While the environmental benefits of solar are clear, many Australians still grapple with understanding the economic benefits compared to grid electricity. Using the Levelised Cost of Energy method, Smart Energy Group assesses exactly what the difference is and how much solar energy costs.


Rising electricity costs now leave the average NSW household paying $1,576 per year in electricity bills. This is an increase of 50% compared to just two years ago.

The rapid increase has occurred while Australian energy giants such as AGL, Origin and Energy Australia have been making record profits, all at the expense of everyday people.

Many households and businesses now consider solar the smarter option but are unable to clearly assess how much solar will cost them, and how much cheaper it is than grid electricity.

Reports indicate that the average NSW household pays on average 31 cents per kWh of electricity. The bulk of this amount is made up of network costs associated with maintaining the electricity and the actual cost of electricity generation.

The cost of solar

The most common way to calculate the cost of each kWh of solar energy is using the Levelised Cost of Energy (LCOE) method. LCOE compares all costs of the system against the total energy generated, over the life of the system. LCOE gives you a figure to compare against energy rates and reveals whether it’s cheaper or more expensive.

What would you guess the LCOE to be for solar?

Our analyst team has done the number crunching and calculated that, depending on the size of the system and products involved, solar costs 8 to 10 cents per kWh. Based on these calculations, solar energy is less than a third of the price of grid energy.

Solar is no longer just the ‘green’ choice, but the economically obvious choice. As electricity prices continue to surge and energy giants profit exorbitantly, it’s time to put the power back in the hands of everyday Australians.

To find out more about LCOE ask our analysts.