Overview

Australia is a world leader in rooftop solar. As of 2024, 4 million rooftop solar photovoltaic (solar PV) systems are installed, marking a significant milestone for Australia’s 82% renewable energy target. Batteries are critical to achieving net zero as they help secure renewable energy resources (including solar and wind) and improve reliability in the energy system. Batteries also support energy self-reliance and protection against global fossil fuel price and supply shocks, including from traditional dispatchable energy sources such as gas.

Despite high uptake of solar PV systems, in comparison, small-scale battery system adoption continues to remain low in Australia, in part because the upfront cost of batteries is out of reach for most households. The upfront cost to install a battery can range from $10,000 to $25,000, presenting a barrier for many households and businesses. While the payback period for household solar PV systems can be as low as 3-5 years, batteries generally have a payback period of approximately 12 years. As a result, only one in solar 40 homes have installed solar batteries.

From 1 July 2025, the Cheaper Home Batteries Program (the Program) will support Australian households, businesses and community facilities by providing a discount on the upfront cost of typical small-scale battery systems. Government support for battery investment will help alleviate cost of living pressures by supporting more consumers to harness the power of rooftop solar, store cheap renewable energy for when they need it most, lower power bills, and unlock permanent electricity bill savings.

At scale, the Program will also provide broader positive outcomes for the energy system by reducing impacts from minimum demand, export limits, curtailment and high peak prices. This will benefit all electricity consumers, including those who are unable to install solar PV and battery systems. The rapid deployment of small-scale storage will help balance peaks in supply and demand and reduce system costs.

Objectives of this policy paper

This paper seeks to communicate the Australian Government’s policy intent behind supporting battery systems, including pre-assembled battery systems (batteries) and integrated battery energy storage systems (BESS), under the Small-scale Renewable Energy Scheme (SRES). The Department of Climate Change, Energy, the Environment and Water (the Department) has developed this paper and accompanying Frequently Asked Questions to provide more information on key aspects of the Program, particularly eligibility.

The Cheaper Home Batteries Program

The Program will be delivered through an expansion to the SRES and an amendment to the Renewable Energy (Electricity) Regulations 2001 (REE Regs). The SRES is a trusted, established scheme that incentivises system owners (such as households and businesses) to install small-scale renewable energy systems by providing a financial incentive in the form of small-scale technology certificates (STCs). The SRES has been instrumental to the uptake of solar PV across Australian homes and businesses. Extending the SRES to include battery systems reflects how Australia’s renewable energy needs have evolved.

Delivering support for batteries through the SRES has garnered significant industry support. Several organisations, including the Smart Energy Council, Clean Energy Council, Solar Citizens and the Australian Conservation Foundation have advocated for supporting batteries through an expansion of the SRES. Delivering the Cheaper Home Batteries Program through the well-known and effective SRES framework will ensure that Australians are well-positioned to seize the benefits offered by small-scale storage.

Discounted batteries and STCs

The Program will reduce the upfront cost of eligible batteries and BESS (5kWh – 100kWh) installed on or after 1 July 2025 by approximately 30%. This discount rate is equivalent to $372 per kWh or 9.3 STCs per kWh of usable capacity under the SRES in 2025. After 2025, the discount will progressively lessen until it halves by 2030 when the SRES is due to finish. The discount reduction will align with the anticipated decline in prices over time.

The cost of the discount will be borne by the Australian Government. Under the SRES, when installing a small-scale renewable energy system, the system owner has the right to create small-scale technology certificates. The right to create the STCs can be assigned to a registered agent (often installers/designers) at the time the system is installed in exchange for a discount on the cost of the system. Agents can then on-sell the STCs when they have been validated by the Regulator.. Alternatively, system owners may opt to create STCs to sell themselves. In the case of batteries and BESSs, the Australian Government will purchase STCs from the STC Clearing House, thereby absorbing the cost of the discount. This will ensure there are no compliance cost flow-on impacts to consumers, and that liable entities will not have to purchase the STCs associated with battery installations.

Virtual Power Plants

The discount is available to anyone (e.g. households, businesses and community groups) for on-grid and off-grid battery systems. If installing an on-grid system, owners can opt to participate in virtual power plant (VPP) arrangements. To enable immediate and/or future VPP participation, the Program will require eligible on-grid battery systems to be capable of being connected and coordinated through a VPP.

What is a Virtual Power Plant? 

A VPP is a network of small, distributed or consumer energy resources (in this case, batteries) linked and controlled by smart software to function as a single power plant. VPPs coordinate the electricity from connected batteries, and release and dispatch electricity to participate in the electricity grid and even secure the grid. In return, participants may receive revenue which can further reduce the payback period for the battery.

Intended Eligibility

The intended eligibility criteria for the Program are detailed in the table below. The eligibility criteria are draft and subject to change. The amendments to the REE Regs will play a significant role in determining the final eligibility criteria. As such, the eligibility criteria will be confirmed when regulations are in place.