Savings as a Service - Issue #7
A perfect storm of local and international factors are driving up wholesale prices, which inevitably flow through to your retail bills.
Welcome to Savings as a Service, May 2022 edition.
Energy bills have been front and centre in the media again over the past month, as a perfect storm of local and international factors are driving up wholesale prices, which inevitably flow through to your retail bills.
Energy is a market like any other, and Economics 101 teaches us that when demand goes up and supply is constrained, prices will rise. That’s now happening both at domestic and global levels.
Local Supply & Demand for electricity
We’re seeing increasing demand as the Australian economy emerges from COVID-19 lockdowns, plus moving into the winter months introduces a seasonal increase in energy demand. At the same time we’ve had a series of coal power station outages which have constrained supply.
International Supply and Demand for fuels
Australia is one of the world’s largest suppliers of coal, and is also the single largest exporter of gas. Global prices for these commodities have risen due to conflict in Ukraine and uncertainty about Russian energy supply. Our local fossil fuel producers participate in these global markets, so the prices for the fuels are going up, which drives up the costs for domestic electricity generation.
NSW and QLD markets are the worst affected. Victoria relies on brown coal, which does not have an export market, because it is less energy dense than the black coal used in NSW and QLD. South Australia is also less exposed because it’s well ahead in terms of renewables, so reliance on fossil fuels is lower.
How bad is it?
After a solid couple of years of wholesale price decline, we’re now seeing a dramatic upturn in wholesale prices.
Retailers are notoriously slow to pass through wholesale price reductions, but they’re aways very fast to pass through increases.
Some of the previously most competitive retailers are now scrambling to exit the retail market altogether as their costs to buy energy from the NEM are spiralling upwards.
What you can do?
It’s always been a good time to get on top of your energy bills. Now more than ever, it’s important to insulate yourself from the worst of this price increase, by staying on the best priced plan.
If you're not already a Bill Hero subscriber, then what are you waiting for? Join now to make sure you stay on the best priced plans, no matter what happens in the retail energy markets.
Also, since prices are going up, the economics for Solar and Batteries will only improve. Ultimately, the value in Solar and Battery is less about feed-in tariff, and more about offsetting your need to import energy from the grid at all. Avoiding those rising prices for grid imports will minimise the pay-back period for your solar and battery investment.
We've partnered with SolarQuotes to help Bill Hero subscribers get introduced to high quality solar installers
Its easy to be Green
Bill Hero makes it easier than ever to identify the retailers that meet your personal Green expectations and requirements.
Bill Hero also makes it easy to find and buy GreenPower renewable energy at the best possible prices. This maximises your Green impact while minimising both the direct cost to you and the ability for your retailer to skim your Green investment to their own benefit.
We’ve started a new partnership with Solar Quotes, the leading trusted Solar quote provider in Australia.
It’s pretty much a no-brainer that solar is a good investment for most households, and the emerging price increases will only make the economics better. But it’s very hard to know how to approach the market, and how to be sure you’re dealing with quality providers, not the cowboys that unfortunately are still very prevalent in this industry.
Solar Quotes has already helped over 600,000 Australians get solar quotes for their homes and businesses, and they will help you get up to 3 no obligation solar quotes from fully qualified installers, absolutely for free.
Retail energy news
Consumers are expected to be hit with a double-digit price increase on their power bills from July, as the Australian Energy Regulator allows retailers to pass on the costs of surging wholesale power prices to consumers.
The Q1 2022 Quarterly Energy Dynamics report (QED) from the Australian Energy Market Operator (AEMO) reveal electricity prices have increased 140 percent in the last 12 months, mainly driven by high coal prices and breakdowns at coal power stations.
Wholesale electricity prices for industry and large businesses have breached the federal government’s promised level, adding another cost pressure to the economy.
Power users in Queensland and NSW are staring down the barrel of sharply higher wholesale electricity prices than their neighbours in the south will pay after retail prices are reset mid-year.
We’re now on the brink of winter, so it’s time to get your winter energy savings strategies in place.
- Maximise your access to sun in the day, but close your blinds and curtains when the sun goes down. You do have blinds and curtains, right?
- Block any gaps around your doors and windows. It’s generally pretty easy to install weatherstrips and seals, and these will make a real difference to your energy consumption, by keeping cold air out, and warmer air in.
- Heat the room(s) you’re using, not the whole house. If you can close off unused areas of your home, you’ll save plenty. The same logic about weatherstripping and sealing applies to your internal doors. Close off drafts to maximise energy efficiency.
- Check your hot water thermostat. If you routinely need to mix down with cold water to avoid scalding yourself, then your hot water system is too hot. Turn it down a notch or two and enjoy the savings.
- Get a blanket. Deliberately run your home a few degrees cooler, and keep a blanket handy to snuggle into when watching TV. It’s even possible to find electric throw blankets that can prety much eliminate the need to heat your living room at all.
- Turn off heating at night. When you’re sleeping, it’s easy to rely on warm blankets, and you probably don’t need any heating on at all.
As always, think about your next appliance upgrades before you need to.
It’s usually an urgent rush when you need to replace an important appliance like a hot water system, and your time to research and think will be very constrained. Much better to research the options and prices ahead of time, so you’ll be more ready to act when you need to.
Last month, Energy Coach included this piece of advice :
Use fans to circulate warm air in winter. Using ceiling fans to push the air downwards in winter improves heating efficiency.
Bill Hero subscriber Robert from Mount Eliza, VIC, contacted us to clarify that ‘winter mode’ for a ceiling fan means pulling air up, not pushing it down.
He reminded us that “heated air naturally rises to the ceiling, and you can use your ceiling fan in reverse to draw up the cooler air from the room below, to displace the warmer air above, which will then be pushed out and down the walls to recirculate into the room.”
Thanks for the tip, Robert!
Have you got your own energy saving tips? Please send them to EnergyCoach@billhero.com.au.
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