Solar vs Grid Energy Price Escalation: 2025 Outlook
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December 16, 2025
The Australian energy market continues to be characterised by unprecedented volatility. So, businesses are already preparing for additional price fluctuations in electricity costs. Forecasts released earlier indicate that the price of grid-based electricity in Australia is expected to increase between 10% and 25% in 2025. It would depend on geographic location, and if this continues, it would put pressure on businesses’ operating budgets. Due to the 18% increase in the average business energy bills between 2023 and 2024, controlling these expenses has become highly critical.
This is why many businesses are considering solar panels to create predictability regarding future energy costs. As the cost of electricity from the grid increases, the costs associated with solar energy generation are expected to remain relatively stable and with a long-term hedge against volatility.
In this blog, we provide a detailed Solar vs Grid Energy 2025 outlook, explaining how
On-site generated electricity can offer energy cost predictability for businesses.
Request a Free Feasibility Report along with Bill Modelling.
Why Grid Energy Prices Are Rising in 2025
Reasons Behind Electricity Price Increases (With Actual Data)
There are several types of structures and markets that are driving the Price of Electricity higher:
- Wholesale pressures:
NEM wholesale prices in many regions are projected to be between $110-$160/MWh, due largely to generator constraints and demand spikes.
- Network and transaction costs:
Costs for AER-approved increases of 6%-12% across major states continue to put pressure on retail prices.
- Policy and carbon pricing:
Increasing emission reduction targets will increase the compliance cost for generators.
- Demand growth:
Increased electricity demand due to more electrical appliances and the momentum for an increase in the amount of electricity consumed are increasing the wholesale prices.
The result is that standard commercial tariffs will likely hit a price of approximately 28-40c/kWh in 2025, with little room to increase the amount of money generators can spend to operate their businesses.
Explore how such energy bill costs impact your next bill: Free Bill Modelling.
Solar Energy Cost Trends to Watch in 2025
Why Solar Panels Are a Smart Business Investment Now (With Solar Cost Ranges)
As electricity prices from the grid continue to rise, the cost of producing on-site electricity will stay comparatively low. It is due to the LCOE of commercial solar systems today ranging from 6 to 12 cents per kilowatt hour, depending on the size of the system.
In addition to this information, other 2025 trends that businesses should be aware of are:
- Higher-efficiency solar modules available, including bifacial panels.
- Easy access to financing, as numerous $0 upfront PPA's, operating leases, and tax-incentivised capital expenditures enable business to make the most of upcoming massive growth of solar energy.
- Better solar inverters with smarter controls to increase yield and extend operating time.
Agile Energy supports businesses with engineered commercial solar and battery solutions specifically designed to provide long-term savings.
Book a System Health Check or Feasibility Study
Solar vs Grid Electricity: 2025 Cost Comparison for Businesses
Solar vs Grid Electricity Price Comparison for Businesses
The cost of grid-delivered energy in 2025 is projected to range from approximately (28 to 40 cents per kWh). This shows considerably more than solar-powered (6 to 12 cents per kWh), providing savings of as much as 70%, depending on the size of the system.
Payback periods include:
• 30 to 100 kWs 3 to 4 years
• 100 to 500 kWs 2.5 to 3.5 years
Scenario summaries include:
• 100% grid-reliant with the most risk to tariffs
• Solar business allowing up to 80% offset for daytime use
• Solar and battery provide a total offset of up to 95%.
Get a Free Feasibility Report + 2025 Cost Comparison
Commercial Solar Savings Forecast for 2025
Commercial Solar Savings 2025: Potential Energy Savings for Your Business
Estimates of Cost Savings Based on Average Fitting Rates
- For 50kW Installation: $12,000.00 To $20,000.00 per year
- For 200kW Commercial Building: $45,000.00 To $75,000.00 per year
- For 500 kW Facility: $110,000.00 To $150,000.00 per year
With solar energy, a business can stabilise its operating budget and achieve more consistent cash flows. When storage is added to these systems, self-consumption may increase from 20% to 40%.
Free Bill Modelling + Savings Forecast Included.
The Role of Battery Storage in Managing Rising Grid Costs
Here’s how you can beat grid inflation with Solar + Battery Strategy for 2025:
With elevated peak tariffs in some states (up to 45-60c/kWh), batteries empower businesses by helping them avoid these high rates. Additionally, batteries enable businesses to capture excess solar energy during the day and utilise it later in the evening. Batteries, along with available tax incentives and rebates, have become a logical addition to the commercial energy strategy.
Get Your Free Battery Feasibility Assessment Today!
The Risk of Doing Nothing in 2025
A business can be exposed to financial risk by continuing to rely solely on the grid for its electricity needs. Potential financial risks include:
- Annual increases in energy prices of 10-25%
- Failure to take advantage of solar PV savings opportunities in 2025
- Potential for fluctuating peak tariffs and peak demand
- Loss of competitive advantage
- Expiration of incentives and increasing pressure for all businesses to meet ESG obligations
- The cost of waiting to implement a solar energy system ranges between $12,000 and $150,000 per year, depending on the size of the system.
Contact us today for a Free Feasibility Analysis to protect your business!
Risk Factors & Considerations
Here are the major risk factors & considerations to watch out for when comparing solar and grid power:
- Up-front capital versus the operational costs: It is necessary to comprehend the difference between a greater initial expenditure versus additional savings over the long term (essential to a credible ROI).
- Solar intermittency: Be informed that solar energy generation can fluctuate because of climatic and seasonal variations.
- Required hybrid solutions: Need for hybrid systems to provide continuous access to electric service at a specific location.
- Continual maintenance and tariff uncertainty: It will impact the overall expense stability of the solar system.
Agile Energy provides engineered, future-ready solutions to mitigate these risks.
Why Switch to Solar in 2025
Reasons for Businesses to Explore Solar Energy:
- Certainty in Energy Pricing for 20+ Years
- Reduced Operating Expenses
- Enhance Your Company's ESG (Environmental, Social and Governance) Performance
- Use Agile Energy’s Results-Oriented Project Delivery (Over 1,000 Projects Delivered)
Request Your Free Feasibility + System Health Check.
Conclusion
As 2025 will produce another surge of inflation in energy costs, businesses that invest in solar energy will find this investment an extremely reliable hedge against unpredictable tariff rates established by the utility companies. When businesses generate their own energy on-site, they significantly reduce their exposure to tariffs and take control of their long-term energy cost.
FAQs - Solar vs Grid Energy Price Escalation: 2025 Outlook
1. Is solar cheaper than grid electricity in 2025?
Yes. In 2025, solar-generated electricity is significantly cheaper than grid power, helping businesses reduce exposure to rising energy prices.
2. What is the payback period in 2025?
Most commercial solar systems achieve payback within 2.5 to 4 years, depending on system size, usage patterns, and incentives.
3. How do batteries help with rising grid costs?
Batteries store excess solar energy for later use, reducing reliance on high-priced peak grid electricity and improving overall cost control.
4. What incentives are available in 2025?
Businesses may access federal STCs, state-based rebates, tax incentives, and accelerated depreciation, subject to eligibility and location.
5. Can a business run fully off solar + battery?
Some businesses can operate largely off-grid, but most benefit from a hybrid setup that combines solar, batteries, and grid backup.
6. How reliable is solar during cloudy periods?
Solar systems continue to generate power in cloudy conditions, though at reduced output. Batteries and grid backup ensure reliability.
7. Should I install solar now or wait?
Installing now allows businesses to lock in savings, access current incentives, and reduce exposure to further grid price increases.
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