Labor’s $2.3bn Cheaper Home Batteries Program has been broadly welcomed by energy groups as a game changer for power bills, but some voices say the scheme is missing key elements. So what’s the overall verdict?
After Treasurer Jim Chalmers last Thursday stated plans to accelerate the uptake of household batteries in Australia would be revealed soon, the first details were reported on Saturday evening, followed by a torrent of coverage on Sunday.
We’ve covered the initial details on the Cheaper Home Batteries Program here, with the article updated since it was first published as more information became available, and undertaken our own analysis of potential savings from the scheme. In a nutshell, the up-front cost of a new home battery system of 5-50kWh useable capacity will be subsidised at around $372 per kilowatt-hour useable capacity (theoretical maximum and minus any admin fees) from July 1 *if* Labor wins the upcoming election.
Batteries installed between now and then will also be eligible, but cannot be switched on until July 1 or after. Also, a battery must be associated with an existing or new solar system.
It seems Labor was open to the idea of extending the scheme to non-solar households, but that required putting legislation before Parliament instead of just a change to regulations. And given the current climate (no pun intended), this would have been complicated to say the least. Perhaps this can be tackled down the track if Labor is returned to office, although there’s been no commitment to that I’m aware of.
So far, the response to Labor’s election pledge has been generally positive.
Smart Energy Council: A Win-Win For All
The Smart Energy Council played a key role in helping Labor shape this policy.
“The Cheaper Home Batteries Program is the most important development in consumer energy since Australians first gained access to subsidised solar panels,” Smart Energy Council Chief Executive John Grimes said. “It’s important to understand that this policy will help reduce the power bills of everyone, not just those who can get solar and a battery. Less demand on the energy grid means fewer price peaks, a win win for all.”
CEC: Significant And Welcome
The Clean Energy Council also welcomed the announcement.
“Not only is this good news for homeowners, but small businesses and community battery owners stand to save even more with the first 50 kWh of capacity for eligible larger batteries (up to 100 kWh), also covered by the scheme,” said the CEC’s Con Hristodoulidis. “We’re pleased to see the Government using the existing Small-scale Energy Scheme (SRES) to deliver the discount – with batteries to be added to the scheme retailers and installers already know well, making the process easy.”
Australian Energy Council: VPPs Key To Maximising Value
The AEC wants to see more focus on Virtual Power Plant (VPP) participation through the program. While batteries must be VPP-ready, there’s no requirement to join a program.
“There are a significant number of households unable to install solar and batteries, including many vulnerable customers and renters,” said AEC Chief Executive, Louisa Kinnear. “Whilst this scheme will provide material benefits for those able to access a battery, encouraging VPP participation would help broaden the benefits of storage and rooftop solar generation and see reduced costs for all.”
But even if a battery isn’t connected to a VPP, it still brings broader benefits to the electricity system – although VPP participation can enhance this.
ACOSS: Good, But Go Further
The Australian Council of Social Services (ACOSS) recognises batteries reduce peak energy demand in the evening, putting downward pressure on wholesale electricity prices and network costs – resulting in cheaper energy bills for everyone. It welcomed that the program would be fully funded directly rather than the costs recovered through electricity bills.
“However, if parties are serious about providing targeted energy bill relief to people with the least, there must also be further investment in measures like thermal efficiency, electric appliances and solar for low-income housing and renters,” said ACOSS Acting CEO Edwina MacDonald.
Climate Energy Finance: Just What We Need To See
“This is exactly the policy support needed to immediately start providing Australian consumers enhanced support to access a lot more distributed energy resources – in particular residential batteries to support even more rooftop solar,” said Tim Buckley, Director of Climate Energy Finance. “This leverages the existing grid transmission and distribution structure, this benefits all electricity consumers and can be deployed fast – in days, rather than decades, like nuclear!”
However, the organisation would have liked to have seen the subsidy extended to apartments.
Coalition: You Just Wait
Leader of the Nationals David Littleproud was interviewed on ABC’s Insiders program yesterday morning and spent close to two minutes dodging the original question asked by David Speers, which was:
“Do you support this sort of idea?”
Mr. Littleproud says we need to fix the fundamentals.
“And that is to flood the market with gas to get Australian gas back into the grid.”
