Solar panel installation in Australia peaked around 2020-2022 when generous feed-in tariffs and government rebates made payback periods attractive. Now in 2026, feed-in tariffs have dropped significantly and electricity grid prices have moderated.

Does rooftop solar still make financial sense?

The Economics Have Changed

Feed-in tariffs then versus now: In 2012-2015, some Australian states offered feed-in tariffs of 40-60 cents per kWh for excess solar exported to grid. Those contracts are mostly expired now.

Current feed-in tariffs across Australia range from 5-15 cents per kWh depending on state and retailer. That’s roughly one-quarter to one-third of retail electricity prices you pay for grid power.

This drastically changes the value proposition. Previously, exporting solar to grid generated meaningful revenue. Now, the real value comes from consuming solar power yourself and avoiding grid electricity purchases.

Installation costs have fallen: In 2015, a 6.6kW solar system cost $8,000-12,000 installed. In 2026, comparable systems cost $4,000-7,000 after government rebates (STC incentives).

Lower installation costs partially offset reduced feed-in tariff value. But the calculation is still different than it was.

Grid electricity prices: Have risen from $0.20-25/kWh in 2015 to $0.28-38/kWh in 2026 depending on state and retailer. This increases the value of each kWh of solar you consume rather than importing from grid.

Calculating Actual Payback

For realistic example, 5kW solar system in Brisbane:

Installation cost: $5,500 after STC rebates Annual production: ~7,000 kWh in good location with proper orientation Self-consumption rate: 35% (typical for households without batteries) Feed-in tariff: 8 cents/kWh Grid electricity price: 32 cents/kWh

Annual savings:

• Self-consumed solar: 2,450 kWh × $0.32 = $784
• Exported to grid: 4,550 kWh × $0.08 = $364
• Total annual benefit: $1,148

Payback period: $5,500 ÷ $1,148 = 4.8 years

That’s without factoring in electricity price inflation (makes payback faster) or solar output degradation over time (makes it slower). It’s a reasonable return, but not the incredible deals available 5-10 years ago.

According to Solar Choice data, average payback periods for Australian solar installations in 2026 run 4-7 years depending on location, system size, self-consumption rate, and local electricity prices.

What Makes Solar More or Less Valuable

High daytime electricity consumption: If you’re home during day using air conditioning, running appliances, or have pool pump operating during solar production hours, self-consumption rate increases. This dramatically improves economics.

Retirees, work-from-home people, and households with daytime electricity use get better returns than households where everyone’s at work/school during solar production hours.

Electricity price: Higher grid electricity prices make solar more valuable. South Australia and NSW have higher average prices than Queensland or Victoria, improving solar economics in those states.

Roof suitability: North-facing roofs with minimal shading produce 20-30% more than east/west roofs or partially shaded installations. Poor roof orientation or shading significantly extends payback periods.

System size: Larger systems have better cost per watt because installation labor is similar regardless of system size. But if you’re exporting most production at low feed-in tariffs, going larger doesn’t help much.

The optimal system size is one that maximizes self-consumption without excessive export.

Battery Addition Changes the Calculation

Adding battery storage to solar increases self-consumption by storing excess daytime production for evening use when most households consume most electricity.

But batteries are expensive. A 10kWh battery system costs $8,000-13,000 installed. That’s 1.5-2.5x the cost of the solar panels themselves.

For the same Brisbane example with 10kWh battery:

Total system cost: $5,500 (solar) + $10,000 (battery) = $15,500 Self-consumption increase: From 35% to 80% Annual savings: ~$2,150 (much higher self-consumption)

Payback: $15,500 ÷ $2,150 = 7.2 years

Battery payback is longer because of upfront cost. Also, battery warranties typically cover 10 years—you might need battery replacement before system cost is fully recovered.

Batteries make sense if:

• You highly value energy independence
• You experience frequent blackouts
• You have very high evening electricity consumption
• Electricity prices rise substantially (which may happen)

For pure financial return, batteries are marginal in most Australian contexts currently.

Government Incentives Current State

STC rebates: Federal government Small-scale Technology Certificates (STCs) reduce upfront solar costs by roughly $2,000-3,500 depending on system size and location. These are factored into installer quotes as “after rebate” pricing.

STCs are being phased down gradually through 2030. By 2027-2028, rebate amounts will be notably lower than current levels.

State programs: Various state governments offer additional rebates or interest-free loans for solar and batteries. These programs change frequently—check current offerings in your state:

• Victoria: Solar Homes program
• South Australia: Home battery scheme
• NSW: Empowering Homes program
• Queensland: Various regional schemes

These can improve economics significantly but often have eligibility restrictions or limited funding.

What Could Change

Virtual Power Plants (VPPs): Some electricity retailers offer better feed-in rates (15-20 cents/kWh) if you join VPP programs allowing them to control your battery during peak demand periods.

VPP economics improve battery financial returns but require giving up some control over your system.

Electricity price trajectory: If grid prices continue rising, solar becomes more valuable. If they stabilize or fall (unlikely but possible with renewables growth), solar value plateaus.

Feed-in tariff changes: Some advocacy for improved feed-in tariffs to recognize grid support value of distributed solar. Whether this translates to policy changes is uncertain.

Technology improvements: Solar panel efficiency continues improving gradually. Battery costs are slowly declining. Future installations will have better economics than current ones, but waiting indefinitely means never installing.

Should You Install Solar in 2026?

Yes if:

• You plan to stay in property for 5-7+ years (to achieve payback)
• You have good north-facing roof with minimal shading
• Your electricity bills are high ($400+ quarterly)
• You have daytime electricity consumption

Maybe if:

• Roof orientation is east/west but otherwise suitable
• Moderate electricity consumption
• You value environmental benefits alongside financial return

Probably not if:

• You’re renting or planning to move within 3-4 years
• Roof has significant shading issues
• Electricity consumption is very low
• Budget is extremely tight (though payment plans are available)

Solar still makes financial sense for most Australian homeowners with suitable roofs. But it’s no longer the incredible no-brainer deal it was with 60-cent feed-in tariffs.

Do your own calculations based on:

• Your actual electricity usage patterns
• Current installer quotes for your roof
• Your state’s electricity prices and available rebates

The payback period of 4-7 years is still decent investment return. Just manage expectations—you’re not going to eliminate electricity bills entirely or make huge profit exporting power.

You’ll reduce bills significantly, gain some energy independence, and help the environment. For most people, that’s enough justification even if it’s not the financial windfall it once was.