Solar Payback Report

Which Australian cities see the fastest solar payback?

With solar panels becoming an increasingly popular way to cut energy bills, the energy comparison experts at iSelect wanted to find out how long it actually takes for solar systems to pay for themselves across Australia. Our goal was to reveal which cities and states see the fastest return on investment, and how system size, energy usage, and batteries affect payback times.

To do this, we analysed solar panel prices, government rebates, local solar exposure data from the Bureau of Meteorology, and average retail electricity and feed-in tariff rates. We modelled payback periods for households using different amounts of electricity, with and without batteries, to give a clear picture of the potential savings and returns across the country.

The capital cities in Australia that see the fastest returns on solar investment

The time it takes for solar panels to pay for themselves can vary depending on a number of factors, including your system size, energy plan, installation cost, how much energy you use yourself during daylight hours, panel performance, and natural wear and tear over time.

To give you a sense of what to expect, we’ve estimated the payback period for a standard 6.6kW solar (PV) system in Australia’s capital cities. The calculations are based on the assumptions outlined below.

Assumptions

6.6kW Solar Panel System, 5kW inverter
Performance rate of 80%
2% degradation rate after 1 year, 0.4% degradation each year thereafter
Retail electricity and feed-in tariffs are taken as flat during the analysis period (no indexation)
Seasonal inverter clipping applied – monthly energy multiplied by clip factors averaging 0.98
Daytime self-use caps of 4/7/10 kWh/day (Low/Mid/High); +50% weekend uplift (Sat–Sun); monthly seasonal multipliers, excess PV exported at feed-in tariff
Solar system prices include the cost of a full turnkey system – all products, labour, equipment hire, and the national solar rebate from the federal government’s Small-scale Renewable Energy Scheme are inclusive of GST, as at September, 2025
Victorian government rebate applied to solar panel (PV) costs
See methodology for more information

For households using a lower rate of solar-generated electricity (4kW) per day, Perth offers the quickest return on investment, with panels paying for themselves in around 4 years and 9 months. That’s almost half the time it takes in Melbourne, where the payback period stretches out to 8 years and 11 months. Perth also comes out on top for those using a mid-range of electricity (7kW), with a payback of just 3 years and 8 months. This is due to a relatively low solar system cost, high electricity prices and feed-in tariff rates, as well as a high level of solar exposure, all making it ideal for quick payback.

When it comes to those using a large amount of electricity per day (10kW), however, Adelaide takes the lead. For 10kW per day, solar can pay for itself in as little as 2 years and 9 months, with Perth close behind at 3 years.

While Melbourne lags on the lower end of the scale, Hobart sees the slowest returns for mid- and high-range usage. At 7kW per day, it takes about 6 years and 7 months to pay off, while 10kW per day takes 5 years and 9 months. This is because Hobart has a high cost for solar systems, and despite a relatively high feed-in tariff rate, electricity prices and solar exposure are the lowest in the country.

The research shows that the more solar power you use, the faster your system can pay for itself. Households with higher electricity usage can see their return on investment in around half the time compared to those with lower usage, depending on the state you live in. This means people who work from home or spend a lot of time gaming or using other energy-hungry devices could see the quickest payback. Melbourne has the biggest gap between low and high usage, with heavy energy users cutting their payback period by up to 4 years and 10 months.

Julia Paszka - General Manager – Utilities & Credit Cards

Julia Paszka, General Manager – Utilities at iSelect offers her advice on how to maximise the electricity generated from solar:

“Solar panels can be a great way to cut your power bills, but to really maximise the benefits, it’s important to use as much of your solar energy as possible during the day. Any excess power you don’t use will usually be sent back to the grid, but the rate you’ve paid for this ‘feed-in’ is typically much lower than what you pay for electricity from the grid.

“Other ways to make the most of your solar include timing energy-heavy activities, like running your washing machine, dishwasher, or charging your EV during daylight hours. Even small adjustments, like using smart plugs or timers, can help you maximise self-consumption and speed up your savings.”

The payback period for solar systems with battery storage can vary depending on a range of factors — from the size of your system and the cost of installation, to your energy plan, how much power you use during the day and night, and the performance and lifespan of your panels.

When it comes to batteries, size can make a difference. As battery capacity increases, the installed cost per kWh generally goes down. That’s because certain installation costs are fixed, so a larger battery often works out to be better value overall.

Government rebates can also have a big impact on affordability. For example, the Cheaper Home Batteries Program introduced on the 30th of July provides around a 30% discount on home batteries for households that already have, or plan to install, solar panels. This kind of support can significantly reduce upfront costs and shorten the payback period.

