The NSW Government has released new details about the zero-interest Empowering Homes loans program, which will see loans of up to $14,000 offered to households, but with no guarantees that households will be financially better off under the program.
The details have been published in a ‘market sounding’ paper released by the NSW Department of Planning and Environment, seeking feedback from the industry on the proposed design of the Empowering Homes program.
It is the most amount of detail made available about the design of the loans scheme since its announcement as an election promise in February, with the program being funded through the NSW Government’s Climate Change Fund, the state’s flagship initiative to support increased clean energy uptake.
Under the Empowering Homes program, NSW households will be offered loans of up to $9,000 for the installation of a battery storage system, and up to $14,000 for a battery system combined with a rooftop solar system.
Access to the loans will be means-tested, with loans limited to owner-occupiers with a combined household income of up to $180,000. This will mean that renters will be locked out of the program, however those living in townhouses or apartment buildings could be eligible for a loan, provided permission is received from any relevant strata body.
The NSW Government will stagger the availability of loans, with just 8,000 interest-free loans being provided in the first year of the NSW program, progressively increasing each year, aiming to provide up to 42,000 loans annually by the seventh year of the program.
A similar approach is being taken in Victoria, where the first batch of around 3,300 rebates available under the Solar Homes rebate were exhausted within days.
Industry associations are already calling on the Victorian Government to reduce the means-testing threshold of the Victorian Solar Homes rebate program from $180,000 to $90,000 to curb the flood of applications under that program and to better target the rebates to cash-strapped households.
The NSW Government will largely take a hands-off approach to running the program and will seek expressions of interest from companies able to act as the program’s administrator, as well as a financial service provider for the loans.
Internal budget documents obtained by the Greens NSW revealed that the NSW Government has approached the Clean Energy Finance Corporation has a potential provider of loan finance under the Empowering Homes program.
The program will provide up loans to support the installation of up to 300,000 solar and battery systems, over the course of 10-years, with the loans to be repaid through savings achieved in reduced household energy costs.
However, the NSW Government has again warned there is potential for the value of loans taken out by households to exceed the savings generated through systems installed under the program, raising the risk of lumping households with extra debt and of loan defaults.
The cost savings of an appropriately sized rooftop solar system have been well established, particularly when solar power can be used to offset increasingly expensive grid electricity. But the cost benefits of battery systems are less clear, with households to be encouraged to properly consider their needs before taking on a loan.
“While households should be able to make energy bill savings from their system, it should be clear that the NSW Government does not guarantee that these savings will be equivalent to or exceed the loan repayments. Delivery partners and approved system suppliers must be mindful of sales claims about any net savings in energy costs in their marketing materials,” the document says.
The NSW Government will encourage service providers to support households to make an informed decision about the type and size of system, and the size of the loan, before making a decision to borrow money to cover the costs.
The loans will be provided on an interest-free basis, with the NSW Government covering the interest costs of the loans, as well as the potential costs resulting in households defaulting on the loans.
The program will also draw upon the accreditation and system safety requirements developed by the Clean Energy Council (CEC), ensuring all systems installed under the Empowering Homes program are completed are installed safely, use equipment on the CEC approved lists, and meet the CEC’s best practice guides.
“We are also working with the Clean Energy Council to leverage their accredited industry program to ensure appropriately trained and qualified installers are used to meet strict safety standards,” a department spokesperson said.
“We released a market sounding paper this week and consultation is ongoing with industry and stakeholders to make sure this program delivers the outcomes announced. Further risk mitigation work will take place as part of the final program design, with the program ready for launch in the Summer.”
The NSW Government hopes that an additional 3,000MW of residential battery storage capacity will be installed under the program, incentivising up to $3.2 billion in private investment in residential clean energy technologies.
Systems installed under the program will also be required to be “pre-enabled” for virtual power plant (VPP) operation, allowing for the bulk coordination of systems, with facilitating the use of the battery storage systems to support grid stability and reliability, but details are not yet available about potential VPP operators, or how households may benefit through by having their systems connected to the VPP
The NSW Government had previously cancelled a previously announced virtual power plant program, to redirect $50 million in funds to the Empowering Homes loan program.