“It’s going to be devastating:” Crisis talks as battery rebate design threatens to kill sales

The solar industry is calling for urgent changes to the New South Wales government’s home battery rebate, after identifying some major flaws in the policy that threaten to devastate the state’s battery market and send businesses to the brink.

The NSW home battery rebate was announced two weeks ago, just one day after the Labor Minns government revealed that it would keep Australia’s largest coal plant burning past its use-by date at a potential cost to taxpayers of hundreds of millions of dollars.

The promise of up to $2,400 off the cost of adding storage to existing rooftop solar systems – and up to $400 for battery owners who join virtual power plants – seems like great news for consumers, but it now appears the policy was rushed out with little thought of how it would affect industry.

Within days, the Smart Energy Council had called a snap “crisis meeting” that was attended by more than 150 members. The SEC has declined to comment on the detail of that meeting, but it is understood it is in ongoing discussions with the state government to try address industry concerns on the design of the battery policy.

The biggest bone of contention appears to be the long delay until the rebate becomes available, in November, which retailers and installers say will kill home battery sales for more than five months as consumers wait to get the discount.

Reportedly, this effect is already being felt in the industry, with companies sharing stories of orders being cancelled and of sales leads drying up.

James Sturch, from battery and inverter giant SolarEdge, says one NSW customer has reported having 10 existing sales canceled within days of the rebate being announced.

“It is absolutely stalling the market,” Sturch told Renew Economy on Tuesday. “Because why would someone install a battery now when they just wait a few months and they’ll get a rebate?”

Sturch, who worked with Sonnen’s home energy storage business in Australia before becoming technical director at SolarEdge, says one of the biggest frustrations for industry is that they’ve seen it all before. But governments don’t seem to be learning from past mistakes.

“It’s kind of similar to when NSW did the feed-in tariff all those years ago, where they just announced it without any actual consideration of how. It’s almost as bad as the Queensland’s battery program…” he says.

Lessons might also have been learned from Victoria’s experience in the late 2010s with the rollout of the Solar Homes rooftop solar subsidy.

In that case, a failure to anticipate the popularity of the solar rebate saw “puny” monthly allocations snapped up within hours, and even minutes, leaving many installers and retailers with no sales and no option but to try their luck again a month later.

This stop-start approach had the effect of putting an artificial cap on the market, with sales all but drying up in-between each month’s allocation, and causing some installers to go out of business. Hundreds attended public rallies led by the SEC to protest the devastating effect the rebate was having on businesses in the state.

The biggest concern for NSW is that the long wait until the rebate kicks in might push some retail and installation businesses to the brink, in what is already a very tough market.

Earlier this year, Brisbane-based Australian battery outfit Redback Technologies shocked the market by entering voluntary administration, just days after announcing the launch of a new home energy storage offering. The company has since bounced back, with a new owner and “reinvigorated and bright future,” but others might not be so lucky.

“It’s hard in retail land right now, it really is,” says Sturch.

“Everyone is really feeling the pinch due to all the interest rate rises. System sales have stalled throughout the country; system sizes have reduced. What people are prepared to spend has gone down because people just don’t have the cash that they used to, and the cost of borrowing has gone up.

“So yeah, [the NSW rebate announcement] is not really doing anyone any favors,” he says.

“It means that, at the end of the day, anyone that’s [selling batteries] is somehow going to have to be dropping their prices, cutting their margins to be able to almost compensate consumers for the couple thousand dollars which they may, or may not, get when the rebate actually emerges.

“A lot of a lot of companies, you know, ourselves included, are looking to see what we can do in the interim, to see if we can do things to help stimulate the market. Because without that, it’s going to be devastating.”

Meanwhile, there are a number of other concerns about the design of the battery subsidy, including around talk that it will be a certificates-based scheme – similar to the federal SRES scheme – rather than a straight-forward rebate.

Some industry members are also concerned about the eligibility criteria for the rebate, including the size of the batteries that can be installed through the scheme. The worry is that it will encourage the installation of systems too small to be of any use in virtual power plants or in supporting all-electric homes with large solar systems and electric vehicles.

“So what it’s going to do is to probably encourage a lot of dumping of the really cheap, small… batteries, to maximise the rebate, as opposed to going with good quality batteries, which are going to give consumers, you know, a much better outcome and return for the long term,” says Sturch.

“The information coming through is very limited. There’s a lot of sort of whispers – it might be this, it might be that, it might be a scaling rebate, depending on battery capacity, or it might be linked to inverted capacity.

“There’s all these things which will probably emerge over time, but … without the information right now, no one [in the industry] really knows what’s happening.

“There was no industry consultation. Nothing,” says Sturch.

“They just did it. It’s a real shame, because it’s not going to deliver the results that I’d have thought that New South government actually wants.”