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Australia is experiencing sustained increases in electricity and gas costs driven by wholesale market volatility, infrastructure pressures and the broader energy transition. These price shocks are no longer short-term disruptions they are becoming structural with real implications for how buildings are operated and managed.
For asset owners and operators, the message is clear, historic assumptions about stable and predictable energy costs no longer hold.
Electricity – volatility is the real problem
Australia’s electricity market presents a paradox. Daytime prices can fall to extremely low levels due to abundant solar generation, yet overall electricity bills remain among the highest on record.
The reason is volatility.
Sharp price spikes during peak evening demand, combined with a market highly sensitive to supply disruptions are driving costs upward. Australia now has one of the most volatile electricity markets globally, reflecting its energy-only market design and the widening gap between low-cost daytime solar and expensive dispatchable generation at night.
Proposed default market offer increases for 2025-26 reinforce this trend with households and small businesses in New South Wales, South-East Queensland and South Australia expecting further rises. These increases are being driven by coal outages, rising wholesale costs and higher network infrastructure expenses.
Gas – no longer a stable fallback
Once seen as a reliable and relatively stable energy source, gas is now a growing cost risk.
Prices have surged across major cities including Melbourne, Sydney, Adelaide and Canberra. In Melbourne, gas costs have nearly doubled over the past decade and increased by around 60 per cent in just five years.
Export market dynamics and limited domestic competition continue to place upward pressure on prices, leaving building operators increasingly exposed.
The operational reality – costs are flowing through everything
Energy price increases are no longer confined to utility bills. They are flowing through the entire operational ecosystem of buildings.
In practice, this is increasingly visible across everyday services. Rising fuel and energy costs are leading to new or expanded surcharges from contractors attending sites including cleaning and maintenance providers. Recent contractor notices show fuel surcharges typically in the order of 6-7 per cent of contract value. For a typical A?grade 15,000 square metre office building, this can translate to an additional $100–$150 per month in cleaning costs alone, depending on the scope of services.
Similar pressures are emerging across waste and landscaping services while higher diesel prices are increasing the cost of fire pump testing and emergency generator top?ups. While these increases are often itemised and individually modest, collectively they are becoming material. They reinforce a broader point – energy volatility is now embedded in operational expenditure.
Buildings must shift from reactive to strategic
As energy costs continue to rise unpredictably, organisations need to take a proactive and strategic approach to resilience. Operational buildings can no longer rely on historic price stability. They need to prioritise efficiency, electrification and data-driven optimisation to safeguard against long-term cost pressures.
This is no longer just a sustainability issue. It is a core asset management and risk issue.
What should building owners and operators do now?
Improving energy efficiency remains the fastest and most cost-effective way to reduce exposure. Detailed energy audits can identify opportunities across HVAC, lighting and building management systems particularly to reduce peak demand and take advantage of low-cost daytime solar generation.
Investment in onsite renewables and storage is becoming increasingly important. Solar PV can offset daytime tariffs while battery storage can reduce reliance on expensive peak-period electricity and provide a buffer against volatility.
Electrification is another critical step. Gas-powered systems including boilers, heating and kitchen equipment are becoming financial liabilities. Transitioning to high-efficiency electric alternatives reduces exposure to rising gas prices and aligns with long-term decarbonisation pathways.
Energy procurement also needs to be actively managed. In a volatile market, regularly reviewing electricity and gas contracts can materially impact operating costs.
At the same time, advanced metering and analytics platforms are enabling building operators to better understand consumption patterns, detect anomalies and target upgrades where they will have the greatest impact.
A broader shift is underway
What is emerging is not a temporary spike but a structural shift in how energy is priced and delivered.
Buildings that fail to adapt will face rising and increasingly unpredictable costs. Those that act early by improving efficiency, electrifying systems and using data to optimise performance will be better positioned to manage risk and protect asset value.
What does this mean for your assets?
Asset owners should be asking a simple question, how exposed are our buildings to energy volatility and what are we doing about it?
Engaging with property and sustainability teams to understand these risks is no longer optional. It is a necessary step toward maintaining resilient, future-ready assets in a rapidly changing energy landscape.