Australian state pairs increased VPP incentive with national battery rebate
The NSW battery installation rebate is set to end on 30 June 2025 with the state government saying households and small businesses will instead need to access the new federally funded scheme to secure a discount on the cost of installing small-scale battery systems.
The federal government’s $2.3 billion (USD 1.5 billion) Cheaper Home Batteries Program, set to launch on 1 July 2025, offers a rebate of up to AU$372 per kWh of usable capacity for batteries between 5 kWh and 100 kWh, with rebate eligibility capped at the first 50 kWh. The rebate is expected to reduce the cost of a battery by about 30%, or AU$4,278 when applied to a “typical” 11.5 kWh system.
The NSW solar battery rebate, introduced in November 2024 and meant to run for years, offered between AU$1,600 and AU$2,400 off the cost of a battery, depending on its usable capacity.
Previous commentary from the federal government indicated that its scheme would be stackable on top of existing state-based battery subsidies but that has not come to pass with the NSW government confirming that its battery installation discount will not be available beyond the end of the month.
Instead, the state government said it will increase its incentive for households and businesses to connect their battery energy storage systems to a virtual power plant (VPP), and it can be combined with the federal rebate program.
“The increased virtual power plant incentive will replace the NSW home battery installation incentive,” the government said in a statement. “It will stack with the Commonwealth solar battery incentive.”
“It means NSW households and businesses will be able to access double the current incentive for installing a battery, through the Commonwealth program, and double the current incentive for registering it with a virtual power plant through the NSW scheme.”
The VPP connection incentive previously offered between AU$250 and AU$400, depending upon the battery capacity. The incentive was available to be claimed twice, upon installation and again three years later. The NSW government said the payment has now been increased to an upfront payment up to a maximum AU$1,500.
NSW Energy Minister Penny Sharpe said the scheme is designed to drive the expansion of VPPs that are expected to play a key role in the state’s future energy system, helping manage peaks in electricity demand and decrease reliance on fossil fuels.
“We know the best benefit for the grid comes when these batteries are linked together, and NSW wants to be world-leading in encouraging households and small businesses to be a part of that,” she said.
“By increasing battery uptake we’re reducing demand on the whole grid, putting downward pressure on bills for everyone.”
The update on the NSW battery rebate scheme comes after the Western Australian government announced that its battery rebate would be combined with the federal government’s subsidy initiative to jointly fund the installation of up to 100,000 residential battery energy storage systems throughout the state.
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