Mr. Littleproud said we’ll see the rest of the Coalition’s energy policy in the “coming short period”, which is rumoured to also feature support for residential energy storage.
Aside from that, The Australian (paywall) reports a Coalition claim Labor is “cooking the books” on the cost of the scheme, which Labor has denied. Labor says the initiative has been independently assessed and included in the budget, with planned tapering and annual reviews to ensure its effectiveness.
So, what does SolarQuotes sleuth, blogger and fact-checker Ronald Brakels think of what Labor has cooked up? His initial thoughts:
“It appears to be a well- thought-out scheme compared to the usual state scheme. At this time it seems fairly simple, which will keep compliance costs down. As it stacks with battery subsidies such as those in NSW and WA, everyone with a rooftop suitable for solar in these states should get a battery unless their electricity consumption is unusually low. These states are already good locations, so it’s like a triple battery blessing for them. But even with the subsidy, it will be hard to make batteries pay in VIC and the ACT.”
Ronald also believes the program should be expanded.
“If their goal is to support the grid, when they can change legislation, they should make the scheme available to households and businesses without solar as these batteries are likely to provide more grid support bang per kWh.”
As for the potential for major battery system price hikes as demand builds:
“Some good news is that Australia – due to its relatively low population – is a much smaller part of the international home battery market than it used to be. This means the subsidy – hopefully – will not raise the hardware cost of systems by much.”
One reservation Ronald has about the Cheaper Home Batteries Program is the significant drop in the subsidy at the end of every year, in line with how the SRES operates. If the cuts were made every six months instead, that would cushion the impact.
“Big subsidies followed by big cuts are a problem.”
We’ll have more details and commentary on the scheme as further information becomes available. Stay updated by subscribing to the SolarQuotes newsletter.
For more on how much this incentive could potentially save off the cost of a battery, and some potential problems with the program, read our deep-dive explainer here.
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When Ronald says “even with the subsidy, it will be hard to make batteries pay in VIC and the ACT”, why would that be the case?
Hi Karl,
Basically just because Victoria & ACT have low prices for power, the ACT pays reasonable feed in tariff and Melbourne is the least sunny capital city in Australia. Even Hobart get’s less than 180 days per year that are overcast.
You might still like the reliability of having battery backup though, that can be priceless.
Thanks Anthony. That’s good insight. We’ve been waiting to finish renovating our house in the ACT before deciding on whether to go solar or solar/battery. We also assumed an election sweetener like this would come.
As much as I love the idea of saving money and reducing emissions, you still have the initial outlay costs. So have been hesitant on moving forward.
Point taken, but Ronald also makes the point that non-solar homes would do well with a battery under the scheme but for the legislation issue. So even under-performing southern solar could just be a bonus on a battery that justifies itself on its own – and gets you through the SRES hurdle to be allowed to claim.
The rebate can pull the LCoS from a current ~30c/kWh down below 20c (14c/kWh on the 16kWh SigenStore I have scoped for me, pending a Labor win). With that, it pays for itself on any of a number of ToU tariffs available (some go from 10c or free off-peak up to 50c peak). I would see battery-only homes doing well with just 5-10kWh to cover the peak (key to the ‘bang for your buck’ point made (for the grid and solar duck), because that means two or more homes disappearing from peak demand instead of my one solar home getting 16kWh).
The utility of a battery depends on your ability to charge it and to empty it. In the southern states, consider the case where you have reverse cycle heating and cooling. In practice we use it only a little for cooling in the summer, and mostly when the 10 kW solar is really cooking, so we would put away only about 4 kWh into the battery before it’s full and then we are back to earning only feed-in tariffs. We use our reverse cycle hard in the winter, but a 10 kWh battery will be exhausted before 8 pm and it will have nothing left to offer us in the morning. Going bigger doesn’t help because in winter a 10 kW solar system won’t surplus enough to fill a 15 or 20 kWh battery. Autumn and spring offer a better opportunity to work the battery, but the upshot is that in the southern states you really don’t have the match enough of the year between solar surplus and household demand for the battery to do its work and earn its keep. Having done the sums, the $4000 rebate still won’t tempt me.
