Energy minister Chris Bowen spruiks Labor’s battery plan during the federal election – a scheme that has been revamped less than six months after launch.
The federal government has earmarked an additional $4.9bn for the Cheaper Home Batteries Program, while revamping it so incentives taper off for oversized home batteries that were rapidly depleting the scheme’s budget.
How Is The Federal Battery Rebate Changing?
The original $2.3bn budget has been massively expanded to $7.2bn over the next four years. The federal government expects this will see more than two million Australians install a battery by 2030 – double the amount initially predicted.
This is anticipated to deliver 40 gigawatt hours of additional storage capacity.
The funding boost will be accompanied by tightened requirements, with the rebate to decline at a higher rate every six months from May 2026, instead of the annual reduction initially planned.
The value of the rebate will in particular be reduced significantly for larger home battery systems.
Why Is The Scheme Being Revamped?
As first revealed by SolarQuotes, the federal battery rebate was on track to churn through its original allocated funding by mid 2026.
The $2.3bn budget was supposed to last across the four-year forward estimates period, but SolarQuotes’ resident fact checker Ronald Brakels crunched the numbers and found it was on track to run out in just one year.
We’ve been sounding the alarm on this issue since late July – less than a month after the scheme launched.
The Department of Climate Change, Energy, the Environment and Water claims the incentive has been reworked to align with declining battery costs, with the aim of maintaining roughly a 30% discount for battery systems.
Incentive To Drop Faster & More Frequently
The Cheaper Home Batteries Program discount is provided through government purchases of Small-scale Technology Certificates (STCs).
Subject to regulations being made, the STC factor, which determines the number of STCs a system is entitled to create per kWh of useable capacity, will drop every six months instead of every year, and by a steeper amount.
Source: The Department of Climate Change, Energy, the Environment and Water.
Reduced Rebate For Larger Batteries
The main reason the rebate is being used up so quickly is due to households installing much larger home batteries than expected – and in many cases much larger than they actually need.
At a Smart Energy Council briefing earlier this week, it was revealed that battery sizes had averaged about 28kWh since October – well up on last year’s typical install size of 10–12 kWh.
To rein this in and encourage households to install more appropriately sized batteries, the rebate will only fully apply to smaller systems, and taper down for larger capacity batteries:
- From 0 kWh up to 14 kWh (inclusive) the STC factor will be applied at 100%.
- For every kWh greater than 14 and up to 28 kWh (inclusive) the STC factor will be applied at 60%.
- For every kWh greater than 28 and up to 50 kWh (inclusive) the STC factor will be applied at 15%.
This change will also come into force from the start of May, subject to regulations being made.
It appears that as before, batteries up to 100 kWh nominal capacity are eligible under the Program, but STCs will only be provided for the first 50 kWh of usable capacity.
The original structure of the rebate helped fuel an epidemic of offers for batteries much bigger than homeowners need – often paired with inadequately-sized inverters.
More Rules Add Complexity
SolarQuotes founder Finn Peacock told the ABC that because the scheme had launched with an approach to pay out “per kilowatt hour, not per battery”, it had effectively incentivised installers to sell consumers the biggest possible batteries that were eligible.
“So if there’s X kilowatt hours’ worth of cash in the pot and people are getting bigger systems, then fewer people can benefit from it,” he said.
Industry Accepts Need For Changes
The Smart Energy Council noted that with changes not to come into place until May, 2026, there was ample forewarning for industry and consumers.
This ensures that installers and homeowners getting batteries in the next couple of months won’t suddenly be copping a reduced rebate for jobs already booked in.
“We are a responsible industry that believes in spreading the benefits of solar and batteries to as many people as possible. If that means changes to the rebate we support that,” Smart Energy Council Chief Executive John Grimes said.
That sentiment was echoed by GoodWe Australia Country Manager Dean Williamson.
“We do agree that ensuring the ongoing viability of the scheme is essential and support calls to adjust the program. We need time and sensible adjustments, but believe the industry would rather have this than a sudden end,” he said.
Jim Hill, CEO of Nepean Solar, said the “sensible” change could soften the industry’s tendency for a boom-bust cycle.
“As a small business owner we need to be able to plan for the ordering of stock, training and upskilling of staff, and indeed the taking on of new apprentices, this approach allows us to do that with confidence,” he said.
A Boon For Australia’s Energy Storage Needs
Despite challenges with the incentivisation of oversized systems, the scheme has been hugely successful in pushing home batteries into the mainstream and adding significant storage capacity to the grid at a critical moment, as coal plants reach the end of their operational life and large-scale renewable projects roll out slower than needed.
Energy Minister Chris Bowen on Friday said nearly 160,000 batteries have been installed since the scheme launched on July 1.
