Victorian households with rooftop solar systems are facing a significant reduction in their energy bill savings, with the average minimum solar feed-in tariff (FiT) plummeting to just 0.8 cents per kilowatt-hour (c/kWh) for the 2026/27 financial year. This drastic change, widely reported this week, stems from the Essential Services Commission (ESC) no longer mandating a fixed minimum FiT, allowing electricity retailers to set their own rates, provided they remain above zero.
The deregulation marks a critical shift in the economics of solar ownership in Victoria, compelling homeowners to rethink their energy consumption habits and consider new strategies to maximise their investment. The era of passively earning substantial credits for exported solar energy is over, replaced by a landscape that heavily rewards self-consumption and strategic energy management.
The Deregulation Impact on Victorian Solar Owners
Historically, the ESC set a minimum FiT that offered a more predictable return for surplus solar energy sent back to the grid. However, for the 2026/27 financial year, the ESC has moved away from this mandate, leading to a fragmented market where retailers now determine their own export rates. This change primarily reflects the increasing volume of rooftop solar generation during daytime hours, which has driven down the wholesale value of electricity at those times.
“The market has shifted toward total deregulation. The Essential Services Commission (ESC) no longer mandates a fixed minimum; however, the average minimum solar feed in tariff Victoria offers for the 2026/27 financial year is just 0.8c per kWh.”
For many Victorian solar owners, this 0.8c/kWh average minimum FiT stands in stark contrast to the 25c to 35c per kWh they might pay to import electricity from the grid during peak evening hours. This disparity underscores the urgent need for homeowners to adapt their energy strategies to avoid the “export trap” – selling power cheaply only to buy it back at a much higher price.
New Strategies to Maximise Your Solar Investment
With feed-in tariffs offering minimal returns, the focus for Victorian solar owners must shift from exporting surplus power to maximising self-consumption. This means using as much of your generated solar power as possible directly within your home. Here are key strategies:
1. Shift Energy Consumption to Daytime Hours
Program appliances like washing machines, dishwashers, and pool pumps to run during the middle of the day when your solar panels are producing their maximum output. This direct use of solar power avoids both the low export rate and the higher import costs. Simple timing adjustments can significantly reduce reliance on grid electricity.
2. Invest in Home Battery Storage
Adding a home battery system is increasingly becoming a critical component for optimising solar investments in a low FiT environment. Batteries store excess solar energy generated during the day, making it available for use in the evening or during periods of high demand, effectively increasing self-consumption and reducing reliance on the grid.
Australian households considering battery storage can benefit from the federal Cheaper Home Batteries Program, which provides an upfront discount via Small-scale Technology Certificates (STCs). This program offers approximately $252 per usable kilowatt-hour (kWh) for eligible systems. For a common 10 kWh home battery, this can translate to a discount of around $2,500 to $4,500 off the upfront cost.
Typical fully installed prices for a 10 kWh home battery in Australia range from $10,000 to $14,000 before the federal discount, dropping to approximately $7,000 to $11,000 after an indicative discount. The STC factor, which determines the rebate value, is currently 6.8 for May–December 2026 but is set to reduce to 5.7 on 1 January 2027, making timely installation beneficial.
For more detailed information on selecting and financing a home battery, refer to our guide: Best Home Batteries for Australian Homes 2026: Performance, Warranties & Value Compared.
3. Participate in Virtual Power Plants (VPPs)
Virtual Power Plants allow multiple home battery systems to act as a single, collective power source, helping to stabilise the grid. In exchange for allowing your battery to be dispatched by the VPP operator, you can receive financial incentives, including upfront bonuses and ongoing payments. This can provide an additional revenue stream beyond the low FiT.
For insights into potential VPP earnings, see: Maximise Your Home Battery Savings: Earn $1,000+ Annually with a VPP in 2026.
4. Implement Smart Energy Management Systems
Modern Home Energy Management Systems (HEMS) can automate energy usage, optimising when appliances run based on solar generation, battery status, and electricity pricing. These systems help homeowners make the most of their self-generated power and minimise grid imports. You can learn more about these systems here: Best Home Energy Management Systems in Australia 2026: Slash Bills by $1,000+ Annually.
The Changing Retailer Landscape
With deregulation, the onus is now on consumers to actively compare electricity plans and retailers. While a high feed-in tariff was once a key factor, the overall usage rates and supply charges for grid electricity, particularly during evening peaks, now hold greater importance. Homeowners should seek plans that offer competitive import rates and consider time-of-use tariffs that align with their ability to shift consumption.
The plummeting Victorian FiT highlights a broader trend across Australia where the value of exported solar is decreasing due to high penetration of rooftop PV. This necessitates a more active and informed approach to energy management from solar owners to maintain the financial benefits of their systems.
Outlook for Victorian Solar Owners
The shift in Victoria’s feed-in tariff structure underscores the evolving nature of Australia’s energy market. While the direct financial return from exporting solar has diminished, the underlying value of generating your own electricity remains significant, particularly in offsetting high retail electricity prices. Proactive engagement with self-consumption strategies and, where feasible, investment in battery storage and VPP participation, will be crucial for Victorian solar owners to continue realising substantial savings on their power bills in 2026 and beyond.