Solar Panels Melbourne, VIC | Analyzing The Cost And Savings

Featured image for solar panels Victoria. The great ocean road and homes with rooftop solar panels.

As sunny as Australia is as a whole, Victoria has low sun hours compared to most of the states. In fact, all other states except Tasmania have more sun. But don’t click away just yet because, trust me, Victoria is one of, if not THE, best places to invest in solar panels despite the relatively low sun hours.

I say this confidently because the return on investment says so. Because the short payback period says so. Because the ultra-generous incentives from the Victorian government say so. Heck, your savings will say so!

“What in the world are you talking about?” you ask. Well, this article is going to tell you everything you need to know about solar panels in Victoria. Here’s a list of everything I’m covering today:

How much solar energy are solar panels capable of producing in Victoria?

How much power solar panels can generate depends on a lot of things. This includes the power ratings and efficiency of your chosen solar panels, their tilt and orientation, atmospheric pressure, and others.

If you want to get a more accurate answer, the best way to do that is to have solar panel installers check out your residence and run their numbers.

To give you some context, though, below are the potential daily, monthly, and annual power outputs of different-sized solar panels installed in Victoria:


Note that these numbers are calculated using the PV Watts calculator using the following settings:

  • Roof pitch: 22.5%
  • Inverter efficiency: 96%
  • Quality and type of solar panels: Standard
  • Installation type: fixed, roof-mounted

Your solar system could have better or worse power outputs, but this should be a good starting point for your estimations.

Get 3 Solar Quotes From Quality Local Installers.

How much money can you save by installing solar panels in Victoria?

Again, that depends on a lot of factors, including your solar panel systems’ power output, how much power you consume, the value of feed-in tariffs, and others.

We have a more thorough discussion about how much money you can save with solar panels, but for now, I have listed sample savings profiles based on the following basic assumptions and averages:

  • The cost of grid electricity is 27.2 cents per kWh.
  • Households have an average electricity usage of 4670 kWh annually and 389 kWh per month.
  • Households have an average monthly electric bill of 105.85 cents per month (27.2 cents x 389 kWh), or 1,270.2 cents per year.
  • 1 kW solar systems produce 112.83 kWh of energy per month, or 1,354 kWh per year.
  • Solar batteries are used, and all of the generated solar power is consumed.
  • Feed-in tariffs are disregarded. Adding them to the equation can make the values below better, but only by a little.
  • Varying weather conditions are disregarded.

Now, obviously, these savings profiles aren’t specific to you, so take them with a grain of salt. But, as it is with the power outputs I showed you, use these numbers as a reference point when you’re considering the switch to solar energy.

While we’re talking about savings, though…

Does the Victorian government have any incentives for solar?

Yes, they do. They have some of the most diverse rebates in Australia, too. Feed-in tariff rates in Victoria aren’t bad either.

Solar rebates in Victoria

  1. Federal rebates: This rebate applies to all of Australia, which, naturally, includes Victoria. The value of this rebate depends on how many small-scale technology certificates (STCs) your solar panels are eligible for. The more STCs you get, the higher your rebate. The higher your rebate, the cheaper it gets to install solar panels.
  2. Solar homes program: The solar homes program is specific to Victoria. Eligible Victorian households can get up to $1400 in rebates and the option to get an interest-free loan.
  3. Solar PV rebate for rental properties: This rebate applies to rental properties. Eligible properties can get rebates of up to $1400 and another $1400 as an interest-free loan.

If you need more information about these solar rebates from the Victorian government, we have a separate and more in-depth article about them.

Feed-in Tariffs

Solar feed-in tariffs (FiTs) are credits that you get from your electricity retailer in exchange for sending your excess solar power to the grid. These credits are used to further reduce your electricity bills.

It sounds nice, doesn’t it?

It is. But there’s a caveat to feed-in tariffs, too. The value of FiTs is far lower than the cost of buying electricity. For example, AGL’s maximum rate is 15 c/kWh. That’s the highest feed-in tariff in all of Victoria, but it still pales in comparison to the average cost of electricity (27.2 c/kWh) in VIC.