“This is a remarkably strong take-up and it is the outer suburbs of regions which have led the way with regional electorates in New South Wales, including Riverina, having the highest home battery take-up. When we announced this policy at the election some people said, ‘oh, this is just the inner city, this is just for wealthy people’. The opposite has been the case,” he said.
The tweaks to the scheme follow the federal government’s decision earlier this week not to extend energy bill subsidies.
Stay up to date with the all the latest on the battery rebate by subscribing to SolarQuotes’s free weekly newsletter., and read up on whether solar batteries are right for you in our deep dive guide.
About Max Opray
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About 30kWh is about as much as can be useful to the wider public footing the subsidy bill, so this sounds about right.
About 10kWh for overnight and then about two hours of your export limit – 10kW at best on single phase, so 20kWh. Total: 30kWh.
E.g. on Amber you can generally get two hours in the evening peak at 20c/kWh or more; and retailers are getting their heads around something like this being a viable peak FiT from batteries. You need at least 15c/kWh to cover what you pay up front for every cycled kWh (LCoS), so 20c is reasonable for making the whole investment earns its keep.
Once VPPs get a bit better at addressing these basic battery-owner economics, this kind of peak exporting from bigger batteries (and great public benefit) shouldn’t be too hard as set-and-forget.
At the least, we should see a battery home use 5kWh for their dinner and export the same for two neighbours.
What this should do to peak gas-lead price spikes and average prices should pay for the scheme.
I wish the government had taken a different approach. Say after 14 kWh, anything above that must be available as part of a VPP. And say have the connection be a requirement for 7 years for example.
This has a few benefits. The Australian public gets access to a distributed (no additional transmission), on demand power (reduces evening peaks) that also absorbs the glut of daytime solar power. The public gets that access with most of the cost voluntarily paid by the private owner. The owner now avoids electricity costs, gets the better peak evening tarrifs as well as the full big battery in the future.
It feels like a good opportunity missed to drastically increase our electrical storage capacity right where it’s needed, at a great price and quicker than what large utility scale facilities can achieve.
I am glad that another myth was debunked: “only wealthy people from inner city are installing home batteries”.
I can’t prove it but I think that smart people are installing home batteries.
Now, let’s work on debunking other myths such as “only wealthy people can afford electrical vehicles, in Australia there is no need for home insulation if you have AC, large PV arrays do not pay off”, and another myriad of other myths and half truths that people believe without questioning!
Another perfect example of how ‘the market’ is a myth. And leaving the rollout of renewables to this fictitious market is a recipe for chaos and corruption. Without proper regulation fo this scheme for example, people do what they always do in the absence of regulation – they milked it for maximum status. The bigger the battery, the better.
Influencers and ordinary folk following them installing ridiculous oversupply of home storage, way beyond any sensible cost-benefit calculation. And also feeding the Robinson Crusoes out there, the off-gridders who see the grid as the enemy (spare me) and begrudge spending even a dollar a day to access it.
It’s great to see the government leading here, and they should have been targeting households from the beginning of their first term. It would have derailed much of the anti-renewables strategy.
Another broken political promise.
Why am I not surprised.
Can you outline which promise has been broken? This is the original promise:
https://alp.org.au/news/labor-to-deliver-one-million-energy-bill-busting-batteries/
Seems to me they have delivered on it.
Small businesses and community facilities will also be able to access the subsidy, with support for up to 50 kWh of batteries sized up to 100 kWh eligible.
50kWh batteries Not Intended For Households !
Interesting to see you’ve gotten the information early? When do these changes take effect? – especially the teired rebate allocation ?
As most installers I know are booked with 3 months of work nearly and accepted quotes?
All changes will apply from the start of May, to ensure they don’t impact battery installs that have already been booked.
Feels sensible but also a missed oppurtunity to require these heavily subsidised overly large batteries to join a VPP. Giving people a huge subsidy to essentially become non-participants in the network is counterproductive. There should be some joint responsibility here that if the taxpayer is going to give you a heap of coin you should also have a responsibility to share that benefit with the wider community. Not everyone can fill their roof with solar and a massive battery, but they should be able to share in some of the benefits of their neighbours system that they have helped fund. It might also demand a higher quality product and install than some of the rubbish that might be being peddled. Requiring participation in VPP ( well designed) seems like it should have been on the table
This sounds like a sensible move and I agree we don’t want to make the rules too complex.
I hope there is scope to adjust the other way if this ends up reducing demand for household batteries.
14kWh gets us through a couple of cloudy days but we are far more frugal with energy use than most households.
Let the moaners scream about SUBSIDIES, but if this scheme reduces peak period demand, it is worth every cent.
It’s going to like July 2025 again, but this time installers will be spruiking 50 kWh batteries with gusto and everyone who hasn’t has a battery will be getting them even at higher than today’s prices.
FOMO