Electricity Prices in Australia

Electricity is one of the largest recurring household expenses in Australia. In 2026, the average residential customer pays somewhere between 30 and 35 cents per kilowatt-hour, depending on their state, retailer, and tariff structure. That might not sound like much on its own, but a typical household using 20 kWh per day is spending $2,200 to $2,500 a year just on usage charges, before supply fees are added.

Prices have risen steadily over the past decade, driven by network infrastructure costs, wholesale energy market volatility, and the ongoing transition from coal-fired generation to renewables. For most households, the question is no longer whether electricity is expensive. It is what they can do about it.

Understanding what you pay, and how your tariff works, is the first step toward making smarter energy decisions. Whether you are considering solar panels, a battery, or simply switching to a better retail plan, the numbers below give you the context you need.

TOU tariffs reward households that can shift their usage away from peak periods. If you are home during the day using solar power, or you have a battery covering the evening peak, TOU can deliver real savings. On the other hand, if most of your usage happens between 4pm and 8pm with no solar or battery, a flat rate may be the safer choice.

Some networks are moving customers to TOU as the default. Check with your distributor (the company that owns the poles and wires in your area) to understand which tariff you are on and whether switching is an option.

Australian residential electricity prices have risen by roughly 25% over the past five years. The causes are layered: ageing network infrastructure requiring expensive upgrades, volatility in wholesale gas and coal prices, and the costs associated with transitioning the grid toward renewable generation.

The Default Market Offer (DMO), set annually by the Australian Energy Regulator, caps the maximum price retailers can charge customers on standing offers in NEM states (NSW, QLD, and SA). Victoria has its own equivalent called the Victorian Default Offer (VDO). While these caps provide a safety net, most consumers can find cheaper deals by actively shopping for a market offer.

Looking ahead, wholesale electricity prices are expected to remain volatile. New renewable generation capacity is being built at pace, but the retirement of ageing coal plants and the cost of grid-scale storage mean price relief is not guaranteed in the short term. For individual households, the most reliable way to reduce exposure to rising prices is to generate and store your own electricity.

Solar panels generate electricity from sunlight, and every kilowatt-hour you produce and use in your home is a kilowatt-hour you do not buy from the grid. This is called self-consumption, and it saves you the full retail rate. At 30 to 35c/kWh, a household self-consuming 15 kWh of solar per day avoids $1,600 to $1,900 in annual electricity costs.

Surplus solar that you export to the grid earns a feed-in tariff, typically 5 to 8c/kWh in 2026. That is much less than the retail rate, which is why maximising self-consumption matters more than maximising exports. Running your dishwasher, washing machine, and pool pump during daylight hours shifts usage to free solar electricity instead of grid power.

A well-sized system for the average Australian household is 6.6 kW, costing roughly $4,500 to $8,000 after the federal STC rebate. At current electricity prices, most systems pay for themselves within 3 to 5 years. After that, the electricity they generate is essentially free for the remaining 20+ years of the panels' lifespan. You can see a full cost breakdown on our solar panel cost page.

State rebates can reduce the upfront cost further. Check what is available in your state: NSW, Victoria, Queensland, South Australia, or Northern Territory.

Solar panels produce power during the day, but most households use the bulk of their electricity in the morning and evening. A battery bridges this gap by storing excess solar generation for use later, typically during the expensive peak period from 4pm to 8pm.

On a time-of-use tariff, this is where batteries deliver the most value. Instead of buying grid electricity at 40 to 55c/kWh during peak hours, you draw from your battery, which was charged with free solar during the day. This is sometimes called energy arbitrage, and it can eliminate peak rate purchases entirely for many households.

A typical 10 kWh home battery stores enough energy to cover 8 to 10 hours of average evening usage. Combined with a solar system, it allows some households to reduce their grid purchases by 80% or more. Battery prices have come down significantly in recent years, and the economics continue to improve as electricity prices rise. For households already on solar, adding a battery is increasingly the next logical step. You can learn more in our battery buying guide.

Regardless of whether solar is on your radar, there are several things worth doing right now.

First, check your current plan. Use the government comparison site Energy Made Easy to see if a cheaper retail offer is available. Many households are still on standing offers that cost hundreds more per year than the best market deals.

Second, understand your tariff. If you are on time-of-use pricing, shift heavy appliances like washing machines, dryers, and dishwashers to off-peak or shoulder periods. Even small changes in timing can add up.

Third, look at your usage. An energy monitor or smart meter portal can reveal where your electricity actually goes. You might find standby power, an inefficient hot water system, or an old fridge is costing more than you realised.

Finally, if you own your home and your roof gets reasonable sun, solar is the single most effective way to cut your bills long-term. The technology is proven, the payback periods are short, and the savings compound every year as grid prices continue to rise. Our solar buying guide walks you through the process from start to finish.