To give you a clearer picture, we’ve estimated the payback period for a 6.6kW solar (PV) system paired with a 12kWh battery across Australia’s capital cities. These figures are based on the assumptions outlined below.

Assumptions & Notes

Solar System

6.6kW Solar Panel System, 5kW inverter
Performance rate of 80%
2% degradation rate after 1 year, 0.4% degradation each year thereafter

Battery:

12kWh usable Battery, DC-coupled
Round-trip efficiency 92%
Back-up reserve 10% minimum state of charge
2.5% degradation per year capacity fade
Up to 1 full cycle/day cycle limit
Power limits & windows: charge ≤ 5 kW, discharge ≤ 5 kW; up to 5 h/day for charge and 5 h/day for discharge
Parasitic/standby consumption: 0.3 kWh/day
Charging source: PV-only (no grid charging under flat tariffs)
Dispatch order: daytime self-use first, charge battery from PV surplus, export remaining PV; battery does not export to grid (discharge offsets night load only)
Day/Night self-use caps: Day 4/7/10 kWh/day and Night 6/9/12 kWh/day (Low/Mid/High), with +50% weekend uplift (Sat–Sun) and the same monthly seasonal multipliers as PV-only; excess PV exported at feed-in tariff

Calculation

Retail electricity and feed-in tariffs are taken as flat during the analysis period (no indexation)
Seasonal inverter clipping applied – monthly energy multiplied by clip factors averaging 0.98
Daytime self-use caps of 4/7/10 kWh/day (Low/Mid/High); +50% weekend uplift (Sat–Sun); monthly seasonal multipliers, excess PV exported at feed-in tariff

Notes:

Solar system and battery prices include the cost of a full turnkey system – all products, labour, equipment hire, the national solar and battery rebates from the federal government’s Small-scale Renewable Energy Scheme and Cheaper Home Batteries Program are inclusive of GST, as at September, 2025
WA (Synergy) and NSW State Government rebates applied to battery costs. Victorian government rebate applied to solar panel (PV) costs. NSW two-way pricing

For households with lower energy use, Adelaide offers the quickest payback, with solar systems taking around 8 years and 6 months to cover their costs. Perth comes close behind at 8 years and 11 months. Adelaide also leads the way across all usage levels, with payback dropping to 6 years and 2 months for medium users, and just 5 years and 6 months for high-energy households. Sydney ranks second for both mid- and high-range usage. Sydney and Adelaide lead for payback with batteries, due to high electricity prices, which they avoid paying by storing solar power for evenings.

At the other end of the scale, Hobart has the longest payback periods across all usage levels, followed by Melbourne.

How did we calculate this?

The cost of solar systems across Australia includes Small-scale Technology Certificates (STCs) from the Small-scale Renewable Energy Scheme (SRES), which help reduce the upfront price of solar panels. The number of STCs you can claim depends on your system size, location, and expected energy output. Regions with more sunlight qualify for more STCs, meaning bigger rebates for homeowners. Retailers typically apply for and sell the STCs on your behalf, with the value shown as a discount in your quote.

When looking at system sizes, there’s a clear trend: as the system size increases, the price per watt usually decreases. For larger systems, in some states like Darwin and Perth, however, 10kW setups can cost more per watt because they require bigger inverters, more panels, additional racking and cabling, and sometimes even roof or switchboard upgrades.

The 6.6kW system hits the sweet spot for most Australian homes — and it’s the size we’ve used in our payback analysis. It fits on a standard 5kW single-phase inverter, is widely installed, and benefits from competitive pricing since it’s the most popular system size. Moving to a 10kW system puts you in a more niche market, meaning fewer households can install one, and prices are less competitive.

When it comes to the 6–7kW sweet spot, Perth has the lowest installation costs, at around $0.78–$0.79 per watt. This is a major reason why Perth ranks so highly for fast solar payback. In fact, Perth has the lowest cost across most system sizes, making it one of the most affordable states to invest in solar, except for 10kW systems, where Canberra, Sydney and Adelaide offer slightly lower prices.

At the other end of the scale is Darwin, where the price per watt sits at $1.55 for a 6kW system and $1.46 for 7kW. Darwin consistently has the highest installation costs across all system sizes. This helps explain why, despite its strong solar potential due to abundant sunshine, Darwin doesn’t see the fastest payback compared with other states.

