Labor's home battery subsidy kicks off 'strong demand'. Here's what you need to know
Slashing the price for home batteries was one of Labor's flagship policies during the election campaign.
With the election now in the review mirror after an overwhelming win for the Albanese government, many Australians want to know more about the Cheaper Home Batteries Program.
We unpack how much it can save, when it starts, and how it can benefit Australians with and without solar systems on their rooftops.
What's in Labor's home battery subsidy?
Labor's $2.3 billion program applies to people with existing solar, or for those wanting to invest in a new solar-plus-battery set-up.
It won't be means-tested and offers a 30 per cent discount on batteries for households, businesses and community facilities like sports centres or town halls.
The scheme is being directly funded by the Federal Government, and will be delivered through the existing Small-scale Renewable Energy Scheme, which has been providing similar subsidies on solar for Australians since 2011 and is credited with driving the country's early uptake of rooftop solar.
The scheme provides incentives to purchase renewable energy systems like rooftop solar.
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"I think that this scheme is going to change Australia," said the CEO of the Smart Energy Council, John Grimes.
"If you deploy one solar panel or one rooftop solar system, it doesn't mean very much, but we've now deployed over 4 million rooftop solar systems.
"Combined, they have a greater energy generation than the entire coal-fired power fleet in Australia.
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We're going the next step and we're actually unlocking that and making it dispatchable so you can actually use it when you need the electricity.
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According to Labor's modelling, households with existing rooftop solar could save up to $1,100 extra off their power bill every year, and up to $2,300 a year for those with new solar, about 90 per cent of a typical bill.
The discounts are based on the size of the battery and will apply for up to 50 kilowatt-hours.
When can I get a discounted battery?
Today! That's the short theoretical answer.
The scheme officially kicks in at the start of the financial year, July 1, but it's designed so batteries can be purchased and installed now and are eligible when they are "switched on" in the new financial year.
Photo shows
A man's hand near a solar battery in a house.
WA's Labor promise to introduce a $5,000 subsidy for residential batteries if re-elected has been welcomed in principle but it has thrown the industry into turmoil.
This avoids a situation like in New South Wales and Western Australia where recent battery subsidies were introduced with a long lag between their announcement and start-date, leading to people delaying their purchases and causing frustrations in the industry.
The national battery scheme can be used in addition to those state discounts, leading to even bigger savings for households in those states.
The CEO of the Smart Energy Council said he knows businesses already selling batteries based on the scheme.
"One of our contractors actually runs a small solar business in rural New South Wales. He sold three batteries on the weekend alone," Mr Grimes said.
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I think that the demand for this has been unbelievably strong. It's been unprecedented.
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What are the benefits of getting a battery?
Batteries help maximise Australia's solar energy, with the country having the highest rate of rooftop solar in the world. In Queensland and Western Australia, every second home on average has solar.
Australia is now in the situation where we have abundant solar power in the middle of the day, and homes with solar don't need any power from the grid and are instead sending their excess into the system.
Batteries can help making the most of the solar power households produce.
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But when solar production drops off in the evening, just as people return home, the electricity grid has a sudden spike in demand.
Solar households with a battery can charge it when they are producing more power than they need, and then use that solar power later in the evening, thereby reducing the amount of power being used from the grid at crunch times in the evening.
Think of it as time-shifting solar power from the daytime to the evening.
"It's like putting a rainwater tank on your house to capture water and then have it on tap when you need to drink," Mr Grimes said.
Using that stored solar power also saves on power bills.
What size battery do I need?
Obviously, every home is different and energy needs vary, but the Smart Energy Council crunched the numbers recently on household power usage and came up with this conclusion: the battery you need to lower bills is smaller, and therefore cheaper, than you might think.
It found that to avoid using power during that evening peak, over 90 per cent of households could get by with a battery as small as 6 or 7 kilowatt-hours.
That's smaller than the average battery installation, with two of the most popular batteries in Australia being around 13 kilowatt-hours.
Mr Grimes cautions people to consider what suits them best.
"You get one chance to apply for and receive the rebate for your house. And so, really, people should be thinking about getting the biggest solar battery they can afford," he said
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But the converse of that is, a small battery is better than no battery at all.
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Batteries are usually "stackable" meaning additional capacity can be added at a later date but the rebate won't apply.
In terms of size, the intention isn't to go completely off-grid with a battery-and-solar system; instead, it's about maximising how much of your own rooftop solar you can use throughout the day, reducing reliance on the grid and also thereby also reducing power bills.
