Verdict
Yes. The biggest value from solar is not a feed-in tariff but being able to use the electricity that you produce.
Analysis
A lot of consumers have recently been informed that their solar feed-in tariff from their energy retailer is decreasing.
A solar feed-in tariff is when an electricity retailer pays households or businesses a set rate per kilowatt-hour (kWh) for the excess electricity they generate from solar panels and feed back into the electricity grid.
How did we get here?
Feed-in tariffs were introduced in Australia in the late 2000s as part of efforts to encourage the uptake of household solar panels which were expensive to purchase at the time. By 2008, most states and territories rolled out government-mandated feed-in and premium tariffs that were time limited and have now closed to new solar customers. These feed-in tariffs were designed to encourage the uptake of solar panels when the cost of panels were more than double the price they are now (See Figure 1)1. These incentives worked, with Australia surpassing 4million installations late in 20242.
As government-funded schemes closed, electricity retailers began to offer market-based feed-in tariffs, which vary across retailers. For the last five years payments for solar exports have been decreasing. Today, feed-in tariffs are usually between 1c and 15c per kWh, depending on location and provider. For example, Victoria, once offered feed-in tariffs as high as 60 cents/kWh, and then last month the Victorian Essential Services Commission set the 2025-26 rate at 0.04 cents/kWh, a 195% decrease from the previous rate.3
Figure 1: The fall in prices of solar since 2012 (from Sunwiz – https://www.sunwiz.com.au/)
Figure 2: The decline of solar feed-in tariffs in Victoria4
Market-based feed-in tariffs are linked to the wholesale electricity market, where electricity is bought and sold by retailers and generators. Prices in this market go up or down depending on supply and demand.
As more people installed solar panels, more solar energy was fed into the grid during the day. At the same time, many households began using more of their own solar power, which reduced the need to draw electricity from the grid during daylight hours5.
This combination – more supply and less demand – has pushed daytime wholesale electricity prices down. As a result, feed-in tariffs have also dropped, since they reflect these lower market prices.6
The biggest savings come from self-consumption
The biggest value of having solar installed at home is being able to use the energy you generate, not feeding it back into the grid. Every kilowatt-hour of solar electricity you produce, and use means you don’t have to buy it from your energy retailer which might cost 25 to 45 cents per kilowatt-hour.7 That saves you way more than what you could earn from the feed-in tariff.
For example, if you are in Victoria and your PV system generates 1 kWh of electricity and it gets exported to the grid, you get a credit of 0.04c cents for it. But if you do use the electricity generated by your solar system, you miss out on the 0.04c cents, but you don’t pay 26.13 cents to buy it from the grid, so you’ve saved 26 cents. If the average household in Victoria uses around 5,000 kWh, that’s a saving of about $1,300 per year8.
The three ways you can maximise the value from your solar system:
- Use more power during the day – The key to taking the best advantage of solar is all in the timing. If you can switch some of your usage from nighttime to daytime when your solar is producing more, you will see a bigger benefit.
- Monitor and get smart – Monitoring your system helps you understand your electricity use and see when you are consuming the electricity generated by your solar system. You can then add smart devices that let you schedule electricity use to match solar generation.
- Consider a battery – To maximise savings, adding a battery to your system will help you increase your self-consumption by allowing you to store and then use your solar electricity when the sun isn’t shining9.
Conclusion
What’s the bottom line?
Despite the reductions in feed in tariffs, investing in household solar systems is still a good idea.
1. Decreased solar installation costs: The upfront costs of installing solar panels have decreased over the years, making solar energy more accessible and shortening the payback period. Government incentives and rebates further offset these expenses. For example, the Small-scale Renewable Energy Scheme provides financial incentives for installing eligible small-scale renewable energy systems10.
2. Significant savings on electricity bills: By generating your own electricity, you can substantially reduce your reliance on the grid, leading to lower electricity bills.
3. Environmental benefits: Investing in solar energy contributes to reducing carbon emissions, aligning with global efforts to combat climate change.
4. Increased property value: Properties equipped with solar systems often see an increase in value when selling. According to the realestate.com.au Residential Audience Pulse Survey, 85% of buyers and 67% of renters want solar panels installed in properties they are looking at11, 12.
5. Protection against rising energy costs: Generating your own electricity can help to manage fluctuating energy prices.
While the reduction in feed-in tariffs has altered the considerations, there are still a lot of benefits of installing a household solar system in Australia.
References
1 – The Solar Battery Group. (2025). The end of solar feed-in tariffs? What falling rates mean for homeowners in 2025. Available at: https://solarbatterygroup.com.au/the-end-of-solar-feed-in-tariffs-what-falling-rates-mean-for-homeowners-in-2025/#:~:text=Tariffs%20Across%20Australia-,The%20government%20provided%20generous%20feed%2Din%20tariffs%20in%20the%20early,tariff%20schemes%20were%20phased%20out.
2 – Department of Climate Change, Energy, the Environment and Water. (2024). Australia hits rooftop solar milestone. Available at: https://www.energy.gov.au/news/australia-hits-rooftop-solar-milestone#:~:text=Rooftop%20solar%20in%20Australia%20has%20reached%20new,which%20cuts%20upfront%20costs%20by%20about%2030%.
3 – Essential Services Commission (2024) Minimum feed-in tariff review 2025–26. Available at: https://www.esc.vic.gov.au/electricity-and-gas/prices-tariffs-and-benchmarks/minimum-feed-tariff/minimum-feed-tariff-review-2025-26
4 – Mercer, D. (2025) ‘Australian solar feed-in tariffs have plunged 99 per cent’, ABC News. Available at: https://www.abc.net.au/news/2025-03-16/australian-solar-feed-in-tariffs-have-plunged-99-per-cent/104986534
5 – Essential Services Commission. (2023). How can the feed-in tariff go down while retail prices are increasing? Available at: https://www.esc.vic.gov.au/media-centre/how-can-feed-tariff-go-down-while-retail-prices-are-increasing
6 – Mercer, D (2025) ‘Solar feed-in tariffs plunge up to 99.93pc in 15 years as market saturates’ ABC News. Available at: https://www.abc.net.au/news/2025-03-16/australian-solar-feed-in-tariffs-have-plunged-99-per-cent/104986534
7 – Canstar Blue (2025) Electricity costs per kWh. Available at: https://www.canstarblue.com.au/electricity/electricity-costs-kwh
8 – Australian Energy Regulator (2020) Residential energy consumption benchmarks. Available at: https://www.aer.gov.au/system/files/Residential%20energy%20consumption%20benchmarks%20-%209%20December%202020_0.pdf
9 – Department of Climate Change, Energy, the Environment and Water (n.d.) Get the most from your solar system. Available at: https://www.energy.gov.au/solar/use-your-solar-system/get-most-your-solar-system
10 – Clean Energy Regulator (2025) Information for householders – Renewable Energy Target. Available at: https://cer.gov.au/schemes/renewable-energy-target/information-householders
11 – PropTrack and Origin Energy (2024) Australian home energy report: March 2024. Available at: https://www.realestate.com.au/insights/proptrack-and-origin-australian-home-energy-report-march-2024/
12 – Energy Matters (2024) The impact of solar panels on property value. Available at: https://www.energymatters.com.au/renewable-news/the-impact-of-solar-panels-on-property-value/questionable.
