We’re only five months into 2020 but we don’t think it’s premature to say that it hasn’t been the easiest year for Australians. From 2019 until early this year, the country was ravaged by bushfires. Our “Black Summer” caused damage to infrastructure, a considerable impact on business, and tragic loss of lives. And of course, Australia and the rest of the world have been trying to beat the COVID-19 pandemic. These events have impacted electricity markets in Australia, significantly resulting in both risk and opportunity for businesses in the country.
We can observe these effects through the cost of electricity in Australia for 2020.
Electricity prices in Australia for 2020 have gone down
Wholesale electricity prices in the NEM have been falling since October 2019. This is good news for Australian electricity consumers as wholesale rate reductions pass through to end users by energy retailers.
In one of our articles from 2017, we reported that Australia was top-ranked for the most expensive electricity prices in the world. But as of September 2019, Australia had 23rd place locked in, as you may see in the table below – a solid feat, all things considered.
| Top 30 Countries with the Most Expensive Electricity as of September 2019 (in AUD per kWh) | Country | Household Rate | Commercial Rate | Average Rate |
|---|---|---|---|
| Switzerland | $0.32 /kWh | $0.24 /kWh | $0.28 /kWh |
| Sweden | $0.28 /kWh | NA | $0.28 /kWh |
| Panama | $0.26 /kWh | $0.3 /kWh | $0.28 /kWh |
| Spain | $0.35 /kWh | $0.22 /kWh | $0.285 /kWh |
| Netherlands | $0.37 /kWh | $0.2 /kWh | $0.285 /kWh |
| Mali | $0.33 /kWh | $0.24 /kWh | $0.285 /kWh |
| Austria | $0.34 /kWh | $0.24 /kWh | $0.29 /kWh |
| Australia | $0.33 /kWh | $0.25 /kWh | $0.29 /kWh |
| Costa Rica | $0.26 /kWh | $0.33 /kWh | $0.295 /kWh |
| Liechtenstein | $0.38 /kWh | $0.24 /kWh | $0.31 /kWh |
| Guatemala | $0.37 /kWh | $0.25 /kWh | $0.31 /kWh |
| Belize | $0.35 /kWh | $0.27 /kWh | $0.31 /kWh |
| Gabon | $0.31 /kWh | NA | $0.31 /kWh |
| Kenya | $0.34 /kWh | $0.28 /kWh | $0.31 /kWh |
| United Kingdom | $0.35 /kWh | $0.29 /kWh | $0.32 /kWh |
| New Zealand | $0.32 /kWh | NA | $0.32 /kWh |
| El Salvador | $0.37 /kWh | $0.29 /kWh | $0.33 /kWh |
| Belgium | $0.46 /kWh | $0.2 /kWh | $0.33 /kWh |
| Honduras | $0.33 /kWh | $0.33 /kWh | $0.33 /kWh |
| Nicaragua | $0.32 /kWh | $0.36 /kWh | $0.34 /kWh |
| Italy | $0.40 /kWh | $0.33 /kWh | $0.365 /kWh |
| Japan | $0.42 /kWh | $0.32 /kWh | $0.37 /kWh |
| Aruba | $0.31 /kWh | $0.45 /kWh | $0.38 /kWh |
| Jamaica | $0.44 /kWh | $0.35 /kWh | $0.395 /kWh |
| Ireland | $0.41 /kWh | NA | $0.41 /kWh |
| Germany | $0.53 /kWh | $0.32 /kWh | $0.425 /kWh |
| Barbados | $0.43 /kWh | $0.43 /kWh | $0.43 /kWh |
| Denmark | $0.47 /kWh | $0.41 /kWh | $0.44 /kWh |
| Portugal | $0.44 /kWh | NA | $0.44 /kWh |
| Bermuda | $0.63 /kWh | $0.39 /kWh | $0.51 /kWh |
Household and Business Rates from Global Petrol Prices
Note: Average electricity rates calculated by adding Household Rate and Business Rate and dividing by 2.
That said, for 2020, all states are enjoying lower electricity prices for both household and business consumption. By March of this year, the cost of electricity in Australia averaged $0.3025 per kWh.
To put it into better detail, here is a report on how much electricity was in the commercial and industrial sectors for the first quarter of the year.
| Average Electricity Prices in Australia (as of Q1 2020) | |
|---|---|
| Consumer Type | Rate ($ per kWh) |
| Average | $0.3025 / kWh |
| Households | $0.338 / kWh |
| Small Business – Up to 30,000 kWh PA | $0.224 / kWh |
| Small Business – 30,000 to 150,000 kWh PA | $0.342 / kWh |
| Medium Business – 150,000 kWh to 1,000,000 kWh PA | $0.314 / kWh |
| Large Business – 100,000,000 to 7,500,000 kWh PA | $0.305 / kWh |
| Extra Large Business > 7,500,000 kWh PA | $0.292 / kWh |
Meanwhile, in the table below are the average electricity prices from various countries for the first quarter of the year compared with Australia’s 2020 electricity prices for the same period.
| Average Commercial Electricity Price in AUD per kWh | ||||
|---|---|---|---|---|
| Small Firm | Medium Firm | Large Firm | Extra Large Firm | |
| Canada | $0.1943 | $0.1887 | $0.1318 | $0.1262 |
| China | $0.1544 | $0.1544 | $0.1449 | $0.1469 |
| Germany | $0.4038 | $0.3986 | $0.3293 | $0.2842 |
| Japan | $0.3810 | $0.3448 | $0.3313 | $0.3314 |
| Philippines | $0.2048 | $0.1832 | $0.1768 | $0.1780 |
| United Kingdom | $0.4220 | $0.3703 | $0.3424 | $0.3205 |
| USA | $0.2178 | $0.2041 | $0.1599 | $0.1569 |
| Australia | $0.3420 | $0.3140 | $0.3050 | $0.2920 |
COVID-19 has had a significant impact on the Australian economy with productivity in many industries grinding to halt. As such, this has affected electricity spot and futures markets in Australia as wholesale market participants grapple to forecast future demand and supply.
At the time of writing, electricity prices across the NEM are at historic lows. This has created a good opportunity to secure lower electricity rates up to 60 months into the future.
It’s time to consider energy cost reduction measures for your business. We can help with that.
The ongoing pandemic has resulted in uncertainty for businesses across the board. One way companies can regain a modicum of stability is by reducing energy costs to manage short-term cash.
Leading Edge Energy helps companies control their energy spend quickly and simply. We do this by identifying the best deals for commercial and industrial electricity and gas. And best of all? It’s an obligation-free service.
Does that sound good to you?
We can get the ball rolling on energy cost reduction! Fill in our Get Started form, or contact our Energy Experts for an obligation-free consultation.
