The Institute of Public Affairs working paper series is produced to share analysis for discussion and comment. Working Paper 04/25 assesses the direct costs to households if the entire nation underwent full electrification, as well as the effects on the energy market resulting from economy-wide electrification. The analysis finds:
- The total cost of household electrification adds up to $81,054 per household.
- Nationwide household electrification could carry an aggregated annual cost of $28billion between 2024 and 2050. The cumulative aggregated cost could be $768 billion over the 27 years to 2050.
- On a state-by-state basis, the aggregated upfront costs of electrification between 2024and 2050 could potentially be$246 billion in New South Wales, or $9.1 billion per annum.
- $206 billion in Victoria, or $7.6 billion per annum.
- $140 billion in Queensland, or $5.2 billion per annum.
- $81 billion in Western Australia, or $3.0 billion per annum.
- $57 billion in South Australia, or $2.1 billion per annum.
- $18 billion in Tasmania, or $659 million per annum.
- The additional energy demand attributable to economy wide (residential and business) electrification will exceed the total amount of electricity generated by sources that are reliable and available, such as coal and gas, by 2037.
- Electricity consumption attributable to electrification in the National Electricity Market (NEM) is expected to increase to 121 TWh per annum by 2050. Generation by reliable and available sources is forecast to be 58 TWh per annum by 2050. The generation deficit, attributable solely to electrification, will therefore reach 63 TWh per annum—enough to power more than seven million Australian homes for a year.
The implication of these findings is that Australians will be more dependent on intermittent renewables and experimental batteries to power their homes and businesses.
The concerted effort to electrify homes and industries in Australia will serve to further disincentivise investment in gas exploration and production by artificially reducing market demand. This comes at a time when more gas production is needed to deliver energy into homes and to support the electricity market that is fast losing baseload power and becoming inundated by intermittent renewables.
