The $1.24 billion rooftop solar scheme promised by the Andrews government has been attacked by a leading public policy think tank as a waste of taxpayers' money.

The Grattan Institute has urged Labor to abandon its key re-election pledge to subsidise rooftop solar installation for an estimated 650,000 Victorian homes, arguing that the bold scheme could force up power prices for those not fortunate enough to buy into it.

A Labor promise to subsidise rooftop solar panels for 650,000 homes has been slammed as economically wasteful. Credit:Craig Abraham

The government has committed to pay half the cost of rooftop solar installation for Victorian households on a combined income of less than $180,000, saving them up to $2225 on installation costs and about $890 a year on power bills.

But the Grattan Institute says that the scheme is “a return to the bad old days” of excessive solar subsidies, which will benefit only a minority of Victorians while leaving taxpayers worse off overall.