Solar battery rebate expanded to apartments and big energy users for up to 30 MWh in game-changing move

New South Wales has quietly rebooted the state solar battery rebate, and expanded the scheme to offer significant discounts on storage for apartments, small to medium business, and on batteries sized up to 30 megawatt-hours for the state’s commercial and industrial sector.

The amendments to the state Labor government’s Peak Demand Reduction Scheme (PDRS) were signed off by energy minister Penny Sharpe late last month and have been published on the NSW Climate and Energy Action website, here.

And they have the potential to change the game, again, on behind-the-meter solar and storage and its contribution to the grid in a state that remains heavily dependent on coal power.

The changes essentially reactivate the PDRS battery installation discount that was snoozed last year following the launch of federal Labor’s Cheaper Home Batteries (CHB) scheme.

The decision to snooze the scheme was driven by the desire to avoid people “double dipping” into both rebates. Instead, the PDRS offered a further discount to households that signed their battery up to a virtual power plant (VPP).

Under the latest amendments – which are yet to be formally announced by the state government, and which will not come into play until September 1 – not much changes for households, who will still be restricted to VPP benefits only if they are also accessing the federal rebate.

For small businesses, however, the state’s certificate-based rebate is partially reactivated – including with CHB stacking for all government facilities and for minister-approved Exempt Energy Programs (EEPs).

The headline changes, meanwhile, are the addition of rebate stream for apartment buildings, which means buildings with more than four dwellings and no existing battery can apply for discounts on storage of between 20 kWh and 200 kWh, with certificates limited to 5 kWh per dwelling. Stacking with the CHB rebate is allowed up to 100 kWh.

For small to medium business (SME) – no residential buildings or data centres allowed – rebates apply to batteries sized between 20 kWh to 200 kWh usable capacity (capped at a four-hour battery), with CHB stacking up to 100 kWh and the offer of a higher incentive if the battery is installed alongside a new solar system.

For the commercial and industrial (C&I) sector, rebates can be sought for systems sized from 200 kWh up to a whopping 30 MWh of usable capacity, with a 10 MWh cap on certificates.

Much of the detail of the scheme remains to be clarified and confirmed by the government in due course – the above interpretation of the fairly complex settings and rules of the amended PDRS may contain inaccuracies and should be cross-checked – details will be updated as needed.

But Renew Economy understands that the feedback from the industry so far is largely very positive, particularly from the C&I solar sector, which has been patiently waiting for incentives to drive battery and solar uptake by big business and industrial customers.

Smart Commercial Energy CEO Huon Hoogesteger says the early calculations show the PDRS changes could significantly reduce the pay-back period for businesses that have been wanting to install solar batteries but have held off due to cost.

“Break-evens for batteries are naturally sitting around seven years at the moment, [with the PDRS] that will drop down to under four years, which is significant.”

“[What it also] means is much larger battery size systems… will come into the market, which are easier to manage for the VPP operators and the electricity retailers.

“Another great thing about this program is that it’s going to encourage additional solar installation,” Hoogesteger adds, noting that the C&I sector in Australia remains vastly underserved, compared to the opportunity that is available.

“[And due to the settings], you know the biggest rebates will be gained by not just adding a battery, but by adding solar as well.

Even the two-month delay before the scheme kicks in, in September, has been welcomed by some as a useful block of time to consult with customers and start ordering kit.

“We’ve got a little bit of time to warm up and stretch before what we hope is a very exciting time in the industry,” says Hoogesteger.

The biggest concerns, ahead of the rebate changes, are the availability of properly qualified electricians and – as is almost always the case when subsidies are announced – the establishment of rules and regulations that will keep out dodgy operators and “cowboys.”

“Getting good quality installations is going to be the biggest [challenge], … [it] invites a bunch of cowboys, obviously, every time there’s government rebate, and we’re afraid of what that means for the market,” says Hoogesteger.

“The good thing about commercial solar is that it requires a [development application],” he adds. “It requires a certain level of engineering, and so I guess some of those cowboys who exist in the Cheaper Home Batteries scheme won’t transfer across.”

Ultimately, the emergence of a rebate scheme that focuses on bigger and more complex battery storage applications is considered well overdue.

“Unfortunately, Cheaper Home Batteries was really only for homes,” Hoogesteger tells Renew Economy. “It really wasn’t making use of that commercial opportunity.

“I’ve been part of about five different submissions, and … conversations with the Department of Water, Energy, and Climate Change in New South Wales, and also federally – everyone has been asking the same question:… How do we solve the missing middle?”

Hoogesteger says it is also encouraging to see that the NSW rebate is “basically a market mechanism” which has a built-in floor price for certificates, that should act to keep the scheme in check.

“It’s good to have a market that reflects the amount of installations going in, because it kind of creates a natural handbrake, rather than what we saw with the Cheaper Home Batteries … [which] got oversubscribed and even became too buoyant, too exciting.”

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