Australia’s Energy Crisis: What You Need to Know
Published May 19, 2026
If you feel the strain of rising energy prices, you are not alone as many Australian families are facing challenges with cost of living. However, how did we end up in this situation, and will it ever end? An energy crisis occurs when the energy supply cannot satisfy demand. An energy crisis may subsequently cause shortages and price increases for all of us.
Australia ended up in an energy crisis due to a combination of events, such as:
War in Ukraine. Due to the war, many countries in the world have cut off all relations with Russia. In fact, it has been reported that in 2022, as a consequence of the war, the price increase in electricity accounted for 90% of all price increases worldwide, with some areas still suffering from high prices even years later after the invasion. This is due to the fact that until now, Russia has been a major actor in global energy markets.
There is much natural gas from Australia that is being exported. In fact, Australia is considered to be one of the largest LNG exporters in the world. On the other hand, there may be an issue of conserving some of the natural resources we have left. The winter of 2026 and beyond, up until 2027, is expected to have issues regarding the lack of LNG on the east coast. For example, southern states will require aid from Queensland for LNG during the winters to come. However, Queensland itself will have issues in finding its supply of LNG by 2029.
Why are energy prices so high right now?
All these factors mean that energy retailers are having to pay a higher wholesale price for electricity. In the first quarter of 2022, with the energy crisis well underway, wholesale electricity prices increased by 141% compared to the same time in 2021. But, as the industry adapts, we’ve seen those wholesale prices drop, it just hasn’t translated to the consumer side of things. This problem is due in part to network costs and those aging coal power plants.
In an attempt to help make up the difference, there’s the Australian Government’s Energy Bill Relief Fund. This is a $150 rebate for households to help take some of the sting out of their electricity bills. Queenslanders also have the Cost of Living rebate, delivering a further $1,000 off their bills.
Of course, these measures can’t entirely turn things around and we’ll all have to continue to weather this storm as best we can. If you haven’t already, there are some tips you can follow that may help you save on your electricity bill, as well as get into some good energy-efficient habits.
How much higher will energy prices rise?
If you lie awake at night worrying about your power bill, you’re not alone. In a May 2025 survey of 1,000 Aussies, we learned that 26% felt they were not coping at all with higher bills or were only just scraping by. But is there light at the end of the tunnel?
We don’t know what will happen tomorrow, but we can use certain benchmarks to make a guess. In the case of electricity prices, we can look at regulated prices, like the Default Market Offer (DMO) and the Victorian Default Offer (VDO), to provide a little more clarity.
Comparing the 2024–25 DMO to the 2025–26 version, there’s a 3.2% to 8.5% increase on your annual bills by $71 to $228. This depends on where you live and what tariffs are on your plan.
Just remember that the DMO and VDO only apply to standing offer contracts. You may find a market offer contract that comes well under the benchmark. In fact, where the DMO or VDO applies, retailers need to include a comparison percentage on their market offers to make it easy to see how various offers measure up. So, even if you aren’t currently on a standing offer contract, the DMO or VDO may give you an idea of what to expect across your electricity bills. Alternatively, they might tell you that it’s time to find a new electricity plan.
Is the energy crisis just happening in Australia?
No, this is a global issue that’s being felt around the world to varying extents by different countries. How countries are affected and to what extent can depend on their policies and energy reserves, amongst other factors though. While it’s nice to know we aren’t alone, we’d love if the world could come together in a less stressful way!
When will the energy crisis end?
Unfortunately, the energy crisis didn’t come with an expiry date. But there are some positive developments that could mean the worst is behind us. For instance, did you know that worldwide renewable power capacity increased 50% in 2023 with more fast growth to come? The global energy crisis has been a wake-up call for many countries about their energy security, and focusing on renewable alternatives is one way to handle this.
Things get even better when you zoom in on Australia. Across the country, renewables accounted for 39.4% of the electricity generated throughout 2023, growing almost 7% in two years. There are also some Federal Government-led initiatives that may help see this number rise further too, including Powering Australia and Rewiring the Nation.
So while the crisis may not be over just yet, there could be a rainbow at the end of this storm.
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