Industry insiders say we need to take another look at the way the battery subsidy scheme has been criticised. Bigger batteries mean more clean energy that can be pumped into the grid when it’s needed.
After the uptake of the cheaper home batteries scheme completely exceeded the cost of the $2.3 billion initially allocated to help households and small businesses get the benefits of renewable energy, including installing solar batteries, federal Energy Minister Chris Bowen has announced “urgent” expansion to the scheme, claiming most of its budget has been spent in just six months.
The expansion is estimated to cost $4.9 billion, increasing the spend over the four years of the program to $7.2 billion.
The government said the original initiative saw 155,000 households and small businesses take up the grant, which delivered 3.5 gigawatt-hours of battery storage, which it said is almost twice the level before the program. During this period, battery systems up to 100kWh could access a 30 per cent discount.
The government said it was expecting to see “more than 2 million Australians install a battery by 2030”. [Although we couldn’t see how the numbers would add up].
Notably, an average household should only need a 10kWh battery.
Industry observers told The ABC that rebating people on a “per kilowatt hour” basis rather than a per battery basis has fuelled a rush towards bigger systems up to the maximum eligible size of 50 kWh, “draining the budget” sooner than anticipated.
They also point out that most houses would only use about 10 kWh of power overnight and would struggle to fill a system with five times as much storage, ending up with batteries that will “never fill up and sit there empty”.
But the government will now crack down on the support available based on the size of the battery through a “tiered” support system, where larger systems will receive a reduced subsidy from 50kWh onwards up to 100 kWh. These changes will start from batteries installed from the start of May 2026.
Steve Hennessy, consultant at WT Partnership and former chairman of the Chartered Institution of Building Services Engineers (CIBSE), told The Fifth Estate he was not sure “draining the fund” was the right message.
“The bigger the battery pool, the bigger the opportunity to shift renewables to when they are needed most. This is where VPPs come in. Batteries can soak up excess solar during the day and put it back into the grid when the sun stops shining.
“Someone with an 8 kW solar system could generate 40 kW or more during a summer day. If they’re not at home and using power, it makes sense to store that and put it to good use at a later time.
“Conversely, in winter, on the days when there is a large amount of wind power, the batteries can absorb excess renewable energy when it would otherwise be curtailed and feed it back into the grid when the wind dies down.
“From an engineer’s perspective, the bigger the battery, the greater the opportunity to undertake renewable energy load shift. If you look at it this way, you won’t see big batteries as being a negative.”
The NSW government continues to get it wrong
Earlier this year, the NSW government received flak for ending support for battery installations, refusing to stack its available grant with the federal Cheaper Home Battery scheme, despite its federal counterpart promising its scheme wouldn’t override any existing state benefits.
The state government said at the time that the funding for its Peak Demand Reduction Scheme would be redirected to increasing incentives for Virtual Power Plants to enable people to share their solar energy with each other. Households would be offered up to $1500 to install and connect their batteries, and consumers can claim six years’ worth of incentives upfront by joining.
Hennessy pointed out that the size of the batteries eligible for the scheme must be less than 28 kWh, meaning any battery systems over that capacity would not be eligible for the scheme.
“Good on them for encouraging VPP uptake, but it’s counterintuitive to limit the size of the battery when bigger batteries will deliver better outcomes. Especially given that people are installing bigger batteries, this reinforces the need for the NSW government to encourage the bigger battery owners to sign up to a VPP.
“They will get a better outcome if they rethink the maximum battery size limitation.”
Hennessy suggests to those getting batteries that companies such as Amber can help consumers “hand control” their batteries.
“They will charge your battery from the grid when your solar is insufficient, and the grid price is low, and put that charge back into the grid at times when it is favourable.”
And we have an installer shortage
According to a Clean Energy Regulator report compiled by Green Energy Markets, the number of rooftop solar systems currently being installed is also approaching its lowest in three years – thanks to a more saturated market from the battery scheme. In the first nine months of 2025, not a single month recorded a year-on-year increase compared to the same period in 2024.
Green Energy Markets analyst Tristan Edis told The AFR that the slowdown was due to a shortage of installers, as solar retailers were now prioritising the more lucrative battery sales.
“Installers are rushed off their feet doing battery installs and are less inclined to sell solar systems,” Edis said.
There are also long-term structural issues causing the decline, such as the reduction in daytime energy prices, which reduced the payment a household can get back from energy retailers through feed-in tariffs to “near zero”. This caused Bowen to flag plans to force retailers to give consumers free power for three hours a day.
The other issue was that there was simply less roof space remaining on roofs already with solar panels to add more installed solar.
Earlier in the year, installers also said the government had announced the subsidy three months in advance without any notice to the industry. This left installers with no cash flow as households were delaying their purchases, while also planning difficulties for how to implement the policy.
I think that for any battery of over say 15kWhr, the rebate for the additional capacity over 15kWhr should only be available if you sign up for a VPP. This would mean anyone getting a lot of subsidy needs to contribute to the greater good. If someone only has enough battery for their own needs then they don’t need to sign up because they are reducing the morning and evening peaks anyway