The Australian Energy Market Commission (AEMC) says its proposed grid pricing reforms could reduce electricity costs and result in savings of up to $6 billion over 15 years – but modeling suggests these savings will not be distributed evenly and some solar owners may be worse off.
Will AEMC’s network pricing reforms save money?
The modeling predicts savings of $40 to $80 per year on electricity bills by 2040. It is estimated that some families would be much better off if they saved up to $740 per year by 2040, with two-thirds of households that do not have solar or batteries benefiting.
However, the impact is slightly negative for solar and battery owners. The payback period for solar energy is approximately 4.4 to 4.7 years, for solar energy and batteries the payback period is 4.6 to 5.0 years. However, home batteries could be better compensated as they reduce the load on the grid during peak times.
Giving up gasoline would become more financially tempting as the payback period would improve from 8.3 to 7.7 years by switching to pure electric vehicles.
This follows SolarQuotes’ previous reporting on the draft proposals, which raised concerns about higher fixed fees and a cost shift to low-consumption households using solar power. The latest version does not change that direction – but it does add further modeling and proposed consumer protections.
Is this really about savings – or about cost shifting?
AEMC forecasts possible changes that would result in fixed fees increasing and usage costs decreasing.
If you look at the details of the report, you’ll see that the focus is less on reducing bills across the board and more on reshaping who pays what under the AEMC’s so-called “cost-based” pricing approach.
The AEMC also links the reforms to broader benefits, including lower wholesale costs, improved energy security and lower emissions, although these results are not directly demonstrated in pricing modeling.
Power grids must continue to pay for poles and lines, regardless of how much energy flows through them. As households install solar energy and reduce grid usage, it becomes more difficult to cover these costs through usage alone.
The proposed solution is not to reduce these costs, but to recover more of them in a way that is less dependent on how much electricity is used. That’s why fixed salaries remain at the center of the discussion – even if they are not the focus.
What role do peak prices actually play?
Much of the AEMC’s argument relies on higher prices when electricity is used during peak demand and lower prices when the grid is underutilized. But this element is more pronounced in the modeling than in the media release itself.
In practice, the reform depends on households responding to these price differences. Those who can shift consumption, store energy or avoid peak periods can benefit. Those who cannot do this are at greater risk – especially if a larger portion of their bill is committed.
What this means for solar energy and electrification
This is where it gets harder to ignore the tension.
For years, households have been encouraged to install solar power, electrify appliances and reduce reliance on fossil fuels. These decisions were supported by clear financial signals: if you use less grid power, your bills will go down.
This reform begins to change this relationship.
Since more costs go into fixed fees, reducing network consumption results in lower savings. At the same time, more complex pricing means that outcomes are more dependent on behavior, flexibility and access to technologies such as batteries.
The AEMC argues that this supports electrification overall – and at a system level that may be true. At the household level, however, the incentives become less clear.
Winners, losers and acknowledged risks
The modeling confirms that not everyone benefits.
Some households – particularly those with flexibility, storage or the ability to shift usage – are better able to respond to changing pricing structures.
Others, including low-power households and some solar-only homes, may face higher costs depending on how tariffs are designed and implemented.
The Australian Energy Market Commission recognizes these distribution impacts. A separate report from HoustonKemp examines the likely impacts in more detail and presents options to address them, rather than questioning the direction of change itself.
These options include limiting the rate at which fixed fees can increase, changing the way network costs are allocated between different types of customers, and requiring retailers to offer clearer choices and obtain customer consent before moving customers to other tariff structures.
These measures aim to manage the transition and reduce the risk of sudden bill increases when reforms are introduced.
Not final, but the direction is clear
The AEMC has not yet made final recommendations, with more than 2,700 submissions received before the final report is scheduled to be published in June 2026.
Nevertheless, the direction of the reform is becoming clearer. It points to more complex pricing structures, a greater reliance on covering fixed costs and a greater focus on how households use electricity – not just how much.
For solar households, the savings increasingly depend on the tariff structure and the time of use as well as the amount of energy produced.
The impact of these changes will become clearer as the reforms are finalized and implemented in the coming years.
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