Based on Bureau of Meteorology data, the Northern Territory unsurprisingly tops the list for year-round solar exposure. Darwin records an average of 21.45 MJ/m² per day. In contrast, Australia’s southernmost areas, namely Hobart and Melbourne, receive much lower levels of sunlight, making them less optimal for solar generation.

Since energy output directly reflects available solar energy, the northern parts of the country naturally have the highest solar potential. The Northern Territory in particular, delivers consistently strong results throughout the year, with Darwin peaking at 5.43 kWh per day in October and dipping to 4.15 kWh per day in January.

At the other end of the spectrum, Greater Hobart averages just 3.03 kWh per day across the year, which explains why the solar payback time in Greater Hobart is significantly higher than in other states.

The Northern Territory, Tasmania, and Western Australia maintain the highest and most consistent feed-in tariffs, with standard rates set state-wide, at 11.20c, 8.78c and 7.20c per kWh, respectively.

From 1 July 2025, Victoria removed its minimum feed-in tariff requirement, meaning retailers can offer any rate above $0. This helps explain why average feed-in prices in Victoria are lower than in other states, at an average of 1.33c.

Meanwhile, average feed-in tariffs in NSW and South Australia have dropped since 1 July 2025, following the introduction of the so-called “sun tax”. The sun tax is a fee on any extra solar energy you send back to the electricity grid. It’s designed to encourage solar users to either use their energy at home or store it in a battery for later, rather than exporting it to a grid under strain.

In NSW, some retailers use a “two-way pricing” system, where you might pay a small fee to export electricity during certain times of the day and earn a credit at other times. There’s also a free monthly threshold of around 200kWh before charges apply. The exact rates and structure depend on your retailer. In South Australia, the network charges the retailer rather than the customer. While some retailers have chosen not to pass on the costs, feed-in rates dropped slightly when the tariff was introduced.

The average usage rate is the price households pay for electricity if they don’t have solar panels. South Australia currently has the highest electricity costs at 45.15 cents per kilowatt-hour. This helps explain why Greater Adelaide ranks so highly for solar payback times, as the higher the cost of electricity, the more households can save by generating their own power.

At the other end of the scale, Tasmania has the cheapest electricity in the country at 25.87 cents per kilowatt-hour. Because power is already more affordable there, the savings from solar are smaller, which, alongside low solar generation, contributes to Tasmania having some of the longest payback times.

When comparing this to the feed-in tariffs, Aussies pay a lot more for their energy than they get paid back for the excess they export to the grid. For example, in South Australia, households pay 45.15c/kWh for electricity but only receive 2.33c/kWh for exported solar power, meaning the grid pays back just around 5% of what it costs to buy electricity. Similarly, in New South Wales, the average usage rate is 37.59c/kWh, while the feed-in tariff is just 3.67c/kWh, and in Queensland, households pay 34.21c/kWh but only get 3.33c/kWh for exported energy.

Even in states with higher feed-in rates, like Tasmania (8.78c/kWh) or the Northern Territory (11.20c/kWh), the amount received for exported energy is still far lower than what households pay for electricity. This disparity highlights why using solar energy on-site — or storing it in a battery for later use — can significantly increase the financial benefits of solar panels.

The total long-term energy savings

The research highlights just how much Aussie households could save once their solar system has paid for itself. Darwin comes out on top, with households saving up to $2,143 a year at the higher usage range, thanks to strong solar exposure and comparatively high electricity prices. Even at the lower end of energy use, Darwin households could still pocket almost $1,700 annually once their panels are paid off, making it the most lucrative city for long-term solar savings.

Adelaide also performs strongly, with potential savings of more than $2,000 per year for high-usage households. This lines up with earlier findings that the city has some of the fastest payback times, thanks to a mix of higher electricity costs and relatively affordable solar installation prices.

At the other end of the spectrum, Melbourne households see the smallest savings, with even high-usage homes saving around $1,186 annually. Lower solar exposure and cheaper retail electricity rates both contribute to the smaller long-term return in Victoria.

While solar systems with a battery generally take longer to pay off upfront, the long-term rewards can be significantly greater — often more than double the savings compared to a solar-only setup.

Adelaide stands out as a clear winner, with households saving up to $3,019 per year on average. Even at the lowest usage range, Adelaide homes could save around $2,001 annually, more than twice the savings of solar-only households in the same category ($941). This shows just how much value a battery can add by storing excess energy rather than sending it back to the grid at low feed-in rates.

Darwin also performs strongly, with savings between $2,057 and $2,611 annually, cementing its position as one of the most lucrative cities for solar overall.

At the lower end, Melbourne and Hobart households still benefit, though savings cap out at around $1,645 and $1,500 per year, respectively. While that’s smaller compared to sunnier states, it’s still a significant return once systems are paid off.