You do not have to project very far ahead (unless this scheme is a raging success) to a point in time where all retailers will be offering a solar sponge type tarriff in the middle of the day – where you could then charge your battery. Sooner or later the AER has to stand up to the DNSPs who claim too much power on their networks during the day and mandate that all Retailers have a solar soaker tarriff.
Craig
I am in an embedded network in NSW. Pretty well all the free-standing houses in the complex have solar, but because individual houses do not have an NMI meter, they are not entitled to the NSW rebate for home batteries. Will the proposed Commonwealth scheme be different?
Great question Brian,
I’ll have to ask about that but it might be a detail they’ve yet to finalise.
Is there going to be a cap of maximum subsidy? Ie maybe 4000?
If no, and someone just installed ie 50 kWh of battery, it will then cost the gov close to 20k. That would be a lot of money to subsidy
Hi Chris,
$18,000 is the theoretical maximum battery subsidy.
However we’ve had STCs payable on 99.99kW solar power systems since forever.
In today’s market that’s 829 STC certificates and at $36ea, it’s nearly $30,000 paid by Australia’s 200 biggest polluters for you to have cheap energy.
I have a 6kw solar system and have a 120kw per month feed in is it worth my while to install a battery
Hi Neville,
It’s all about time of use. If you can’t move your consumption to the daytime then a battery will work well. Try our calculator here and it will use your own data from your own meter to calculate an answer.
Any subsidy is welcome.
I’ve contacted battery supplier in Adelaide 2,3 months ago. Got a quote from him and I’ll wait for government rebate if Labor wins of course.
But I can bet ,my quote wil go up about 4K once the deal is on. Supplier and installer dishonesty. That’s how it works, it’s a scam. So what’s the point.
Hi Tom,
That isn’t how the cost of solar PV has panned out using the same STC incentive mechanism for the last dozen years. Please let us know what you’ve been quoted and what the details are for the hardware.
Cheers
There is plenty of competition on the market. Any installers trying to fleece people won’t be competitive on price so unlikely to last long.
That said, when there are good incentives to buy, demand will I care which will put upwards pressure on prices.
Always get multiple quotes so you can get a better gauge on the market.
Whole lotta opinions in this article but no clarity
I am still not comfortable putting a lithium ion battery on the side of my house due to fire risk. Are there any sodium ion units on your rader that may be released in time to take advantage of this scheme? Anything from PowerCap?
Hi Brad,
Best thing available off the shelf right now would be lithium titanate (LTO) from Zenarji.
Pretty sure they drive nails though them and they still won’t catch fire.
Brad – LiFe PO4 is extremely stable. The risk of fire is much lower than say a gas connection or an ICE car sitting in your garage. As always, you have to weigh these things up yourself but I would have zero concerns with a quality LiFe battery from a reputable manufacturer and installer.
I think lithium batteries get a bad rap because of the numerous fires from cheap Chinese eScooters and eBikes. Not only are these NMC or LiPo rather than LiFe but they come with very substandard charging systems and a BMS that is probably under-rated for the job.
I’m in Victoria and have been having a 5.4 kWh array since 2013. It used to make peak 4.5 kW/hr during summer days but only 3 kW/hr this last summer.
After July 1st, if I install 25 kWh battery at roughly the cost of 25K, does it mean I would get $9300 subsidy from the federal government? Plus do I get $8800 interest free loan over 4 years from state government?
If all these are true, I would be paying up front 25K – (9.3+8.8) = $6900
Route 2: If I only install a 12 kWh battery at the cost of 15K, I’d get $4464 subsidy. Add in the state government interest free loan and I would be paying up front 15K – (4.464+8.8) = $1736
But if I decide to add more battery later, I wouldn’t get the incentive again.
Are my calculations reasonable? What are your thoughts?
Also, I might have to add a second solar system (6.6 kWh) for roughly $1000 more.
Hi Charlie,
Without going into specifics, the incentive will likely be in the order of $350kWh by the time the there are fees, margins & market values factored in.
You only get one bite at the battery incentive to my knowledge.
More solar is a no brainer in any case.
Try and get everything under the same brand ecosystem, including provision for EV charging, so it will all play nicely.
Thanks for the reply.
Same brand eco system sounds reasonable but if I install more solar + inverter now and home batteries in a few months, there is a good chance they won’t be the same brand.
I’ll keep doing more research.
