The cost of switching to clean energy

Despite a cost-of-living crisis, Aussies are increasingly choosing sustainable options - even if some options cost extra. But is this true for one of our biggest household expenses - electricity?

Bills are soaring across the country - attributed to an increase in wholesale electricity costs.

CHOICE's latest survey found 94% of Australians saw bills increase this year - yet according to Monash Business School, almost half would pay extra for ethical products.

For some, the cost of living crisis is having a "dramatic" effect.

Ellen MacLennan rents in Preston, Victoria, and the cost of living crisis has hit her and her housemates hard. "We are struggling."

Finder sustainability expert Amy Bradney-George says: "The cost of living is putting pressure on people. There is resistance around switching to something that costs more."

Despite this, a Finder survey found a third of households would pay extra for clean electricity.

However, one-third of Aussies are renters and up to 26% live in strata-titled properties - so affordability and strata agreements can make rooftop solar impossible.

Kristyn Glanville owns an apartment on Sydney's Northern Beaches.

"Energy-saving things you would do in a normal house are made more challenging in strata because of the nature of having to make collective decisions," she says.

What is a green energy plan?

It can be confusing to understand your options when it comes to clean energy.

Some plans are carbon neutral but rely on offsets, which means extra cost (more than $1 a week) to avoid or absorb an equivalent amount of greenhouse gases.

GreenPeace's Green Electricity Guide ranks clean electricity providers. Diamond Energy, Momentum Energy, and Energy Locals top the list.

Powershop crowned the list before its sale to Shell in 2022 - when Glanville's family of three scrambled to understand their options. Based on Greenpeace's guide, they switched to 100%-renewable Diamond Energy.

A year ago, MacLennan's household of four switched to Momentum's 100% GreenPower. This quarter, household bills were larger than expected at $369.53, up from $167.46 before they switched. Victorian households on average pay $330 a quarter.

GreenPower, a government-accredited add-on to most electricity plans, costs between $1.85 and $3.35 weekly, depending on what percentage you choose to be renewable.

This doesn't mean your electricity comes directly from the wind turbine or solar field - each unit of energy consumed pays for an equivalent amount of renewable energy to be released into the grid.

Momentum managing director Lisa Chiba explains: "When you buy green power, you are investing in renewables infrastructure." She herself uses the product, for her family around $30 extra per month. Since 2005, GreenPower has grown to 360,000 customers and invested almost $1 billion.

20% of all new Momentum customers add some percentage of GreenPower - up from 1-2% two years ago. "Net zero aspiration and desire is definitely there," Chiba says.

Is green electricity more expensive?

With Diamond, Glanville's recent quarterly electricity bill was $369.69 - up from $295.91 this time last year. On average, Sydneysiders pay $348 a quarter.

"The cost of everything has gone up. We're watching what we spend, making do with less things," Glanville says. "With mortgage repayments increasing we are trying to keep our head above water."

So why are customers choosing green, despite rising costs?

"I am happy to pay it," MacLennan says. "I would pay anything for green power."

Are there ways to keep costs down?

Glanville says green energy "is a short-term cost to help avoid the greater long-term cost of climate change". Her family keeps bills down by dodging energy-intensive appliances such as air conditioning.

Some providers offer rewards schemes to encourage energy efficiency - things like using LED bulbs which use 75% less energy and last 5-10x longer, installing insulation, switching off devices with standby power at the wall. You can also conduct an energy audit.

"It sounds strange coming from an energy retailer, but reducing your energy consumption is a good step," Chiba says.

Bradney-George suggests regularly reviewing your electricity plan and "see what else is out there", warning that when your plan expires you could be slapped with a higher rate.

"People need to feel confident they have power in their buying decisions," Chiba says.

Get stories like this in our newsletters.