Federal battery rebate: What retailers need to know

The 2025 Australian federal election delivered a clear mandate for an ambitious national home battery subsidy to slash the cost of home energy storage. The initial public response – high interest but also confusion – underscores the need for retailers to focus on clear communication and trustworthy execution. Delivering on that expectation will be key to capturing the full value of Australia’s home battery revolution.

The $2.3 billion Cheaper Home Batteries Program will reduce upfront battery costs by around 30% from 1 July 2025. The rebate is not means-tested and applies to systems between 5 and 100 kWh, capped at 50 kWh of capacity. By integrating into the existing Small-scale Renewable Energy Scheme (SRES), the government aims to leverage established installer accreditation and consumer protections. The program targets one million new home batteries by 2030 — up from just 180,000 systems today. A typical 10 kWh battery would receive about a $3,700 discount, based on $372 per usable kWh in 2025, tapering each year to 2030.

The plan sends a strong signal – the Smart Energy Council declared household batteries as the next priority for the energy transition.

Energy Consumers Australia’s General Manager of Advocacy and Policy, Brian Spak, said: “The rise of batteries represents a major shift to the energy system.”

“This is a smart move to slash energy bills both now and long term,” said Heidi Lee Douglas, CEO of Solar Citizens. “This policy builds on Australia’s rooftop solar success story. Millions of Aussie householders would be financially supported to add a home battery.”

State incentives shift to complement federal scheme

Several states have adjusted their battery support programs in light of the federal rebate.

In New South Wales, a state rebate of up to $2,200 ended on 30 June 2025 — the same day the federal scheme began. Rewiring Australia called the timing “bad news” for consumers who had hoped to stack both incentives. However, NSW doubled its Virtual Power Plant (VPP) participation rebate: one-off cash-back now reaches $550 for a 10 kWh battery and up to $1,500 for a 27 kWh system. According to Amber Electric, the boosted VPP bonus can still be combined with the federal discount.

In Western Australia, the Residential Battery Scheme is stackable with the federal rebate, bringing total support to $5,000 (metro) or $7,500 (rural).

Robert Dunne, WA Sales Manager at Sol Distribution lauded the rebate as “a smart move… [that] will ease the mad dash and stretch the rebate funds further without dragging out install times.”  

Other states vary. Victoria still offers a means-tested $2,950 rebate, but its $8,800 interest-free loan scheme closed to new applications on 30 June 2025. South Australia no longer provides a broad rebate but offers low-interest loans and targeted grants. Queensland currently has no active rebate, although broader clean energy initiatives were flagged in the 2025 budget and election commitments.

“We need to make sure the policy and market settings are right, so the broader benefits of battery ownership are realised for all consumers… to become less and less reliant on their retailer,” said Spak. 

IMAGE: Battery discharging data. Source: Open Electricity.

Battery boom: Industry outlook and early impact

The federal rebate is expected to turbocharge battery uptake. Cost has long been the main barrier, with payback periods often exceeding a decade.

Retailers reported a surge in enquiries following the policy announcement. Origin and SolarQuotes saw a 300% spike in battery interest within a week. AGL noted surging demand with 83% of homeowners interested in installing or expanding battery systems, according to General Manager of Innovation Jane Butler.

Australia installed a record 72,500 home batteries in 2024, and 2025 is set to break that record according to SunWiz. “Australia’s battery market is booming,” said Warwick Johnston, advisor to solar equipment suppliers. “For the first time, there are now more battery systems sold than PV systems. In May, 1.4 battery systems were installed for every PV system. That’s extraordinary – and it’s changing the dynamics of Australia’s solar and storage market.”

Many companies are scaling up: battery manufacturers like AlphaESS report they are rebate-ready with expanded inventory. Australia may well hit the oft-cited target of one million home batteries by 2030.

IMAGE: Battery systems installed by state. Source: SunWiz.

Now the focus shifts to implementation: CEC CEO Kane Thornton emphasised the need for effective design and delivery. If executed well, the scheme could unlock significant system-wide benefits.

Spak explained: “The new scheme should help to equalise demand over the day… As more batteries enter the grid, you will see more energy demand during the middle of the day — when batteries charge from abundant solar power — and less during the evening peak.

“Leveling demand in this way will create benefits for all consumers, because batteries can reduce the amount of large-scale generation required during peak period and the amount of network that needs to be built, all of which consumers pay for.”

Implications for retailers: VPP-ready and competitive

The federal rebate explicitly requires batteries to be VPP-capable (internet-connected and able to respond to remote signals), though joining a VPP is optional. For energy retailers, this presents both risks and rewards. On one hand, customers with batteries may buy less electricity. On the other, retailers can harness VPPs to reduce wholesale and network costs and bid into grid services.

Retailers like AGL, Origin, and EnergyAustralia already offer VPP programs with incentives. For example, AGL offers a $550 credit in NSW for customers who commit a 10 kWh battery to its VPP for 12 months.

Retailers are now competing, with new tariff structures, off-peak charging incentives, and feed-in rates tailored to battery owners. Amber Electric has taken a customer-first approach, offering a wholesale price pass-through model.

“Our customers remain in control of their battery, see every market signal directly, and keep the full financial value their battery can deliver. Our role is simply to give them the technology, automation and transparency to unlock that value,” the company said.

This kind of customer-centric VPP design can help build the trust needed to encourage more people to sign up.

The Australian Energy Council’s CEO Louisa Kinnear welcomed this shift: “Such programs allow consumers to actively contribute to the energy system while being rewarded for their flexibility,” she said.

Consumer trust a critical battleground

Maintaining consumer trust through this transition is not just desirable but essential: without it, even the best-laid clean energy schemes may fall short of potential.

“Consumers have a lack of trust in the energy industry overall,” Spak said. “The main reasons why consumers invest in resources like batteries are lower bills and independence from the grid. To retain consumer interest, retailers will need to innovate and provide offerings that consumers see as beneficial.” 

While AEMO envisions widespread VPP participation, uptake remains low. Consumers just “aren’t that interested because the offering is complex and the benefits are not obvious,” said Johnston.

To address this, retailers are refining VPP models with simpler payments and bring-your-own-battery options. Still, concerns persist around loss of control and value — especially when VPP operators also own competing fossil fuel generation assets, raising concerns about conflicts of interest.

Amber Electric noted that some VPPs “offer little transparency around how and when your battery is used, and even less control when things go wrong… Customers should be able to participate in the energy system without losing control of their own home.”

Redress and regulation

Concerns around redress and oversight are rising. Batteries are costly, and some consumers worry about misleading advertising, corner-cutting installers, or underperforming systems.

“Consumer trust remains a big barrier to VPP uptake,” RedEarth Energy CEO Marc Sheldon said.

While the government mandates Clean Energy Council-accredited products and installers, dodgy marketing tactics emerged soon after the rebate was announced. Installers are warned not to cut corners to offer cheap deals.

Spak added: “We need to make sure consumers are treated fairly and receive a fair share of the revenue their battery might be creating.” 

Regulators are reviewing consumer protections for battery owners. Industry and consumer groups are also responding — through initiatives like the Clean Energy Council’s Trusted Battery Installer, and expansion of the New Energy Tech Consumer Code (NETCC) to cover batteries. Consumers Australia is also pushing for a national strategy and stronger oversight of distributed energy resources.

"Batteries and many other home energy technologies are not currently eligible for external dispute resolution from energy ombudsmen,” Spak said. “Policymakers should ensure that consumers have access to someone who can investigate a claim when something goes wrong with their home battery.