What is the cheapest energy source per kWh?

Why are some energy sources shockingly cheaper per kWh? The answer has more to do with infrastructure, politics, and behavioural inertia than technology. Let’s unpack the cost behind the kilowatt.

What's the cheapest energy source per kilowatt-hour right now?

Short answer: Solar and wind are currently the cheapest sources of energy per kWh globally, according to recent reports from the International Renewable Energy Agency (IRENA). In many parts of the world, new solar and wind projects produce electricity at a lower cost than even the cheapest fossil fuels.

As of 2024:

  • Utility-scale solar PV: Often as low as 2–4 cents (USD) per kWh.

  • Onshore wind: Typically around 3–6 cents per kWh.

  • Natural gas: Usually 5–7 cents per kWh (depending on market volatility).

  • Coal: Anywhere from 6–14 cents per kWh, depending on subsidies and plant age.

  • Nuclear: Around 10–18 cents per kWh due to high upfront costs.

Here in Australia, it gets even more interesting.

Why is renewable energy cheaper in Australia?

Australia is sitting on a sun-drenched goldmine. The wide open spaces, consistent sunlight, and wind corridors make renewables a natural fit — and the costs reflect that.

  • Solar farms in Queensland and South Australia often operate at prices as low as 3 cents AUD per kWh, with subsidies driving some even lower.

  • Wind farms in Victoria and WA have achieved similar cost efficiency due to scale and tech improvements.

Unlike fossil fuel plants, renewables don’t need constant inputs (coal, gas). Once the infrastructure’s in, it’s mostly maintenance. And with battery storage catching up, the reliability gap is narrowing.

So why aren’t all businesses rushing to switch?

What stops businesses from accessing the cheapest energy?

Behavioural inertia.

Many small businesses are stuck on legacy contracts or are overwhelmed by choice. The energy market isn’t exactly transparent — pricing is layered with time-of-use tariffs, hidden fees, and seasonal demand peaks. Add to that a mix of behavioural biases:

  • Status quo bias – “We’ve always used this provider.”

  • Choice paralysis – Too many plans, not enough clarity.

  • Framing effect – Energy deals that sound cheaper but bury real costs in the fine print.

The result? Businesses often default to familiarity, even if it costs more.

Does the cheapest energy source mean the cheapest bill?

Not necessarily. Here’s where things get a bit tricky.

Energy source cost per kWh is just one piece of the puzzle. Your actual bill depends on:

  • Time of day usage: Peak vs off-peak rates.

  • Demand charges: Based on your highest 30-minute usage block.

  • Retailer margin: What the provider charges on top of wholesale rates.

  • Network charges: For using the grid infrastructure.

So even if you’re using solar-sourced power, your bill might still sting if your plan structure is inefficient.

Think of it like buying a cheap car with massive running costs — the upfront price doesn’t tell the whole story.

What can businesses do to pay less per kWh?

It’s not just about chasing the cheapest headline rate — it’s about understanding your energy behaviour and matching it to the right structure.

Here’s what savvy businesses are doing:

  • Switching to wholesale or dynamic pricing models if they operate outside peak hours.

  • Installing solar with battery storage for better control and long-term savings.

  • Using energy monitoring tools to track real-time use and find inefficiencies.

  • Working with brokers or consultants who can negotiate better rates across multiple providers.

And yes — comparing rates regularly is essential. Energy plans can change every few months, and loyalty rarely pays.

For a deep dive into how some companies are cutting costs by shopping smarter, this report from CSIRO is worth a look.

Is solar the cheapest for every business?

Not always.

  • Small retailers with daytime usage? Solar’s a winner.

  • Factories running 24/7? They’ll need a mix of renewables and stable grid backup.

  • Urban offices in leased spaces? Installation may not be feasible — but green retail plans can bridge the gap.

The key is matching your business type to the right supply model.

What about coal and gas — are they still in the game?

They’re hanging in, but barely.