Hi Charlie,
Many hybrid systems (except perhaps Powerwall 3) can be installed with batteries added later. ie Fronius Gen24 with BYD, iStore, Sungrow, GoodWe and some models of Sigenergy too.
There was a comment on the battery subsidy saying it is worthwhile unless you have unusually low electricity consumptions. What do you deem unusually low consumption?
Hi Ross,
The average house uses between 16 & 20kWh/day according to my addled memory, but in my experience anyone who has a bill showing less than 6 or 8 kWh/day is very modest.
If you have minimal consumption overnight, say just an efficient fridge and an internet router, then a battery can’t save you much.
To try the calculator and see for yourself, click here and follow the prompts.
Still on the 44c rebate for a 6.0kW system that runs out in a couple of years in SA. SAPN, the monopoly that runs the scheme will cancel the rebate if you change anything (despite any changes they do).
As usual all smoke and mirrors!
Unfortunately ‘cheap’ doesn’t mean economically worthwhile so this electoral bribe by Labor remains a waste of time for many. It’s less than some subsidies that have been offered by various states, and even those weren’t enough to make batteries viable.
Obviously it depends on your use and the cost of your power, but so long as electricity remains relatively cheap, your consumption remains relatively low, and prices don’t soar, batteries simply won’t make economic sense.
Hi George,
You could perhaps explain that to the 1 in 5 customers who are already installing batteries even before this initiative was announced. They must see some value in it.
Labor could give me 100% off a battery, and I still wouldn’t vote for them.
Power among everything else has sky-rocketed over the last few years, a few subsidies here and there are just band aid fixes, our power prices in Australia are out of control,
A battery will still be out of reach for those who are struggling. I for one can’t afford to drop $10,000 on a battery. Nor do I think my aging solar system would really benefit from it.
We were much better off in our case installing a green catch power diverter. Much better r.o.i
Facts are facts. A hot water diverter can only capture so much energy. On a sunny day in summer, my tank will be at temp well before 11am. What then? A home battery won’t cost $10K – that’s the whole point of the subsidy.
And let’s look at what Dutton is offering – a pie in the sky nuclear scheme that will force everybody’s electricity rates to rise and won’t even come to fruition until 2033 (optimistically – history says a 10 year lead time and budget blowouts) and even when it does, at enormous cost to the taxpayer, it won’t bring down electricity rates (they’ll actually increase because nuclear is more expensive than coal and gas and much more expensive than renewables), it won’t support peak demand or even off peak demand and it won’t replace aging coal power plants. I love nuclear energy – it’s clean, it’s reliable but the time to do it was 60 years ago when it was relatively cheap to build. Worse still it will cap renewable investment at 54%.
Point taken, but Ronald also makes the point that non-solar homes would do well with a battery under the scheme but for the legislation issue. So even under-performing southern solar could just be a bonus on a battery that justifies itself on its own – and gets you through the SRES hurdle to be allowed to claim.
The rebate can pull the LCoS from a current ~30c/kWh down below 20c (14c/kWh on the 16kWh SigenStore I have scoped for me, pending a Labor win). With that, it pays for itself on any of a number of ToU tariffs available (some go from 10c or free off-peak up to 50c peak). I would see battery-only homes doing well with just 5-10kWh to cover the peak (key to the ‘bang for your buck’ point made (for the grid and solar duck), because that means two or more homes disappearing from peak demand instead of my one solar home getting 16kWh).
I’m not too sure how this will help me. I’m a disabled veteran living in a block of units in social housing (NSW) and on a pension. So how on earth is this idea going to benefit me? Here’s why I’m sceptical!
1. I’ve no where no put a battery except behind my head outside of my unit’s bedroom, which I really don’t relish that idea.
2. I’m in social housing, so I can’t actually buy one.
3. Where I live gets really cold in winter, so again, there is no adequate storage or protection from the elements where I am (central west NSW), especially when mid-winter it has gotten to -15C.
As far as I’m concerned, this is nothing more than another broken Labor promise in the making, I’m still waiting on his $275 lower power promise.
Hi Mick,
Firstly we should point out that the $275 promise was made on the back of information available to the then opposition. Optimistic or not, it wasn’t accurate because Angas Taylor deliberately delayed the statutory advice on the default market offer, (issued by the Australian Energy Market Commission) until after the last election.
