Subsidy changes prompt battery installation collapse

Installation rates for household batteries dropped by more than 70 percent following changes to a major taxpayer-funded subsidy program, according to figures released by the Clean Energy Regulator. The sharp decline occurred in May, when the federal government revised the Cheaper Home Batteries Program by reducing rebates for larger systems. Data shows just over 20,000 battery systems were installed in May, compared to nearly 80,000 in April under the previous, more generous terms. A similar number was recorded in June, indicating the impact of the new rules continues. The change followed a decision made in the run-up to the 2025 federal election, when Labor introduced its battery subsidy scheme. The policy, which allows households, small businesses, and community facilities to receive up to 30 percent of the upfront cost of a battery system, has been widely popular. Over 450,000 batteries have already been installed, with the government aiming for two million by 2030. Under the original design, the subsidy significantly reduced the cost of a typical 10-kilowatt-hour battery by around $4,000. However, the structure allowed customers to access far greater subsidies for larger systems, with a 50-kilowatt-hour system receiving approximately $18,000 in taxpayer support. Warwick Johnston, managing director of solar consultancy SunWiz, noted that much of the increased demand prior to the policy change was driven by the government’s own deadline for revisions. He described this pattern as characteristic of the solar industry, where demand fluctuates heavily based on government incentives. “This often happens in solar industries when subsidies shift,” he said. “You’ve brought forward a lot of customers that might otherwise have bought in an orderly fashion. They have all rushed to buy before that deadline. So you’re actually going to have a quiet period afterwards.” Johnston also explained that the industry had exploited the subsidy structure, using economies of scale to justify larger systems. “The industry had figured out that the economies of scale that apply to these batteries meant that once you got past a certain point, certain size, then the subsidy was funding a very large portion of the subsequent capacity of the battery,” he said. This led to situations where some customers purchased systems that were unnecessarily large for their needs. To address concerns about over-selling, the government adjusted the subsidy rules in December, limiting the full rebate to the first 14 kilowatt-hours and capping total support at 50 kilowatt-hours. At the same time, the government allocated an additional $5 billion to the program, bringing the total cost to $7.2 billion. While some argue that the new rules will help curb excessive spending, others believe they may inadvertently discourage adoption among households that genuinely require larger systems. Johnston acknowledged that personal factors remain a key driver for many battery buyers. “What we know is that households are on an electrification journey,” he said. “As soon as you go and add an electric vehicle, you can very easily double your household consumption.” This suggests that future growth in battery installations may still occur as more Australians transition to electric vehicles and increase their reliance on stored energy.