Why Australia's solar feed-in tariff dropped (again) in 2026 — and what to actually do about it

Why has the FiT dropped so far?

When rooftop solar first became common in Australia, retailers paid feed-in tariffs that often exceeded what they charged for grid power. That made sense in 2012. It does not make sense in 2026.

The wholesale electricity price during the middle of the day — exactly when residential solar is exporting — has collapsed. On a sunny weekday across the NEM, midday wholesale prices regularly go negative. The market is awash with solar generation it cannot use, because demand is lowest precisely when supply is highest. This is the well-documented "duck curve" problem. Retailers can't on-sell your noon kWh for anything, so they pay you accordingly.

Every state regulator has formally acknowledged this. The IPART benchmark FiT range for NSW for 2024–25 sat between roughly 1.5 and 6 cents per kWh, down from over 10 cents only a few years ago. The Essential Services Commission in Victoria has set declining minimums each year. South Australia and Queensland are on the same trajectory. The direction is set; the only question is how quickly individual retailers pass the change through.

The flat retail price you pay for the same kWh hasn't fallen to match. Network charges, retail margins, and renewables-firming costs keep the price you pay during evenings at 30–40c/kWh depending on your state and tariff structure. So the gap between "what your exports earn" and "what you pay to buy the same kWh back" has widened. That gap is the entire subject of this article.

How big is the gap, really?

For a typical 6.6 kW household solar system in Australia that exports around 4,000–5,000 kWh per year, the dollar gap looks roughly like this:

• Exported energy revenue at 4c FiT: 4,500 × $0.04 = $180/year
• Same energy bought back at 33c grid rate: 4,500 × $0.33 = $1,485/year
• Annual gap: $1,305/year of value walking out of your roof and back at retail price.

Your numbers will be different — different system size, different consumption profile, different state, different retailer — but the structure is universal: you are exporting at one price and rebuying at roughly eight to ten times that price. The Export Worth calculator gives you your specific gap in about 30 seconds.

Option 1: Shift loads into the daytime (free)

The cheapest fix is also the most boring: use more of your own electricity when the sun is on the roof. Run the dishwasher at midday instead of 7pm. Charge devices during the day. If you have ducted air conditioning, pre-cool the house at 2pm so the evening setpoint is easier to hold.

This costs zero dollars and reclaims real money. The cap is your baseline daytime occupancy — if nobody's home from 9 to 5, there's only so much load you can shift. But for retired households, work-from-home households, and weekenders, it's often the first 20% of the gap closed for free.

The honest limit: load-shifting alone rarely closes more than a third of the gap. The remaining two-thirds is the hot water tank and the evening peak — and you need hardware for those.

Option 2: Hot-water diverter

Most Australian households heat water electrically. A standard electric resistance hot-water system (HWS) draws 3.6 kW for a few hours a day, usually overnight on a controlled load. That load is one of the largest individual electricity costs in a typical home.

A diverter is a small piece of hardware (typical install $800– $1,400) that redirects your solar export to the hot-water element when the sun is shining, instead of letting the energy flow to the grid at the low FiT. Result: you heat the tank with your own free solar instead of paying retail to heat it overnight.

For households with the right setup, this is the single highest ROI move available. Typical payback in our calculator sits between 2.5 and 4 years for an eligible household. After payback it's effectively free hot water for the remaining life of the tank.

But it's not for everyone. A diverter only helps if you have an electric resistance tank, the tank is accessible to an electrician, and you have enough excess solar to actually heat it. Households with gas or heat-pump hot water get little or no benefit. Single-occupant households often don't use enough hot water to justify the install. The HWS Diverter ROI calculator tells you which group you're in — and crucially, will tell you it's a bad idea when it is.

Option 3: Home battery

The conversation everyone wants to have. The federal Cheaper Home Batteries Program launched in mid-2025 introduced a rebate worth ~$252 per usable kWh on the first 14 kWh (tapering above that, nothing beyond 50 kWh), which knocks roughly $2,500–3,300 off a typical 10–13 kWh residential battery install.

Even with the rebate, batteries are expensive. A typical 10 kWh system installed in 2026 lands between $9,000 and $13,000 out-of-pocket after rebate, depending on brand and installer. The economics depend on three things: the size of your nightly consumption (a battery only helps if you can actually use what it stored), the gap between your FiT and your retail rate (the per-cycle arbitrage), and the warranted cycle life of the battery itself.

For households with high evening consumption and a generous-sized solar array, a battery can pay back in 7–10 years on current numbers. For households with lower evening usage or smaller solar systems, payback can stretch past the warranted life of the battery itself, which means you never actually break even.

The hard part is honesty about which household you are. The Battery vs Diverter calculator models both options on your actual numbers with the 2025 rebate factored in, and tells you which one wins for your specific case — including the cases where the answer is "neither".

Option 4: Do nothing

This is the option no installer will offer you, so it's worth saying out loud: sometimes the right answer is to leave things alone.

If your annual export gap is $200, a $1,200 diverter has a six-year payback, which is fine but not exciting. A $10,000 battery has a 50-year payback, which is to say it doesn't pay back at all. For low-consumption or low-export households — single occupants, holiday houses, off-grid hybrids — the maths often says wait. FiT rates may continue to fall, but so will battery prices, and the federal rebate doesn't expire until 2030.

The cost of waiting is the dollar gap you keep losing each year. The cost of moving too early is locking in a multi-thousand dollar piece of hardware whose payback assumes prices the market may not actually deliver. The right answer depends on how the maths lands for your house, not what feels right.

How to actually decide

The honest decision framework is:

• Step 1. Calculate your real export gap. Not the installer's estimate, not a vendor's spreadsheet — your gap, with your retailer, on your tariff. The Export Worth calculator does this in 30 seconds.
• Step 2. If your gap is under about $400/year, seriously consider doing nothing or just load-shifting. Hardware will not pay back at that gap unless it's very cheap (basically, a diverter).
• Step 3. If you have eligible hot-water hardware and a real gap, the diverter usually beats the battery on payback. Check the HWS Diverter ROI against your setup before considering a battery.
• Step 4. Only after the cheap options are ruled out (or already deployed) does a battery become the best marginal move. Run the Battery vs Diverter tool with the federal rebate to see whether the numbers actually work for your house.

If you want all four steps in one pass, the all-in-one Compare tool runs each option in ranked order for your inputs and tells you which to pursue first.

The bit nobody tells you

Every vendor calculator on the internet exists to sell you the product the vendor sells. A diverter company's calculator will always conclude a diverter is the answer. A battery installer's calculator will always conclude a battery is the answer. This is not a moral failing on their part; it is how the funnel works.

The reason this site exists is that nobody else has an interest in telling you the right answer is "do nothing for now." Our calculator will say that, when it's true. The full methodology is public, the monetisation model is public (we don't make money yet), and the calculator source code is on GitHub. Audit the maths line by line if you want.

We'd rather be useful than viral. If this piece helped frame the problem, the calculators are where the actual work gets done. Run yours.