely to lead to an increase in prices for the next few years at least.
Why 2028 is a Critical Year
As we look ahead to what the energy markets might look like, many eyes in the energy industry are looking at 2028 as a key year in our energy transition. This is due to a couple of important factors;
- 2028 is the year that several of Australia’s largest coal-fired power stations are scheduled to be shut down.
The largest of these is the Eraring power station in New South Wales, which is due for closure a year earlier in 2027. Eraring supplies around 2,880 MW per annum, which currently equates to around 25% of the entire NSW power grid.
2028 will also see the closure of the Yallourn power station. Yallourn supplies around 1,480 MW to the Victorian grid, which equates to roughly 20% of all of Victoria’s energy supply. - While the plan is to have a significant portion of the electricity supply accounted for by renewables in 2028, the current political climate and construction challenges are making it look less likely that we’ll be up to scratch by that point.
When a coal plant shuts down, the electricity it generates doesn’t automatically get replaced. There’s a lag. And with renewables still scaling up to meet demand, that lag could lead to serious pressure on the grid. The result? Supply gaps, reduced reliability, and price spikes.
What’s more, maintaining aging coal plants isn’t exactly cheap either. A recent report found that keeping Eraring open past its original 2025 deadline could cost billions—and still leave households and businesses with higher energy bills due to the plant’s rising maintenance costs.
In short, there’s no easy option here. But 2028 will be a stress test for Australia’s energy transition—one that will likely have a direct effect on business electricity costs for years to come.
Protecting Your Business from Rising Electricity Costs
As Australia transitions away from coal and demand for electricity continues to rise, energy prices are expected to become increasingly volatile. For businesses, this means greater risk when it comes to forecasting costs and maintaining long-term stability.
One of the best ways to safeguard your business is by taking a proactive approach. This includes reviewing your current energy usage, improving your energy efficiency, and securing more favourable energy contracts by comparing business electricity deals.
It’s also important to consider how broader grid instability could affect your operations. By investing early in energy-saving measures, you’re making savvy decisions for the future of your business.
How Choice Energy Can Help
While we can’t single-handedly solve the energy transition, our team here at Choice Energy can certainly help you get a better deal. Our team are experts in renewable energy as well as in helping businesses save on the hidden costs in their energy bills. We provide this service free of charge; simply contact Choice Energy for a free energy assessment today.
