The Solar and Battery Illusion – Is It Really Worth It in Australia?
As electricity prices continue to rise and sustainability becomes a household priority, many Australian homeowners are asking: is now the time to invest in solar and a home battery system? With state and federal governments offering new rebates — including a recent $4,000 incentive toward home batteries — the pressure to act can feel compelling.
But when you dig into the real-world numbers, the picture changes dramatically. Despite the promising headlines and impressive-sounding rebates, the economics of solar and batteries simply don’t stack up for most people — particularly those living in the southern half of Australia.
This article has used actual figured obtained from reputable manufacturers and installer, who offer at least a 10 year warranty and their products and are likely to be around in 10 years to honour their warranties. Solar and battery systems degrade over time and have a replacement lifetime between 10 and 15 years. These factors have not been taken into consideration below. Adding these factors would make the outcome even worse.
Understanding the Costs
Let’s start with what a typical system costs:
- Solar panels + inverter (5kW system): $7,000
- Battery system (13.5kWh + inverter): $11,000
- Government rebate: $4,000 (reducing battery cost to $7,000)
So, for a solar and battery combo, you’re looking at a total outlay of $14,000.
Electricity Prices Matter
Here are the current Victorian electricity rates used in this analysis:
- Peak (3pm–9pm): $0.36 per kWh
- Off-peak: $0.19 per kWh
- Feed-in tariff (what you earn for sending solar back to the grid): $0.01 per kWh
- Daily supply charge: $1 (~$365 per year)
These figures matter because they dictate how much you save by using your own solar, and how little you’re paid when exporting excess energy back to the grid.
How Much Energy Does a 5kW Solar System Generate?
In the sunny north (like Queensland), a 5kW system can produce around 8,200kWh per year. But in southern states like Victoria, South Australia, and Tasmania, solar output can typically be 50% lower.
That means a more realistic annual figure for these regions is:
- 5kW system × 2.25kWh/day per kW × 365 days
= 4,106 kWh/year
Scenario 1: Solar-Only System
Let’s assume:
- You’re out during the day (typical working household)
- You self-consume only 30% of the solar energy
- The rest gets exported at $0.01 per kWh
Annual Benefits:
- Self-consumed energy:
30% of 4,106 = 1,232 kWh
Savings: 1,232 × $0.30 = $370/year - Exported energy:
2,874 kWh × $0.01 = $29/year
Total Annual Benefit = $399
Payback Period:
$7,000 / $399 ≈ 17.5 years
Verdict: Very slow return, well beyond the typical life of the system’s warranty.
Scenario 2: Solar + Battery System (with $4,000 Rebate)
Assuming:
- 80% of solar energy is stored and used
- 70% of that offsets peak usage
- Remaining 30% offsets off-peak
Annual Benefits:
- Peak usage offset:
2,300 kWh × $0.36 = $828/year - Off-peak usage offset:
985 kWh × $0.19 = $187/year - Exported energy:
821 kWh × $0.01 = $8/year
Total Annual Benefit = $1,023
Payback Period:
$14,000 / $1,023 ≈ 13.7 years
Verdict: Better than solar-only, but still a long and risky investment.
The Reality Check – Why It’s Even Worse Than It Looks
The numbers above are based on ideal circumstances. But in the real world, several issues make it even harder to achieve a worthwhile return:
1. Inverter Limitations
A 5kW inverter can only deliver 5kW at any moment — limiting how much energy you can use, especially during peak times when you need power the most.
2. Self-Use is Hard to Control
Most people leave their system settings on default. Fine-tuning when and how your battery charges and discharges is complicated, and very few households optimise for this.
Battery charging dynamics (constant current -> constant voltage) and settings to prolong battery life, requires considerable engineering, or mathematical background.
3. Most People Aren’t Home During the Day
Most people who can afford these types of systems are also that same people who work during daylight hours. These working households aren’t using power when solar is being produced — meaning they miss out on the main financial benefit of solar: self-consumption.
4. Southern Climate is a Big Problem
In cities like Melbourne, Adelaide, and Hobart, winter sun is weak and short. Solar output drops just when power usage increases, making battery recharging unreliable for large portions of the year.
Conclusion – It’s Not an Investment
Despite the appeal of clean energy and government rebates, solar and battery systems do not represent a sound financial investment for most Australian households — especially in the southern states.
At best, these systems offer a very slow payback period, often well beyond the useful life of the components. And at worst, they offer poor returns and high risk, especially if electricity prices remain stable or decline due to future policy or technological changes.
If you’re passionate about reducing your carbon footprint or want a small hedge against future price hikes, a solar system might still make sense. But don’t kid yourself — this is not an investment. It’s a feel-good luxury purchase with modest financial upside.
Thinking about solar or batteries? Make sure you look beyond the sales pitch and work out the real-world numbers — or you may be out of pocket for over a decade.
Final Thoughts
There may be a non-financial justification for deciding to purchase a battery system in Australia.
If the trend continues for our power companies to reduce our base generation sources such as coal and gas, Australia’s power supplies will have a rocky future. Expect Australia’s power outages to increase in both frequency and duration.
If you are thinking about protecting yourself from these upcoming blackouts, then buying a high quality battery system is good insurance. Note that blackout protection is not a default function of these systems and you will certainly require additional wiring, special configurations and also non-default setting for charge/discharge to meet your off-line power requirements.