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Electricity price rises local and global


The International Energy Agency executive director Maria van der Hoeven, has told the Australian Institute of Energy national conference in Sydney that electricity prices are rising globally and are the fault of rising fuel costs as well as renewable energy subsidies.

Fossil fuel costs in Australia have been impacted by the carbon pricing mechanism that has placed a price $23 a tonne of CO2 equivalent emissions. This had the impact of increasing spot prices of electricity by around $20 MWh. Despite these price increases to fossil fuel domestically and internationally, van der Hoeven states that coal will remain the prominent global fuel. This is in part driven by its use by the emerging economies of India, China and the Middle East who together will drive an increase in global electricity demand of 60%.  

Also, renewable energy subsidies have impacted on Australian electricity prices in the form of Renewable Energy Certificates (RECs) and State-based schemes. These are required to be purchased by energy retailers, who then pass them on to consumers within the bundled price. These subsidies will assist renewables become the second largest fuel source behind coal by 2015, according to van der Hoeven.

Although, van der Hoeven did not mention infrastructure costs as price drivers, which in Australian circumstances form part of network costs which have risen by approximately 60% in the last decade.