Solar energy incentives doubled in NSW

The NSW Government has teamed up with the Australian Government to double the incentives available for NSW households and small businesses to install a solar battery and connect it to a virtual power plant (VPP). This will amount to almost $5000 in upfront benefits for a typical system.

The federal government’s $2.3 billion Cheaper Home Batteries Program will support households and small businesses through a discount on the cost of installing small-scale battery systems. The government said this would reduce the cost of a typical installed battery by about 30%, making this support about double the current incentive available to NSW consumers.

The NSW Government will now almost double its incentive for households and businesses to connect their solar battery to a virtual power plant. From 1 July 2025, the Minns government is increasing the incentive to up to $1500 to encourage more households and small businesses to install a battery and connect to a VPP, with the incentive varying depending on the size of the battery.

Virtual power plants are collections of solar-powered batteries owned by households and small businesses. Members of a VPP are able to generate revenue on an ongoing basis by selling the excess energy stored in their battery to their neighbours and community when demand on the grid is high.

By reducing demand on the electricity grid, VPPs are intended to make the state’s energy supply more stable and less prone to outages, while helping to eliminate price spikes and reduce the cost of energy for all.

The increased virtual power plant incentive will replace the NSW home battery installation incentive, which has been doubled by the Commonwealth program.

In total, this 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 VPP (through the NSW scheme).

“NSW is world-leading when it comes to generating rooftop solar power — and attaching more batteries to soak up our sunshine and store that energy will be good for bills and good for the grid,” said Minister for Climate Change and Energy Chris Bowen.

“We’re working with the Minns Labor Government to make sure more homes and small businesses can slash their bills by installing a battery and connecting it to a Virtual Power Plant.”

The NSW Government said its solar battery incentive had been a huge success, with more than 11,400 battery installations in six months. Anyone with a compatible solar battery, including those installed under the NSW incentive since November, who has not yet taken up the virtual power plant incentive, is eligible for the newly doubled incentive from 1 July.

The Clean Energy Regulator is responsible for ensuring the safe installation of home batteries under the Commonwealth’s Cheaper Home Batteries Program, including the eligibility of products and accreditation of installers. The program builds on Australia’s well established and successful rollout of rooftop solar, which has seen more than four million solar installations and one in three homes adopt solar power.

The NSW Government will continue working with stakeholders on future opportunities for the NSW Peak Demand Reduction Scheme, including considering what new activities could be incentivised.

The Clean Energy Council has welcomed the initiative, with its General Manager – Distributed Energy, Con Hristodoulidis, commenting that the new program will enable consumers to take control of their own energy bills, while simultaneously helping drive down costs for all other households and small businesses — even those without rooftop solar or a battery installed.

“The fact is that home batteries not only drive down energy bills, potentially doubling the savings of a standalone rooftop solar system, but also generate immense value and savings for all other energy customers when participating en masse in a VPP,” Hristodoulidis said. “Our analysis in February 2024 showed the system-wide savings can be to the tune of $190 million between now and 2030.

“Analysis undertaken as part of our ‘Time to Back Home Batteries’ campaign found that incentives of $1000 to participate in a VPP will attract a higher uptake of home batteries connected to VPPs by households.”

Hristodoulidis added that the announcement from the NSW Government, along with the WA Government’s recently announced $337 million residential battery rebate scheme, show “how Commonwealth and state policies can work together to turbocharge the growth of clean energy in our grid at the lowest cost to all Australians”.

“The NSW incentive scheme serves as an effective model for other states to follow suit in the near future. We’d love to see all Australians benefit from a scheme like this and increase their savings,” he said.

Image credit: iStock.com/Eloi_Omella