In short:
Victorian homeowners are facing dwindling returns from solar panels as feed-in tariffs fall and battery costs climb. While rebates still exist, many are now questioning whether solar is worth the investment in 2025.
Feed-in Tariffs Shrink While Costs Rise
Victorians who once embraced solar panels as a money-saving investment are now reassessing the benefits, as financial incentives have weakened and the economics of battery storage remain uncertain.
Early adopters once received generous returns from the state’s Premium Feed-in Tariff scheme, earning up to 60 cents per kilowatt hour for excess energy sent to the grid. That scheme closed to new customers in 2011 and ended for existing users on 1st November 2024. Today, minimum feed-in tariffs in Victoria have dropped to just 3.3 cents per kilowatt hour—and are projected to fall even further, possibly below one cent, according to draft proposals from the Essential Services Commission.
With grid payments no longer lucrative, solar’s value lies in offsetting power bills by using electricity during the day. This means households with high daytime usage, such as people working from home, see the most benefit. For those away during the day, without battery storage, most solar power is exported at minimal return.
To address this, Solar Victoria has offered interest-free battery loans of up to $8,800 for eligible homeowners. However, this scheme ends on 30 June 2025. From 1 July, the federal government will introduce a national rebate covering approximately 30 per cent of battery costs—estimated at around $372 per usable kilowatt hour. A typical 10 kWh battery would receive a rebate of $3,720.
Even with subsidies, batteries remain expensive. Installation for a 13 kWh system can cost between $12,000 and $14,000. Payback periods vary from 7 to 10 years depending on energy usage patterns and electricity tariffs. For many, that timeframe may not justify the upfront expense—especially if they plan to move.
Insurance is another emerging concern. While most providers now include solar systems in their building cover, premiums may increase due to the added replacement value. More importantly, insurers report a rise in fire claims linked to lithium-ion batteries. Budget Direct and Coles Insurance both advise customers to update their coverage and disclose solar or battery installations to avoid being underinsured. In some cases, claims have been rejected due to a lack of disclosure. For further guidance, homeowners can consult the Clean Energy Council for safety and installer accreditation information.
For households working from home, solar systems remain advantageous. Power used during daylight hours offsets retail rates that are often upwards of 30 cents per kilowatt hour. Adding a battery allows excess solar to be used in the evening, offering further savings and limited backup during blackouts.
For others—especially those with low energy consumption or minimal daytime use—the benefits are less clear. A solar system without battery storage may no longer provide a strong return unless energy use patterns align with generation.
While solar continues to support sustainability and long-term energy resilience, the financial equation has changed. Victorians considering new systems—or upgrades—should review their energy use, insurer coverage, and the latest rebate options available through Solar Victoria or Energy Victoria before investing.
