Matt Grudnoff
Senior Economist

Renewables are the cheapest form of electricity generation, and this is being highlighted by the fact that soon electricity will be free for 3 hours a day.

The Climate Change and Energy Minister Chris Bowen has announced that he will change the default market offer to force power companies to offer 3 hours of free electricity in the middle of the day from next July.

This will initially be for NSW, southeast Queensland, and South Australia. It will be available to all households who have smart meters.

Solar power is producing an abundance of electricity in the middle of the day, pushing down electricity prices.

Households wanting to take advantage of this could schedule to run their dishwashers, washing machines, dryers and hot water systems when free electricity is available. The government estimates this could save up to $800 a year.

Making electricity free in the middle of the day will encourage households to shift their demand for electricity to when there is this glut of supply, and away from times of peak demand, usually in the late afternoon and evening.

This is called load shifting and it will not only save people money because they are “buying” electricity when it is free, but also because it will reduce peak demand in the afternoons and evenings, meaning less generating capacity needs to be built.

Importantly, this will mean the benefit of solar power will be extended to people who aren’t able to instal solar panels, perhaps because they live in an apartment, or they rent.

But the government could go further and save people even more money. You can read all about how in the The Point.