How Solar Energy Reduces Electricity Bills: A Practical Breakdown
With rising electricity prices across Australia, many homeowners are turning to solar energy as a reliable way to cut costs. But how exactly does solar reduce your electricity bill — and by how much? Let’s break down the numbers, explore how grid offsets work, and see what you could be saving each month with a well-designed solar system.
How Solar Power Offsets Grid Electricity
When you install solar panels on your roof, they capture sunlight and convert it into usable electricity through the photovoltaic (PV) effect. This energy powers your home in real time — from your lights and fridge to your washing machine — reducing the amount of power you need to buy from the grid.
During the day, when your solar system produces more electricity than you use, the excess power is automatically exported to the grid. Through net metering or feed-in tariffs, your electricity retailer pays you for this exported energy, further lowering your bill.
At night or on cloudy days, when solar generation is lower, your home draws energy from the grid as usual. The key is that your overall grid usage — and therefore your costs — are significantly reduced because of the energy your system produces during daylight hours.
Sample Savings for Australian Households
To see how much you could save, let’s look at an example based on an average household in Australia:
Average daily energy use: 20 kWh
Electricity rate: $0.30 per kWh
6.6 kW solar system output: Around 26 kWh per day (depending on location and weather)
If your solar system produces 26 kWh per day and you use 20 kWh, you can cover most of your electricity needs with solar. Let’s assume you use 60% of your solar power directly and export the remaining 40% to the grid.
Here’s how that translates to savings:
Solar power used at home (60% = 15.6 kWh): 15.6 x $0.30 = $4.68 saved daily
Excess exported to grid (40% = 10.4 kWh) at 8c feed-in tariff: 10.4 x $0.08 = $0.83 credit daily
That’s a total of around $5.51 saved per day, or roughly $2,000 per year — and potentially more in sunny states like Queensland or South Australia.
Maximising Your Solar Savings
Your actual savings will depend on factors like system size, roof orientation, local energy rates, and when you use your electricity. To get the most out of your solar system:
Shift usage to daylight hours (e.g., running appliances like dishwashers and washing machines during the day).
Invest in a solar battery to store excess energy for evening use.
Regularly maintain your panels to ensure they operate at peak efficiency.
Monitor your energy consumption using smart meters or apps.
The Long-Term Payoff
A well-sized solar system can pay for itself within 3 to 5 years and continue providing free electricity for another 20 years or more. Over its lifespan, that could mean tens of thousands of dollars in savings — all while reducing your carbon footprint and contributing to a cleaner future.
Get in touch today to start our journey together.
Stay committed!
Damien Frearson
