If you own a home in Australia and you don't have solar panels yet, you're basically paying a voluntary tax on your electricity bill. That's not hyperbole. It's just what the maths says in 2026.
But the solar picture has shifted quite a bit in the last few years. Panel prices have come down. Feed-in tariffs have been crushed. Electricity prices have gone up (again). So what do the numbers actually look like right now? I went through the data to find out.
The upfront cost is lower than you think
The standard residential system in Australia is 6.6kW of panels on a 5kW inverter. It's the sweet spot: big enough to cover most households, small enough to stay under inverter export limits. At current installed prices of about $1.15 per watt (SolarChoice data, February 2026), that's roughly $7,600 before any rebates.
Now it gets interesting. The federal STC rebate still exists and it's still generous. You get certificates based on how much solar your system is expected to produce over the remaining life of the scheme (which ends in 2030). Sunnier locations get more certificates, so a system in Brisbane gets about $1,980 knocked off, while Melbourne gets about $1,530. Sydney, Adelaide and Perth land around $1,780.
Victoria also has a $1,400 Solar Homes rebate that stacks on top. And the ACT, Tasmania and NT all offer interest-free loan schemes.
Bottom line: after incentives, you're looking at $4,700 to $5,800 out of pocket for a system that'll produce electricity for 25+ years. That's less than most people spend on a holiday.
Where the savings actually come from
Most solar articles gloss over this: not all solar electricity is worth the same amount. There are really two buckets.
Bucket 1: What you use yourself. This is the good stuff. Every kWh you consume directly from your panels saves you the full retail rate, which is 27c in Victoria, 36c in NSW, and a whopping 43c in South Australia. Without a battery, most homes use about 30% of their solar production directly (you're at work during the sunniest hours, after all).
Bucket 2: What you export to the grid. The other 70% goes back to the grid, and your retailer pays you a feed-in tariff. In 2026, these rates are... not great. WA pays 3c/kWh. VIC about 3.3c. NSW 5c. Queensland is the standout at 8.7c (regulated by the QCA). These are heading lower as more solar floods the grid every year.
So the real game is self-consumption. Every kWh you use yourself is worth 6 to 14 times more than one you export. This is why batteries are becoming more interesting, but more on that below.
What this looks like by state
I ran the numbers for a standard 6.6kW system across the five biggest states. Same system, same 30% self-consumption, no battery. Here's what year one looks like:
| State | Elec. rate | Feed-in | Net cost | Year 1 savings | Payback |
|---|---|---|---|---|---|
| SA | 43c | 6.0c | $5,810 | $1,580 | ~3.7 yrs |
| QLD | 33c | 8.7c | $5,610 | $1,640 | ~3.4 yrs |
| NSW | 36c | 5.0c | $5,810 | $1,320 | ~4.4 yrs |
| VIC | 27c | 3.3c | $4,660* | $850 | ~5.5 yrs |
| WA | 32c | 3.0c | $5,810 | $1,070 | ~5.4 yrs |
* VIC includes the $1,400 Solar Homes rebate. Payback periods are simple (undiscounted). All figures based on 6.6kW system, 30% self-consumption, no battery.
Queensland and SA are the clear winners. QLD because of that regulated 8.7c feed-in tariff, SA because electricity is so expensive that even self-consuming 30% saves you a fortune. Victoria has the longest payback, but that $1,400 state rebate softens the blow, and 5.5 years is still a very solid return on an asset that lasts 25+.
Put another way: even in the worst case (Victoria), you're getting the equivalent of an 18% annual return on your money. In SA, it's closer to 27%. Try getting that from a term deposit.
It gets better over time
The table above only shows year one. But electricity prices go up every year (historically 3 to 5% in Australia), while your panels just sit there quietly producing free electricity. Yes, they degrade, about 0.5% per year, but that's nothing compared to the price escalation on the grid electricity you're avoiding.
Your savings in year 10 will be meaningfully higher than year 1. And in year 15, higher still. When you run this through a proper NPV model at a 10% discount rate (which is what you'd roughly expect from a stock market index fund), solar still comes out positive in almost every Australian postcode. These panels are a better investment than the stock market. For most homeowners, solar is one of the best financial moves available.
What about batteries?
A 10kWh battery runs about $10,000 installed on its own, but if you bundle it with a new solar system, you save about $1,500 (shared hybrid inverter, one installation visit). The federal Cheaper Home Batteries program also knocks off about $2,650 for a 10kWh system (from May 2026, when the STC rate drops from 8.4 to 6.8 per kWh, with further reductions every six months).
The pitch is simple: instead of exporting 70% of your solar at 5c/kWh and then buying grid electricity back at 33c/kWh in the evening, you store it yourself. That shifts your self-consumption from ~30% to ~70%, which means a much bigger chunk of your solar is earning you the full retail rate instead of the miserable feed-in rate.
Does the maths work? It depends on where you live. In South Australia, where there's a 37c gap between what you pay for grid power and what you get for exports, batteries look good. In Victoria, where that gap is smaller and electricity is cheaper to begin with, it's tighter. I wrote a full battery deep-dive with state-by-state numbers, but the short version is: run the numbers for your specific situation before committing. The economics are very location-dependent.
When solar isn't the answer
I don't want to be the guy who tells everyone to slap panels on their roof regardless of circumstances. Solar doesn't make sense for every home.
If your roof faces south, you'll produce about 35% less than a north-facing one. Heavy tree shading can cut output nearly in half. In those situations, you might get a better return from switching your gas hot water to a heat pump, or draught-sealing an older home, both of which can have payback periods under 2 years.
The right approach is to compare all your options, not just look at solar in isolation. That's actually why I built the Ohm Equity calculator. It ranks every major upgrade (solar, battery, heat pump, insulation, EV, the lot) by net present value for your specific postcode and home. Because the best upgrade for a house in Cairns is very different from the best upgrade for a house in Hobart.
Run your own numbers
Everything above is based on averages. Your actual situation depends on your postcode, home size, roof orientation, existing equipment, and energy usage patterns. The most useful thing you can do is plug your details into the calculator and see what comes out. You can also tweak the assumptions (your actual electricity rate, discount rate, price escalation) under "Under the Hood" if you want to match your real tariff.
Where these numbers come from
Everything in this post uses the same data that powers the calculator: SolarChoice equipment pricing (February 2026), AER and Canstar Blue electricity rates, Clean Energy Regulator STC values, and state government incentive programs. Full details on the data sources page and methodology.