How Solar Works in Australia: A Complete Guide to Savings, Feed-In Tariffs & Battery Benefits

Thinking about installing solar and want to understand exactly how the savings work? You're not alone. Many homeowners know solar can reduce energy bills, but few understand how those savings are generated day-to-day.

This guide breaks down how solar power works in Australia—covering self-consumption, feed-in tariff credits, and battery night-time savings—so you can make confident decisions and maximise your return on investment.

How Solar Power Works in Australia:

A residential solar system is made up of solar panels, an inverter, and optionally a battery. Here’s the basic flow of energy:

Sunlight hits the solar panels, generating DC electricity.
The inverter converts DC to AC, which your home can use.
Your appliances use your solar energy first—this is your biggest source of savings.
Any unused solar energy is either:
- Sent to the grid (earning you feed-in tariff credits), or
- Stored in your battery for use at night.

This simple system dramatically reduces how much power you buy from the grid—where electricity prices in many parts of Australia are among the highest in the world.

1. Consumption Savings (Your Biggest Solar Benefit):

Consumption savings are the value of using your own solar energy instead of buying expensive grid electricity.

Why Consumption Is So Valuable:

Grid electricity: typically 30–40+ cents per kWh (depending on retailer and region).
Solar energy produced on your roof: $0 per kWh.

Every kWh of solar you use yourself saves you the full cost of buying power from the grid.

Example of Consumption Savings:

If your home self-consumes 15 kWh of solar per day and your electricity rate is 35 c/kWh, you save:

15 kWh × 0.35 = $5.25 / day
≈ $150 / month
≈ $1,825 / year

Most households consume 40–70% of their solar production during the day. Adding a battery increases this dramatically.

2. Feed-In Tariff Credits (Revenue From Excess Solar):

When you generate more solar power than your home is using, that energy flows back into the grid. Your retailer pays you a feed-in tariff (FiT) for each exported kWh.

Current Feed-In Tariffs in Australia:

Feed-in tariffs vary by state and retailer, but many sit around 5–10 cents per kWh.

This is much lower than the cost of buying energy, which is why consumption is more valuable—but FiT credits still help offset your bill.

Example of Feed-In Savings:

If you export 10 kWh/day at 8c/kWh, you earn:

10 kWh × 0.08 = $0.80 / day
≈ $24 / month
≈ $290 / year

While not huge, these credits accumulate over the year and lower your energy bill.

3. Battery Night-Time Savings (Energy Independence Around the Clock):

Adding a battery means your excess solar energy isn’t sold cheaply to the grid—it’s stored and used later.

This lets you:

Use solar at night
Avoid expensive peak tariffs
Reduce your reliance on the grid
Achieve much higher self-consumption (often 80–95%)

How Battery Savings Work:

Without a battery, you export excess energy during the day for a small credit.

With a battery, that energy stays in your home. You use it after sunset instead of buying grid electricity at 30–40 cents per kWh.

Example: Battery Night-Time Savings:

Say your battery stores 25 kWh/day and evening power costs 38c/kWh:

10 kWh × 0.38 = $9.50 / day
≈ $285 / month
≈ $3,420 / year

Batteries significantly increase savings for households with high evening usage or those wanting energy independence.

How a Solar + Battery System Works Throughout the Day:

Morning (Sunrise – Noon):

Panels start generating electricity. Your home uses this first, reducing grid power usage.

Midday (Peak Sun Hours):

Solar production is highest.

Your home uses solar first.
Excess goes to the battery.
When the battery is full, remaining energy exports to the grid for feed-in credits.

Evening (Sunset – Midnight):

Your battery powers your home.

This avoids expensive evening peak rates.

Night (When Battery Is Empty):

Only if the battery is depleted will your home use grid electricity.

Why Solar Works So Well in Australia

Australia is one of the best countries in the world for solar because of:

☀️ High solar irradiation

Most of Australia receives 4–6 peak sun hours per day.

⚡ High electricity prices

The more expensive grid electricity becomes, the more valuable solar and batteries are.

🔌 Government support

Rebates reduce the upfront cost significantly.

🌱 Strong environmental benefits

Solar reduces your carbon footprint and increases home value.

How Much Can Australian Households Save With Solar?

While actual savings depend on factors like usage, system size, and feed-in tariff, many homes save:

Solar Only:

$1,200 – $2,800 per year

Solar + Battery:

$2,000 – $8,000 per year

A well-designed system typically pays for itself in 4–7 years and continues saving for 10+ years.

Conclusion: Solar in Australia Is One of the Smartest Investments You Can Make

A solar system reduces your energy costs in three major ways:

1️⃣ Consumption Savings – using your own energy

2️⃣ Feed-In Tariff Credits – selling excess back to the grid

3️⃣ Battery Night-Time Savings – using stored solar instead of buying power

When combined, these benefits make solar one of the most effective ways for Australian households to reduce bills, increase independence, and take control of their energy future.