Australia’s energy system is geared more towards keeping vested interests lit up than the homes of its consumers, it seems.

Most of the shareholders’ income is tied to regulators’ valuations, rather than its real value – the entire network is valued at $US75bn, compared to the US’ network, which is worth $US100bn. When the grid earns shareholders less money, the prices for end-users go up to make up the deficit.

While this looks like extortion – owners effectively taking money they don’t deserve from customers – it’s all entirely legal.

Built to be reliable

The networks have been built to be more reliable than is realistically needed and this excessive reliability costs more than it needs to. In addition, the interest rate on a lot of the investment is too high and this cost is borne by the consumers.

This is great for owners and investors, be they private or state, and this kickback has encouraged state governments to carry out big spending programmes to get higher valuations from the regulators.

Electricity prices keep climbing

The price of wholesale electricity has risen by an astonishing 240% since 2015, with more rises on the horizon. The conflict between renewable and coal electricity in Canberra has also had knock-on effects on end-users and the lack of forward-planning for energy policy has led to a reduction of excess energy production, which can only mean blackouts.

Straight into the arms of solar

High prices and blackouts have combined to drive lots of Australian households to finally get those solar panels, with batteries, too, these days. This is a worrying trend for the electricity establishment, which is possibly facing its demise.

One way to slow down the inevitable end is to revalue the networks and offer more realistic prices. Otherwise, conventional energy could see more and more households leaving the grid, leaving the ones left behind to near ever-more steeply rising costs, which in turn will accelerate the move to solar.

Re-valuation could take some time

Unfortunately, it could take as long as 15 years for the re-evaluations to filter down to the end-users. There will also be reluctance on the part of the establishment to give up its benefits just yet. Any damage incurred by this refusal will probably be covered by government and regulators.

Solar providers will, in this scenario, simply mop-up the customers fleeing artificially and unnecessarily high electricity prices.