The great energy transition is happening before our eyes. You can see it on our roofs: more than one in three Australian homes now have solar. You can see it on our roads: nearly 10% of new cars sold in Australia last year were electric.
But the greening of Australia is creating losers as well as winners. While wealthier households are saving on their energy bills by installing solar panels and switching from gas to all-electric, many people have no choice but to stay with more expensive fossil fuels.
The newly returned Albanese government should urgently lead action to ensure all Australians benefit from a greener grid.
People who own their own homes have the flexibility – and often the income – to upgrade their house when it makes sense. With solar panels and a battery, you’re able to draw less energy from the grid and use it when it’s cheapest. If you can afford to swap your gas stove for an electric one, or buy an EV, you’re able to save even more.
But if you rent, you are eight times less likely to have solar panels on your house. That’s because most landlords aren’t interested in buying new tech, upgrading appliances, or switching from gas to all-electric when they’re not the ones paying the energy bills.
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So, while wealthier Australians switch, everyone else is stuck. And the way our gas and electricity bills are calculated means the people least able to afford it will pay the most for their energy.
On average, about 40% of your gas bill goes to maintaining the network, not the amount of gas you use. The more people that are connected to the same network, the cheaper your bill. Those who can afford to switch to electric will do so and save. Those who are left behind on the gas network will foot the bill. If you end up being one of the unlucky few who are still paying for gas – mostly renters and people on low incomes – your energy prices are set to skyrocket.
When it comes to electricity, if you can’t afford to install solar panels and batteries, you’ll have to pay more to help maintain the grid. Customers are increasingly being charged different prices depending on when they use electricity or how much they use at once. That’s a big advantage if you own an electric vehicle and can charge it in the dead of night, or you can afford a battery so you can store your solar energy and use it when you need it.
But it’s hard to change the time you cook dinner, and no one is checking tariff rates while they’re watching the footy. If you don’t have a battery to shift when you draw from the grid, you’re going to bear the brunt of peak-time prices.
As the energy transition ramps up, Australia risks becoming a more unequal society. Here’s what needs to change to avoid windfall savings for the well-off, while everyone else gets whacked with the costs.
First, governments need to create a clear plan to get off gas. It’s an essential step on the road to net zero. Each state government should set a date – following the lead of the ACT – for when there will be no more gas in homes. They should put these dates into rental standards, requiring landlords to make the switch.
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The second step is to help the people who can’t upgrade their houses. In public housing, state governments should pay for the switch to all-electric, and have solar panels and batteries installed where appropriate. The federal government should increase funding for upgrades to social housing and push the states to move faster. To help other renters switch, landlords should be given an instant write-off if they convert gas appliances to electric.
The third step is to plan how to fairly share the costs of the energy transition. As the gas network is wound down and new poles and wires are built, someone will have to pay. If households pay the same way they have been, the result will be unfair. If networks wear the whole bill, they will go broke.
The federal government needs to coordinate this process and, building on the work of the AustralianEnergyMarket Commission, reform the way we pay for electricity and the grid. The new rules should be designed to ensure costs are distributed equitably for all households.
The energy transition is essential to tackle climate change, and it’s good for many consumers, who can save on gas, petrol and power. But without action, the transformation risks worsening inequality. Governments must help households to make the switch, and change the rules so that the benefits and costs are fairly shared.
Dominic Jones is an associate in the Energy and Climate Change Program at Grattan Institute