Power Up Your Savings: Understanding the New Battery Incentives in Australia
Thinking about adding a battery to your solar system? You're in luck! The Australian government has launched a nationwide "Cheaper Home Batteries" program to make energy storage more accessible for households. These new incentives, which began on July 1st, 2025, can significantly reduce the upfront cost of a home battery, potentially making battery storage a financially viable option for many Australians.
Before we dive into the details, it's important to get up to speed on the basics. Read our Complete Guide to learn more.
How the Rebate Works
The core idea is simple: the government provides a discount on the price of eligible home batteries at the point of sale. This means you don't have to apply for a rebate after the fact; the accredited retailer or installer will deduct the discount directly from your invoice.
Currently, the discount is designed to cover approximately 30% of the battery cost. In practice, this works out to around $311 per usable kWh (kilowatt-hour) of battery capacity, based on the value of Small-scale Technology Certificates (STCs). STCs are a form of renewable energy certificate, and the rebate is calculated based on the number of STCs your battery system generates.
Important Changes Coming in May 2026
Keep in mind that significant changes to the "Cheaper Home Batteries" program are on the horizon. The government has announced plans to increase the program's funding substantially, from $2.3 billion to a massive $7.2 billion! These changes are slated to take effect on May 1st, 2026.
From May 1st, the rebate amount will be adjusted to $252 per usable kWh, and then it will decrease every six months thereafter. This means the earlier you install a battery, the larger the incentive you're likely to receive.
Rebate Calculation and Battery Size
For installations completed before May 1st, 2026, eligible batteries generate 8.4 STCs per usable kWh, capped at 50 kWh usable capacity. With each STC currently valued at around $37 (after factoring in transaction and administrative costs), this translates to a rebate of approximately $311 per usable kWh.
Let's illustrate with an example: a typical 10 kWh battery, with an average price of around $11,120, would attract a rebate of roughly $3,110. This would bring the net cost down to approximately $8,010.
The government has indicated that the rebate factor will gradually decrease each year from 2026 to 2030, starting at 8.4 STCs per kWh in 2026 and decreasing to 2.1 in 2030. These changes are aimed to keep the overall rebate at approximately 30% of the battery costs.
Understanding the Reduced Rebate for Larger Batteries
The government has also recognised that the marginal cost of increasing battery size beyond a certain point is relatively low. Therefore, the proposed changes include a reduced rebate for larger battery capacities (above 14kWh). This adjustment aims to ensure the rebate remains targeted and effective, while still encouraging the uptake of home battery storage.
Eligibility Criteria and How to Claim
To qualify for the "Cheaper Home Batteries" program, your battery system must meet specific technical, installation, and property criteria. These rules are outlined by the Australian Government's Department of Climate Change, Energy, the Environment and Water, so make sure you check those.
There is no means test for the rebate, and it's available per property. If you own multiple eligible properties, you can apply for a separate rebate at each location, as long as each property has its own electricity meter (NMI).
You don't need to apply directly to the government to claim the rebate. Accredited retailers and installers will automatically apply the discount upfront on your invoice. Alternatively, you can register and sell STCs yourself through the REC Registry, but most households find it easier to take the point-of-sale discount.
Potential Savings and Payback
The actual savings you'll achieve with a home battery will depend on several factors, including your system size, energy usage patterns, and location. However, a typical 10 kWh battery can potentially reduce your electricity bills by anywhere from $700 to $1,500 per year, depending on your electricity usage and prices.
Boost Your Savings with State-Based Incentives
Don't forget to check for state-based battery incentives! For example, Western Australia offers up to $3,800 for Horizon Power customers ($380/kWh, capped at 10 kWh) and up to $1,300 for Synergy customers ($130/kWh, capped at 10 kWh). These are stackable with the federal scheme, and come with requirements to participate in Virtual Power Plants (VPP). Also check for interest free loans up to $10,000. In NSW, you may be able to get a sign up incentive for a VPP.
Is a Battery Right for You?
The "Cheaper Home Batteries" program makes energy storage a more attractive option than ever before. The combination of a federal government incentive and potential savings on electricity bills, may finally push home battery storage into the ‘financially viable’ status for a large number of Australians. As with all significant investment decisions, research thoroughly, get quotes from multiple installers, and consider your specific energy needs and circumstances before making a decision.
With the right information, you can harness the power of solar and batteries to save money, reduce your carbon footprint, and increase your energy independence.
