In this paper, an optimal energy control of a 3 kW residential grid-interactive solar PV system is presented. A typical two-bedroom household within the eThekwini municipality in the city of Durban, South Africa, is considered. The aim is to assess the potential of energy cost saving and cost effectiveness the system can achieve under the new residential feed-in tariff (FIT), referred to as residential embedded generation tariff. Simulation results show that a potential of 69.41% energy cost saving and payback period (PBP) of 19 years can be achieved under the current FIT. By increasing the current FIT by 58%, the energy cost saving is increased by 22.8%, while the period is decreased to 14 years. When the FIT is increased by 71.25% from its current value, a 75% increase in the cost saving is achieved with a PBP of 8.6 years. However, it is shown that the higher the FIT the lesser the need for a battery bank if grid failures are not considered as a constraint. The impact of battery storage and grid electricity price on the profitability of the grid-interactive solar PV system is also analyzed. It is shown that the use of battery storage system will have a positive effect on the system profitability only when the FIT is not attractive. For attractive FITs, the use of battery storage will have a negative effect on the profitability of the grid-interactive solar PV system. Simulation results also show that the higher the grid electricity price the higher the profitability of the system. (C) 2016 Elsevier Ltd. All rights reserved.