Federal Labor’s Cheaper Home Batteries rebate needs urgent tweaks to its settings and eligibility criteria, one of Australia’s peak industry bodies has warned, in order to avoid a “boom-bust cycle that could harm industry and consumers.”
The Smart Energy Council (SEC), which worked closely with federal energy minister Chris Bowen on the design of Cheaper Home Batteries, on Tuesday called on the government to extend funding to the enormously successful scheme, while also making “early predictable changes” to its design.
“We absolutely support the objectives of the scheme, but its settings must evolve to make it financially sustainable through to 2030 as originally intended,” SEC CEO John Grimes said on Tuesday.
“A measured recalibration now will protect the scheme’s integrity and ensure more Australians can continue to benefit.”
The SEC says these changes could include looking at rebate levels and system sizing, with new data confirming that the scheme’s current $2.3 billion budget is being eaten up by huge systems sized at 50 kWh and above.
As Renew Economy reported on Friday, the stunning success of the Cheaper Home Batteries scheme continues to defy expectations, with the Clean Energy Regulator last week forecasting it to hit 175,000 valid applications by the end of 2025.
At the same time, this success has been making some in the industry nervous that the funding set aside for the four-year scheme will be exhausted as early as June, 2026.
Speculation has been rife that the rebate could be wound up early. But a much more likely outcome, and one being pushed for by the SEC, is that it will have its eligibility criteria changed to calm uptake and make it more sustainable.
Under current settings, the Cheaper Home Batteries rebate – which is roughly equivalent to $330 per usable kilowatt-hour (kWh) – can be claimed for systems between 5 kilowatt-hours (kWh) up to a maximum usable capacity of 50 kilowatt-hour.
But the 50 kWh discount also can be claimed for systems with a total installed size of up to 100 kWh – an allowance made to get small-to-medium businesses in on the action.
Data shows that rebate applications are increasingly being dominated by systems closer in size to the 50 kWh ceiling – and not through demand from businesses as the data also shows that only 2 per cent of rebates are being taken up by business.
Instead, the rebate is being taken up by an increasing number of households that are choosing to take full advantage of its settings and supersize their systems.
As reported by Renew Economy last week, the latest monthly stocktake from industry statisticians, SunWiz, shows that the 50-75 kWh and the 30-50 kWh market segments grew the most over the past month – by 71 per cent and 58 per cent, respectively.
“In November, the smaller the system segment, the slower the growth,” SunWiz managing director Warwick Johnston said.
The result is that the rebate’s average system size has risen to more than 22 kilowatt-hours, roughly twice the 11 kWh of the average household system size before the rebate. And the rebate’s budget is being exhausted much quicker than expected by far fewer total systems than originally targeted.
This is not all bad. As the SEC notes, the huge uptake illustrates the huge appetite for home energy storage. And it’s not entirely unexpected – Bowen himself has stressed that there are highly likely to be changes made to the settings of the rebate – including to the discount – “at least annually.”
But Grimes says “six-months into the rollout is the right time” to revisit the rebate’s settings.
“The government deserves real credit for delivering a scheme that has taken off faster than anyone expected, now we need sensible adjustments to ensure its long-term sustainability,” he says.
One of the most likely outcomes is that the Clean Energy Regulator will be directed to lower the rebate’s 50 kWh threshold, potentially to as low as 15kWh – as suggested in this article by Macquarie University’s Rohan Best.
Best also suggests that means testing could be introduced, as has been the case for various state schemes, including in Victoria and Western Australia, to ensure households of all income levels are getting in on the action.
For its part, the SEC is holding an industry briefing this week to outline proposals for government.
“Australia is in the middle of building a strong, stable battery industry,” Grimes says. “We cannot afford abrupt policy shifts or an early collapse of the scheme.”