Secondly, the scheme could easily be described as “middle class welfare” but the flip side of that coin is that it leverages a lot of private money into providing electricity infrastructure.
Reduced loads on the network and delayed spending on network upgrades (because consumption doesn’t grow even as the economy/population does) means lower distribution costs. So the DNSPs who are responsible for about half the bill don’t get to raise prices.
To be honest I think they need to extend the scheme to situations just like yours and I’ll probably write an article to explain that.
This new subsidy will almost certainly mean I put in a battery in the next year. What I now want is clear advice on what size battery will suit me best based on my generation/consumption pattern (all recorded by my Fronius inverter) and then a quote on the installation cost.
In WA it does not seem to be worthwhile to instal batteries. With my simple 6.6kW/5kW 3-phase inverter and an FIT of 2c/kWh and 10c after 3PM PLUS up to one federal pre-election subsidy and up to two additional state subsidies I have not paid for any electricity in the last two years and I am still in credit.
WA did get $700 in a federal subsidy and Qld got $1,000.
Then there might even be a technical problem in a three-phase system to get electricity from the battery during a power failure?
In a 3 phase system there is no problem getting electricity from the battery in a power outage. When you get it installed you can move your essential loads to a single phase.
The issue is if you have installed a 3 phase solar inverter, you can’t actually keep that inverter running during a blackout unless you have a hybrid inverter that can DC couple to a battery and usually a box on the wall that controls that. If you want to keep your 3 phase inverter running during a blackout you will probably have to upgrade your inverter unless it’s a Fronius Gen24 or an already compatible hybrid inverter. Solaredge are offering a free inverter upgrade if you buy their battery.
Hi John,
You’re right there are a good deal of people who use single phase backup on three phase premises. We have an article coming soon explaining one of the technicalities that can make this difficult.
We should clarify that solar edge are offering what they call a “free upgrade” because despite promising, and indeed selling a 3 phase unit, they can’t offer a three phase hybrid which is capable of running “off grid”
They have a three phase hybrid, but it will only work as a grid connected machine, to shift energy to the night time.
For people that bought their three phase unit, solar edge have offered free replacement single phase inverters, because otherwise they would have had to refund the money under Australian consumer law.
We are about to install Tesla PW3 in a few weeks, already paid deposit ($500+). Provided Labor win the election and this goes ahead, what is the actual saving?
Is it $350 x 13.5kWh = $4725?
If that’s the case, should we be cancelling the install and wait?
Hi LT,
I wouldn’t encourage you to cancel, get it installed before the rush.
In the scheme of things, waiting to turn it on until 1st July won’t hurt much.
If you had a hybrid like a Fronius, Sungrow, GoodWe or Sigen then the solar can go on and the battery can come later, but as an all in one box the PW3 will just have to wait.
Thanks for the reply.
So we can go ahead with the installation but just not turn it on until the scheme is in place? In this case, will we be claiming the rebate by ourself or we will need to talk to our installer to do it for us?
Hi LT,
Installers usually offer STCs as a point of sale discount. Some people do go through the process of registering their own certificates but I wouldn’t advise that at this early point in time. There’s a lot of detail to hammer out, not least the election.
So where are these batteries from?
Are thry Australian made?
Are the materials in the batteries responsibly, environmentally and sustainably produced?
I am a sceptic!
Hi David,
You can buy Australian made batteries from Zenarji, Power Plus, Gen Z, Vaulta and probably others I’ve forgotten. Inside them the cells all likely made in China. However, there’s much more local content than a fully imported battery.
These are all 48 volt nominal batteries, so you can use them with the incomparable Australian made Selectronic SP Pro and/or AERL solar charge controller.
For grid hybrid applications, it may require a German made SMA or possibly a Noark/Deye inverter.
I don’t have all the answers in terms of sustainable resource extraction. However, I can point out that recent shows on channel 7 about “dirty nickel” are a premeditated beat up and have nothing to do with batteries.
Australia is the world’s number one lithium miner, While 40 per cent of our waste stream, 12,000,000 tonnes per year is coal ask. Despite incentives this waste isn’t being reused, but it’s dumping means you can’t eat the mud crabs from Lake Macquarie for instance.