Australian households with an electric vehicle will have much lower energy costs than households with an internal combustion engine

Australian households with electric vehicles will have much lower energy costs than households that own and drive internal combustion engine vehicles, according to a major new report from one of Australia’s key energy regulators.

The Australian Energy Market Commission, which manages main grid rules and has a strong focus on distributed energy resources, has released a new report looking at the transition to renewable energy, the rollout of rooftop solar and battery storage, and the rollout of electric vehicles contribute to reducing household energy costs.

These energy bills are defined as electricity and gas costs for households and fuel costs for vehicles, and the AEMC has no doubt who is better off.

“We analyzed the energy costs for a household that, on average, drives this much each year depending on whether they drive an electric vehicle or an internal combustion engine vehicle,” the AEMC said in its report released late last week.

“The energy cost savings for an electric vehicle are around $2,000 per year.”

And it says that these cost savings are not dependent on a consumer fully optimizing their charging for low-cost times.

“The cost of electricity to operate an electric vehicle was calculated on the basis that the household charges their vehicle when it is most convenient for them, rather than just during the day when electricity costs are low.”

However, these calculations only take into account energy costs and do not take into account the differences in the purchase price of the vehicles and ongoing costs such as maintenance and insurance. But as battery costs fall and the prices of at least some low- to mid-range electric vehicles fall, this suggests that the “total cost of ownership” is at least breaking even.

The AEMC says the cost difference between petrol and electric vehicles is expected to narrow, particularly in the used car market, but also highlights the fact that households need access to electric vehicle charging to realize these cost savings.

A separate calculation found that the cost savings for a household that can install a 7 kW solar system are greater if it has an electric vehicle that charges at home, and even greater if the electric vehicle is charged during the day and the Solar output is highest.

It says these savings are in addition to the fuel cost savings of an electric vehicle. Note that this analysis does not take into account the capital and installation costs of a 7 kW system, which typically range from $6,000 to $10,000.

Also read this article from our sister publication Renew Economy: Australian households could cut their energy bills by two-thirds by ditching gas and petrol, says AEMC

Giles Parkinson is founder and editor of The Driven and editor and founder of the websites Renew Economy and One Step Off The Grid. A journalist for almost 40 years, he is a former business editor and deputy editor of the Australian Financial Review and owns a Tesla Model 3.