Is home solar power in Australia still worth it in 2025?

Solar Energy provides many benefits for the environment, this article examines the costs, benefits and payback period of installing solar panels on a residential rooftop. This article aims to show you if solar power is worth it in 2025.

What is the average cost of solar in Australia?

For those looking for the cost of solar power in Australia, Solar Choice publishes a solar price index each month with the current pricing state by state, for different system sizes. The pricing the below table includes the upfront STC rebate provided by the federal government but excludes any additional state incentives like the Victorian Rebate Scheme. Find out below if solar panels could be worth it for you.

History of Solar Panel Prices

In the early days (pre 2010) Solar prices were around $5 to $10 per watt and was really only taken up by the early adopters with greater financial means. The popularity of solar has been driven in part by the decreasing costs and also by an attractive federal STC scheme which offers up to 40% of the cost of the system via a government incentive. Over the last 5 years solar prices have continued to decrease dramatically as product manufacturers have reached economies of scale with production and as installation methods have been streamlined. Solar Choice’s price index has been recorded monthly since 2012 where solar was almost 3 times more expensive.

In recent years the electricity costs have remained somewhat consistent. While the price of solar panels has continued to fall, this has been countered by increasing labour prices and decreases in the federal rebate for solar power in Australia. In future years, we expect that solar panel installations will gradually increase.

Future Solar System Prices

Many people in the solar industry expect the price of solar systems to continue to increase in price. With the federal STC rebate continuing to decline each year until 2030 there is likely to be upward pressure on the cost of solar that cannot be overcome by increases in efficiency.

What are the financial benefits of Solar Panels?

There are 2 main ways in which a home solar system offer benefits, both of which have the effect of reducing your energy bill.

1. Offsetting your energy consumption

The primary way in which solar can help you tackle your energy costs is by reducing the amount you need to buy from your electricity retailer which typically will cost between 25-40c per kWh. Solar systems are installed with the smarts that tell your appliances to use solar power first before ‘buying’ energy from the grid. This is usually referred to as ‘self-consuming’ your solar energy.

This is the primary way in which you will benefit from installing solar panels on your home.

2. Feed in tariff for excess energy

Any surplus energy that is generated by the system can be sold back to your energy retailer at a rate called a feed in tariff. In some states (WA and NT) these rates are fixed and in other states its up to your energy retailer what rate they offer you – view our comparison table here. Generally speaking, have dropped significantly in recent years as the amount of installed solar systems has created a surplus of energy in the middle of the day. Your ability to access a feed in tariff is also usually limited to a maximum solar system size – for a full explanation of what is possible state by state read this guide.

With low solar feed in tariffs, we recommend sizing your solar system to the electricity needs of the house. Maintaining a high ‘solar self-consumption rate’ will help you optimise your return on investment.

Payback Periods for Solar in 2025

To determine the payback period for your solar system we recommend using the Solar Choice payback period calculator and entering the specifics of your case. As a quick guide we have created the below table using some conservative assumptions for a typical residential scenario for a home with an average usage of 25kWh per day and a 6.6kW solar PV system.

Assumptions:

• Electricity rates & feed in tariffs based on middle ground of what’s available
• Assumed that 50% of Solar Energy is used by the home (self-consumption rate)
• Panels are tilted to the North at 30% pitch
• Inflation at 2.5% and a 5% discount rate

Conclusion: Solar is worth it financially

As you can see, for most Australians they can install solar and have the system pay for itself within 2 – 5 years depending on which state their in. So in 2025, the numbers stack up even in the states with the least favourable solar conditions. Installing solar is generally one of the highest returning energy efficiency projects a household can undertake.

Installing a good quality solar power system will also increase the value of the house and increases the potential rental yield as new owners or renters can benefit from the free energy on the roof.

Importantly installing solar power reduces a household’s carbon footprint and helps Australia on its journey to transition to 100% renewable energy sources. There is a great opportunity for a positive financial and environmental outcome.

We publish similar updated articles about home battery storage yearly: Is home battery storage worth it?

• About
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Jeff Sykes

CEO at Solar Choice

Jeff has consulted on over 20MW of commercial solar projects, ranging from SMEs to ASX top 100 companies. Jeff has also provided independent advice to 100s of residential solar, battery and EV charging customers across every state in Australia. He holds an MBA from the Australian Graduate School of Management and is an expert in business strategy and financial analysis.

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