Julia Paszka, General Manager – Utilities at iSelect said:

“Our research found that payback periods vary significantly depending on where you live, the size of your system, and how much energy your household uses. This shows how important it is to consider your household’s unique situation when deciding on solar.”

“And of course, not every household can afford solar panels or has the right space to install them. But that doesn’t mean you can’t save on energy or make greener choices. Shopping around for a better energy plan, exploring renewable energy options from your retailer, and taking steps to improve energy efficiency at home — like upgrading appliances, reducing wastage, or using smart devices to optimise electricity use — can all help you cut costs and lower your carbon footprint.”

About the data

iSelect has undertaken research in order to assess the investment and payback period for solar panel systems based on the capital cities of each state. The purpose of this research is for informational purposes only and should not be relied upon as financial advice. Results are indicative only, using assumptions outlined below. Actual payback may vary.

Solar Panel Prices

Solar system prices provided include the cost of a full turnkey system – all products, labour, equipment hire and the national solar rebate from the federal government’s Small-scale Renewable Energy Scheme and are inclusive of GST. Data accessed from Solar Choices’ Price Index as of September 2025. Prices for a 6.6kWh system were calculated using the price per Watt for each state, except for Darwin, where March 2025 data was used as the NT index price was unavailable.

Solar Exposure

To measure a location’s solar exposure, we used the Bureau of Meteorology’s (BoM) gridded climatology of average daily global solar exposure (1990–2019), reported monthly in MJ/m² per day. Global solar exposure is the total solar energy falling on a horizontal surface. We overlaid ABS Suburbs and Localities (SAL) boundaries onto the BoM grids and, for each SAL and month, calculated an area-weighted average that accounts for changing cell size with latitude. BoM “no data” cells were excluded, and a small buffer ensured very small or coastal SALs were captured. The result is a set of long-term monthly averages for every SAL, not single-year readings.

Retail Electricity and Feed-In Tariff Prices

The power and feed-in tariff prices are based on the average of the cheapest residential market offer usage rate and feed-in tariff rates from the top 3 retailers by market share in each state (NT and WA use the maximum rates for residential customers set by state regulators). The prices are based on residential properties with medium-level usage from single rate electricity plans with feed-in tariffs, no controlled load, no demand charges and with no conditions, discounts or offers.

Victorian default offers are used for VIC. A weighted average was used for Feed-in Tariffs in WA and NT as it is based on peak/off-peak pricing with the assumption of 60% peak/40% off-peak exports. Prices are correct as of September 2025.

Retail electricity and feed-in tariff are taken as flat over the analysis of the payback period (no indexation).

Efficiency and Degradation

Degradation rate for solar panels varies depending on a variety of factors, including panel type, manufacturer and climate conditions. For the purposes of this research, a standardised degradation rate was used based on a typical solar panel with a 2% rate after the first year, then 0.4% per year thereafter.

Payback Analysis

The payback analysis does not include financing costs, discounting (NPV/IRR), maintenance, and future policy changes. To reflect real-world use without a battery, we model self-consumption as daytime-usable load, using three caps:

Low = 4 kWh/day,
Mid = 7 kWh/day, and;
High = 10 kWh/day.
We then apply:
- a weekend uplift of +50% on Saturdays and Sundays, and
- a monthly seasonal multiplier to reflect higher summer daytime use and lower winter use

For battery inclusive calculations, we model self-consumption with the following nighttime usage load, using three caps, along with the same weekend uplift and monthly seasonal multiplier:

Low: 6kWh/night,
Mid: 9kWh/night, and;
High: 12kWh/night.

For Payback calculations, available state-based rebates for Western Australia and New South Wales were included, assuming Virtual Power Plant Participation. The Victorian government rebate was applied to solar panel (PV) costs. Available Australian Capital Territory and City of Adelaide rebates were not applied due to its limited eligibility criteria. For more information on available rebates, as well as interest-free loans for your state/territory, visit: https://www.energy.gov.au/rebates

New South Wales’ two-way pricing and South Australia’s export tariffs were not taken into consideration for the payback calculations as flat rates for feed-in tariffs were used and reflect the updated pricing from retailers after the introduction of each state’s “sun-tax”.

Battery

Battery prices provided include the costs for wiring, other necessary components and installation and include the cheaper home batteries program rebate from the federal government’s Small-scale Renewable Energy Scheme and is inclusive of GST. Data accessed from Solar Choices’ Battery Price Index as of September 2025.