However, if there's a blackout, homes can use their battery to keep the power going without disruptions, and in the event of a multi-day outage, like the recent ex-tropical cyclone Alfred, can keep the lights on for days.
How much does a battery cost?
Some of the most popular batteries currently in Australia, from BYD and Tesla, are both about 13 kilowatt-hours and cost roughly $12,000 and $14,000 installed, before any subsidies.
At the launch of the policy, Labor said the average saving would be $4,000 off a typical household battery. Remember, other state subsidies could reduce the costs further.
The economic case for getting a battery will change for each household depending on their typical power consumption and solar production, so it's important to work out if a battery makes financial sense in your situation.
Household batteries are the same technology as electric car batteries, so the unprecedented growth in electric cars is also driving down costs.
"The competition in the market is really fierce. That's a good sign for consumers because it means there'll be a race to the top in terms of quality … it produces competitive pressure in terms of price," Mr Grimes said.
How do batteries help the grid?
One of the caveats for the battery rebate is that they have to be compatible with virtual power plants, or VPPs.
VPPs work by coordinating household batteries and how they interact with the grid as a whole. For example, if there's a threat of a blackout, batteries could be instructed to push power into the grid to stabilise it.
Photo shows
Pippa Buchanan shows the battery that lives in her shed.
Experts believe virtual power plants could play a vital part in our future energy system.
Under the scheme, the batteries won't be connected to any VPP scheme but will just be required to have the technical capability to be integrated into one at any future date.
Marnie Shaw is an associate professor at the Australian National University's school of engineering and her research focus is energy storage. She believes having some control over household batteries is a huge opportunity.
"If we are able to coordinate our household batteries and our electric vehicles, it means that we'll require many fewer grid upgrades. And so that can potentially save us billions.
"We need to have smart control of our energy resources to result in a lower-cost future grid."
Ms Shaw says more batteries will help displace coal from the grid entirely, reducing Australia's overall emissions.
What if I can't get a battery?
This scheme is great if you are one of the lucky Australians who own a home and can afford a battery.
There have been frustrations that renters and low-income home owners are missing out, and the Greens campaigned on a household solar and battery package for these groups.
Ms Shaw says the government funded a number of community batteries during the last election that help out all households.
Photo shows
A chart shows the breakdown of energy generation over the course of a day, including coal, gas and renewables
Our energy system is evolving at breakneck speed. Here we look at how our power grid works, what more renewables mean for energy prices, how nuclear fits into the picture, and how we might build a grid fit for the future.
"Those [community] batteries are important because they provide more equitable energy storage. You don't have to have your own house, you don't have to be a house-owner to participate in a community battery scheme," he said.
There's also been significant investment in grid-scale batteries, and Ms Shaw says household batteries were the missing piece.
"It's got to the point now with grid-scale batteries that they no longer need government subsidy. So it makes sense now that the government is shifting the priority to look at different scales of storage."
But even homes without a battery will still benefit from more of them around the country.
The electricity system works as a market, so when power demand spikes in the evening, the wholesale cost of power is driven up.
If more Australian homes have batteries, they won't be drawing power from the grid at those critical moments, leading to lower peak prices across the entire market.
The Smart Energy Council modelled what would happen to peak power prices if there were 1 million batteries installed in Australia, and found that it would save $1.3 billion every year on wholesale power prices.
Plus, the electricity system is built to have capacity for those peak moments so lowering peaks means that less investment is needed for those maximums.
Battery boom by 2030
Labor is expecting to hit over 1 million new batteries installed under the scheme by 2030, a huge boost from the current estimate of 320,000, according to the solar consultancy Sunwiz.
While it's an exciting opportunity for many home owners, there isn't much time between the election and the official start of the scheme, which concerns some in the industry.
Mr Grimes says there are still details that need to be worked out and won't happen until the relevant minister — likely Chris Bowen, continuing as energy minister — is sworn in to cabinet.
"This is an area of concern and needs to be an area of genuine focus," Mr Grimes said, urging people and the industry not to get too impatient.
He said while details may not be clear for a couple of weeks, it was important the government nutted them out quickly to avoid flow-on effects on the market and business.
But overall, Mr Grimes was bullish about the impact the battery policy would have.
"Not only will it change Australia, but I think this program will actually change the world because the world will see what's possible when you unleash distributed renewable energy, empower individuals who are making their own investment, but actually help them get over the line to do that," he said.
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Then this is a model for how we should think about energy across the whole world.
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This might sound hyperbolic, but Australia's solar rollout leads the world and has driven prices significantly lower than in other countries.
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