Get 3 Solar Quotes From Quality Local Installers.

How much do solar panels cost in Victoria?

Based on our data, solar panels in Victoria cost roughly $1070 per kW. That price fluctuates depending on many things, including the brand and quality of your solar panels as well as the quote you get from your installer.

We also noticed a trend where the cost per kW goes down as the solar system size goes up. For instance, the cost per kW of a 3 kW system could be $1100, but the cost per kW of a 10 kW system could be $950.

I apologize if I’m repeating myself, but, again, these prices are averages based on data we collected. The actual cost of installing solar panels on your home will more than likely be different, so be sure to ask your installer.

Better yet, ask for quotes from 3 installers! For free! We have a network of pre-vetted installers ready to do that for you. Just let us know, and we’ll make it happen.

Looks pricey. Are these solar panels even worth it?

Absolutely, solar panels are worth it. Despite fewer sun hours, the return on investment (ROI) and payback period of solar panels in Victoria are comparable to those in New South Wales and Queensland.

Let’s do some math so I can prove it to you.

ROI of solar systems in Victoria = 1028.79%

I got that number using the following equations:

  • Net savings = annual savings x life span of the solar panels
  • Total cost = cost per kW x system size
  • ROI = (net savings ÷ total cost) x 100.

Let’s put them in action using a 6 kW system size with solar panels that last 25 years as an example:

  • Net savings = $2,641.68 x 25 years.
    • $66,042
  • Total cost = $1070 x 6 kW
    • $6,420
  • ROI = ($6,420 ÷ $6,420) x 100
    • 1028.79%

If this were a business, this would be the equivalent of buying a product worth $1 and selling that product for about $1000. Highly unrealistic, but with solar panels, it’s totally possible because you get savings instead of profit.

As it is with virtually everything about solar panels, though, your actual ROI depends on many things. The equations I used didn’t account for degradation, dirt buildup, varying weather, and other things that affect your savings and power output.

Nonetheless, a properly sized solar system in Victoria will still yield a massively impressive ROI.

Payback period

A payback period is the time it takes for you to pay off the cost of installing your solar panels. The shorter your payback period, the longer the time you get with free solar energy.

To find out your estimated payback period, use this equation:

  • Payback period = total system cost ÷ annual savings

Let’s use the same 6 kW system size as our example.

  • Payback period = $6,420 ÷ $2641.68
    • ~2.43 years

With this example, you have roughly 22 and a half years of free solar power and low electricity bills.

Again, full disclosure. This is all under perfect conditions, as this overly simplified equation doesn’t account for many things. However, even if your payback period lasts 6–10 years, that’s still considered well and good.

Get 3 Solar Quotes From Quality Local Installers.

So… solar batteries. Should you get them?

Solar batteries cost roughly $1500 per kWh of capacity in Victoria. So, if you’re looking at a 6 kW solar battery, a good estimate would roughly be $9000.

The brand of the solar batteries plays a huge role in the price, too. Tesla’s Powerwalls, for example, are going to be more expensive than Sungrow.

Batteries are pricey investments, but they can be worth it, too.

Particularly if you have a lot of excess solar power and can afford the added cost of installing solar batteries.

In other words, it doesn’t make sense to invest in something so expensive if you’re only going to save so little. Let’s say your solar system generates 220 kW per month, but you consume 218 kW. It’s not very practical to invest in solar batteries in this case.

It’s also unwise to invest in a solar battery system if you’re going to make yourself broke because of it.

If you have a lot more excess solar power and can comfortably afford it, though, by all means invest in solar batteries. We have a list of the best ones in Australia to help you out.


In a nutshell, even though Victoria gets less sunshine than most places in Australia, putting your money into solar panels here is a really smart move. Thanks to the quick payback, great returns, and big savings you get—plus the extra push from the government’s generous offers—going solar in Victoria is both a wise financial and eco-friendly choice.

Now, if you’re ready to make the switch, don’t forget about our network of pre-vetted solar installers. Just let us know, and we’ll get you 3 FREE quotes from them right away.