What is the Cheapest Form of Energy in Australia?

jems smith | June 5, 2025

If you’re staring at your latest electricity bill and wondering how much longer your wallet can take the heat, you’re not alone. Aussies across the country are asking: what’s the cheapest form of energy in Australia—and how can I get more of it? Spoiler alert: it’s not always what you think.

Let’s unpack what makes an energy source cheap, what Australians are actually paying for, and whether switching suppliers (or sources) could save you hundreds.

Quick Answer: What’s the Cheapest Energy Source in Australia Right Now?

The cheapest form of energy in Australia today is solar energy, particularly rooftop solar used for self-consumption. When you factor in government rebates and the falling cost of panels, producing your own electricity through solar often comes in at under 5 cents per kilowatt-hour (kWh). That’s compared to grid prices which, depending on your location, range between 25 to 45 cents per kWh.

But let’s not stop there. What about wholesale electricity, natural gas, wind, coal, and battery storage? And is going with a cheaper form of energy the same as getting the cheapest energy bill? Not always.

How is "Cheap Energy" Measured?

To really compare, you’ve got to look at the Levelised Cost of Energy (LCOE). That’s the total cost of building and running a power source over its lifetime, divided by how much energy it produces. It gives us a per-unit cost in cents per kWh.

Here’s a quick breakdown of typical LCOE figures in Australia as of early 2025:

Rooftop solar (residential): 4–7 cents/kWh
Utility-scale solar farms: 5–8 cents/kWh
Onshore wind: 6–9 cents/kWh
Coal (existing): 9–14 cents/kWh
Gas (peaking plants): 12–18 cents/kWh
Grid battery storage: 15–25 cents/kWh

Clearly, solar and wind are pulling ahead in terms of cost-efficiency. But does that automatically translate to lower bills?

Can I Access the Cheapest Energy as a Consumer?

Not always directly. Most households don’t have a wind turbine in the backyard. But here’s how Australians are accessing cheaper energy today:

Rooftop solar: If you own your home and install solar panels, you can drastically reduce your reliance on grid power. In states like SA, WA, and QLD, this has become the go-to strategy.
Time-of-Use plans: Some energy retailers offer off-peak pricing aligned with when solar or wind output is highest.
Community batteries: These are emerging in neighbourhoods, storing solar energy locally for use after sunset.

What you’re charged depends on your retailer, your meter type, and how clever your energy usage is. This is where an energy broker can actually make a big difference, especially if you’re running a business or have a complex usage profile.

Why Is Solar So Cheap Now?

Anyone who's seen a rooftop filled with shiny panels knows solar’s no longer just for greenies. A few key reasons for its affordability:

Government incentives: Rebates under the Small-scale Renewable Energy Scheme (SRES) can slash thousands off your upfront costs.
Panel prices: The cost of solar panels has plummeted by over 80 percent in the past decade.
Tech improvements: Higher efficiency panels and smarter inverters mean better output per square metre.

And for businesses? Solar is no longer just a feel-good move—it’s a profit-saving one. Warehouses, gyms, even cafés are installing panels to cut peak energy use and improve sustainability scores.

Is Wind Cheaper Than Solar?

At the large scale, wind can compete with solar—especially in regions with strong wind patterns. Wind farms provide energy at night and in winter, balancing out solar’s daytime punch. But they’re not something an average homeowner can tap into.

Still, from a national grid perspective, wind is a big player in keeping wholesale electricity prices down. According to the Australian Energy Market Operator (AEMO), the influx of solar and wind has pushed wholesale prices to their lowest levels in years—particularly in South Australia and Victoria.

What About Gas and Coal?

Gas used to be the “transition fuel”—cheaper than coal and cleaner-burning. But after 2022, gas prices soared with global supply pressures, and they’ve stayed volatile. Coal is still used across NSW and QLD but is getting phased out in other states. It’s not cheap anymore when you factor in environmental costs, maintenance, and community resistance.

In fact, the cost of keeping ageing coal-fired stations online is one reason energy bills can spike during peak demand.

How Do I Get the Cheapest Energy Plan?

Getting cheap energy isn’t just about the source—it’s also about the plan you're on. That’s where comparing providers or using an energy broker can pay off. Brokers negotiate directly with retailers to find rates based on your usage, rather than standard advertised plans.

Key ways to reduce your bill:

Switch to solar if possible
Use energy-efficient appliances
Avoid peak-hour usage where possible
Regularly compare energy plans
Ask an energy broker to review your setup

What Does the Future Look Like for Cheap Energy?

Australia is in a unique position. We’ve got the sun, the wind, and the space to lead the world in renewable energy. With more investment in grid-scale batteries, pumped hydro, and smart tech, energy prices could fall even further—if policy and infrastructure keep pace.

But remember: even the cheapest source can lead to an expensive bill if your plan, timing, or habits don’t match. Cheap energy is a mix of source, access, and smart choices.

FAQ

Is solar really cheaper than grid power?
Yes. Rooftop solar is often under 7 cents/kWh, while grid power can be 30–45 cents/kWh.

Can renters access solar savings?
It’s trickier, but some rental properties now include solar in rent, or offer shared solar setups.

Does using an energy broker cost extra?
Not usually. Most brokers are paid by the retailer and offer free comparisons for households and businesses.

Final Thoughts

Australia’s cheapest form of energy is, without question, solar—particularly when used directly in homes or businesses. But turning cheap energy into low bills takes strategy. Whether that means installing panels, adjusting habits, or working with an energy broker, the opportunity is real—but not automatic.

The cheapest energy is the one you use wisely. And with the sun overhead and smarter tools at our fingertips, there’s never been a better time to take control of your power.