Cost of Electricity in Sydney (2025 Guide) – Why Homes Are Switching to Solar Faster Than Ever

The cost of electricity Sydney homeowners pay in 2025 continues to rise, making solar a much cheaper long-term option.

The cost of electricity in Sydney has been rising steadily over the last few years, and many households are now feeling the pressure of high quarterly bills. If you’ve noticed your own bills creeping up, you’re definitely not alone. Sydney currently sits among the highest electricity cost regions in Australia, and with ongoing wholesale market changes, the trend is unlikely to reverse anytime soon. The cost of electricity Sydney households are currently paying has become one of the biggest financial pressures for families in 2025.

Understanding the Cost of Electricity Sydney Families Pay in 2025

Understanding the true cost of electricity Sydney families pay each year helps explain why solar adoption is growing so quickly.

In 2025, Sydney homeowners are paying between 31 to 43 cents per kWh, depending on their retailer and tariff type. For an average home, this translates to $1,800 to $2,700 per year—and that’s before any expected rate increases.

This rising cost is a major reason why thousands of Sydney households are turning to solar power as a long-term solution. In this guide, we’ll break down Sydney’s electricity prices, why they’re rising, and why solar has now become the much cheaper alternative.

What Is the Current Cost of Electricity in Sydney (2025)?

Electricity prices vary depending on whether you’re on a single rate tariff, time-of-use tariff, or have an older controlled load arrangement. But the basic truth is simple: electricity is getting more expensive every year.

Here’s an updated look at the typical electricity prices Sydney residents are paying:

Average Electricity Tariffs in Sydney 2025

Tariff Type	Average Price (per kWh)	Notes
Single Rate Tariff	31c – 34c	Most common in NSW
Peak Tariff (TOU)	40c – 43c	Usually 2 pm – 8 pm
Shoulder Tariff (TOU)	25c – 28c	Midday and early morning
Off-Peak Tariff	13c – 17c	Overnight

Peak tariff pricing is especially painful for families who use air-conditioning, heating, cooking appliances, or EV charging during evenings — exactly when electricity is most expensive. When comparing solar energy to the rising cost of electricity Sydney residents face, the savings gap becomes very clear.

Why Are Electricity Prices Rising in Sydney?

There isn’t just one reason — it’s a combination of factors that stack on top of each other. The biggest contributors include:

1. Network and infrastructure costs
Sydney’s grid infrastructure requires ongoing upgrades, and these costs are passed directly to consumers.

2. Wholesale electricity volatility
NSW energy prices rise whenever there’s increased demand or decreased supply. The last two years have been extremely unstable.

3. Distribution charges
Energy companies pay to deliver electricity to your home, and these costs have increased significantly.

4. Retailer mark-ups and fixed charges
Even if you use less power, fixed daily charges increase your bill.

5. Growing energy demand
Population growth, more home appliances, EV charging — all increase load on the grid.

This combination has made Sydney electricity bills unpredictable and consistently high.

Why Solar Is Dramatically Cheaper Than Sydney Electricity

Even though electricity costs keep increasing, the cost of generating solar energy at home remains incredibly low — typically between 5 to 8 cents per kWh.

To put this in perspective:

Grid electricity: 31–43 cents per kWh
Solar energy: 5–8 cents per kWh
Battery power: 10–18 cents per kWh

This means that solar energy is up to 6 times cheaper than grid electricity.

Every kWh you produce and use through solar is a kWh you do not have to buy from the grid. This is why solar delivers savings starting from day one.

Solar vs Grid Electricity in Sydney — Cost Comparison

Here’s a clear side-by-side comparison:

Source	Cost per kWh	Long-Term Cost Trend
Sydney Grid Electricity	31–43 cents	Rises every 12–18 months
Solar Power (Home System)	5–8 cents	Stays fixed for 25 years
Battery at Night	10–18 cents	Still cheaper than grid

The huge difference in cost is exactly why solar has become a financial no-brainer for most households.

How Much Can Sydney Homes Save With Solar?

Savings vary depending on how much energy you use and how large your solar system is, but here is a realistic breakdown for 2025:

Small home (3.3 kW system)
Savings: $900 – $1,400 per year
Payback: 3–4.5 years
Average home (6.6 kW system)
Savings: $1,500 – $2,300 per year
Payback: 3–5 years
Large home (10 kW system)
Savings: $2,500 – $3,000+ per year
Payback: 3.5–6 years

The bigger your system, the lower your cost per kW and the faster your payback period.

Recommended System Sizes for Sydney Homes

Not every home is the same, but here are general recommendations:

3.3 kW System

Suitable for small homes or apartments
Low daytime usage
Quick installation and low upfront cost

6.6 kW System (MOST POPULAR)

Ideal for 80% of Sydney homes
Best value for money
Produces enough energy for most families
Fastest payback period

10 kW System

Perfect for large families
Great for homes with EV chargers
Provides strong long-term savings

Sydney’s high sunlight levels mean even small systems perform well, but 6.6 kW remains the most balanced choice.

What About Feed-In Tariffs in Sydney?

Feed-in tariffs (FITs) pay you for exporting excess solar energy back to the grid.

2025 FIT Rates in Sydney:

6c to 12c per kWh, depending on retailer.

While FITs aren’t as high as they used to be, they still help reduce your night-time electricity cost. Most Sydney households use solar to reduce daytime usage and rely less on the grid overall.

Adding a Battery — Is It Worth It in Sydney?

Batteries add value, but they aren’t essential for everyone.

Reasons to add a battery:

Protects you from blackouts
Lower night-time electricity usage
Increases energy independence
Makes solar far more effective

Top battery brands in Sydney include:

Tesla Powerwall
BYD
Sungrow
AlphaESS

Battery prices in 2025 start around $5,000 and go up depending on size.

FAQ — Cost of Electricity in Sydney

Why are Sydney electricity prices so high?
Due to grid upgrades, wholesale price fluctuations, and rising demand.

Do electricity prices ever go down?
Very rarely. Historically they rise every few years.

Can solar reduce my bill to zero?
Yes, if you combine solar with a battery. Without a battery, bills reduce by 60–90%.

Is solar worth it in 2025?
Absolutely. Solar is cheaper than ever, while electricity is more expensive than ever see https://www.ipart.nsw.gov.au/Home/Industries/Energy/Retail-prices/Solar-Energy.

Final Thoughts for Sydney Homeowners

Sydney electricity prices are unlikely to drop in the near future. With increasing inflation, higher demand, and continued energy market volatility, homeowners can expect bills to rise again within the next year.

Solar power, on the other hand, offers a clean, predictable, low-cost solution with excellent returns. For most Sydney households, a 6.6 kW system provides the ideal balance between affordability, performance, and savings.

If you’re tired of rising power bills, 2025 is one of the best times to install solar.