  • Coal plants are ageing and expensive to maintain.

  • Gas prices are highly volatile — especially with international demand.

  • Policy pressure and investor sentiment are shifting away from fossil fuels fast.

While these sources still dominate the grid in some regions, the cost advantage is slipping — and fast.

FAQ: Business energy and price per kWh

Q: Is the cheapest energy always the greenest?
Often, yes. Solar and wind are not only the cheapest to produce per kWh, but they also avoid carbon costs and long-term environmental liabilities.

Q: Should I go for fixed or variable rate energy plans?
Depends on your risk appetite. Fixed plans offer predictability, but variable or wholesale plans can save big during low-demand periods — if you're paying attention.

Q: What’s the biggest mistake businesses make with energy?
Signing long-term contracts without reviewing usage patterns or exploring alternatives. Many providers bank on your inertia.

In a market that rewards the agile and punishes the passive, energy pricing is no longer just about the supplier — it’s about strategy. And sometimes, the smart play isn’t just finding the cheapest energy, but the one that fits how you operate.

Some Australian businesses are already winning that game. Those exploring smarter solutions — like this cheapest business energy comparison — are often the ones trimming their overheads while others are still stuck in the dark. 

Comments

Post a Comment

Popular posts from this blog

Is EnergyAustralia Cheaper Than Origin? A No-Nonsense Breakdown of Power Prices

 If you’ve ever stared at your energy bill and wondered whether you’re paying too much, you’re in good company. With power prices rising across Australia, comparing retailers like EnergyAustralia and Origin has become more than just a casual question—it could mean real money in your back pocket. So, is EnergyAustralia cheaper than Origin in 2025? The short answer: it depends on where you live, how much energy you use, and the plan you’re on. But let’s dig deeper than just numbers. What’s the average price difference between EnergyAustralia and Origin in 2025? According to recent data from Energy Made Easy and Victorian Energy Compare, the price difference between EnergyAustralia and Origin isn’t always significant—sometimes just a few cents per kilowatt-hour. But over a year, even a small gap can add up. For example: In Sydney, Origin’s basic residential plan often edges out EnergyAustralia by around 3 to 5 percent, especially on usage charges. In Victoria, EnergyAustra...
Read more

Is EnergyAustralia Cheaper Than Origin

 If you have ever tried to compare power bills and come away more confused than when you started, you are not alone. EnergyAustralia and Origin are two of the country’s biggest energy providers, and on the surface, their plans look strikingly similar. But dig a little deeper, and differences start to show — in pricing, extras, and overall value. So, which one is actually cheaper Prices vary depending on where you live There is no one-size-fits-all answer. Pricing between these two giants depends heavily on your state or territory. In New South Wales , EnergyAustralia’s Flexi plan often undercuts Origin’s Go plan by a small margin, particularly for households with moderate usage. In Victoria , Origin tends to offer slightly cheaper rates overall and has more bonus offers attached. In Queensland , both providers are neck and neck, though EnergyAustralia sometimes edges out depending on the region. In South Australia and the ACT , Origin frequently comes out ahead on ...
Read more

Who Are the Big 3 Energy Retailers in Australia?

 Australia’s energy market is largely dominated by three major players, commonly referred to as the Big 3. If you’ve ever glanced at your power bill and wondered whether you’re paying a premium for brand familiarity, you are not alone. These companies collectively supply electricity and gas to the majority of households and businesses across the country, shaping the pricing, service, and direction of the national energy landscape. Quick answer The Big 3 energy retailers in Australia are: AGL Energy Origin Energy EnergyAustralia In this article, we explore how these companies became dominant, how they compare to newer providers, and whether Australians should still rely on them—or consider help from an energy broker. Why Are AGL, Origin, and EnergyAustralia Considered the Big 3? These three companies earned their nickname because of market size. Together, they hold over two-thirds of the Australian retail energy market. That means around two in every three homes or ...
Read more