Labor offers a 30 per cent battery discount and this is how it could work for your household

Labor has promised to reduce the price of batteries for households, small businesses and community facilities by 30 per cent.

Australia is already leading the world on the uptake of rooftop solar, and energy experts say the market is ripe for a similar battery subsidy scheme to maximise the benefits of that sunny at-home energy production.

If you’re one of the 4 million Australian homes with solar, you might have already considered installing a battery, but the potential costs might have turned you off.

But battery costs continue to fall as they become more popular around the world, and a battery that covers the average Australian household is cheaper than you might think.

If your home already has solar, or you’re considering getting a new solar-and-battery system, we’ve answered some of the questions you might have on how batteries operate and the benefits you can expect.

Energy experts say a boom in household batteries would not only benefit the households that own them, but could reduce the price of electricity for everyone in Australia.

What’s the battery rebate Labor has pitched?

The Cheaper Home Batteries subsidy is a 30 per cent up-front discount off the cost of a battery and will be delivered through the same government scheme that provides discounted solar. The program will cost $2.3 billion over the forward estimates and was factored into the recent budget.

About 320,000 Australian homes already have a battery, according to solar energy consultancy SunWiz, and around one-in-three homes that installed a solar system in 2024 opted to get a battery at the same time.

That totals about 75,000 new battery storage systems installed last year — up 47 per cent from 2023.

If re-elected, Labor hopes this policy would help Australia get to 1 million new batteries by 2030.

What’s the idea behind a household battery?

Australia is in a situation where we have abundant solar power in the middle of the day. Homes with solar are not drawing power from the grid and are instead sending any excess into the system.

But solar production drops off in the evening just as people return home, so the electricity grid has a sudden spike in demand in the evening.

With a battery, households with solar can charge their battery in the middle of the day when they are producing more than they are using, and then use that solar power later in the evening.

That way, they are reducing the amount of power being used from the grid at crunch times in the evening.

“If you think about a solar battery really as time-shifting energy, [shifting] zero-cost energy from the middle of the day to that evening peak, that’s what solar batteries do,” the Smart Energy Council’s chief executive officer John Grimes said.

“They take that free energy from the middle of the day and time-shift it to the evening peak period.

“If you’ve got one battery, it probably doesn’t matter. But if you’ve got a million or 2 million or 4 million batteries, that’s a really, really, really big help.”

Batteries can shift excess solar to the evening peak

Batteries can help ease the peak demand in the grid as a flexible power source when the sun goes down.

Rewiring Australia is an organisation that advocates for policies to help households get off fossil fuels and become more efficient, and its CEO Francis Vierboom says Australia is a perfect fit for household batteries.

“We’ve been so successful with solar, it does put Australia out in front on this challenge. We’ve got a really strong renewable grid already that’s already over 40 per cent powered by renewables,” he said.

“We get to kind of demonstrate and develop the technologies and business models here that the world is going to be following as they work their way through this transition.”

That’s the basic concept, now let’s look at some more detail.

What battery would suit a four-person household?

If you don’t already have a battery as part of your home set-up, but you’ve discussed it with friends or neighbours, you might be under the impression that they are prohibitively expensive.

But of course, the cost of a battery depends on the size and how much you actually need.

The Smart Energy Council analysed the data for more than 9,000 Australian homes to see what size battery would cover them for that busy time in the evening when everyone is at home and power is expensive.

“People have it in mind that you’ve got to have very large batteries. It’s not necessarily true,” John Grimes said.

“By the time you get to about a six or a seven kilowatt hour battery, you’re covering above 90 per cent of all use-cases for houses in Australia.”

Small batteries can reduce peak demand for most households

The modelling shows a 6kWh battery can reduce peak demand for more than 90 per cent of households.

Francis Vierboom from Rewiring Australia said that size would cope with an average Australian family set-up.

“Right now, a household that’s got two parents and two kids probably uses about on average 30 kilowatts a day,” he said.

“If you’ve got a typical like six kilowatt [solar] system on a typical sunny day in spring, you’ll probably generate about 30 kilowatts of energy, but it’ll all happen at midday.”

He also suggested that a six to seven-kilowatt-hour battery will cover most of their daily use.

How expensive are batteries?

OK this is the part you’ve probably been hanging out for.

According to the Smart Energy Council, there are 77 different types of batteries already available in the Australian market, and they start from as little as $4,000.

So you can get a battery between 5 and 10kWh, a typical battery size currently being installed, for under $10,000 before the subsidy.

Cost of batteries on the Australian market by size

The plot shows you can buy a 5 kWh battery for under $5,000.

These costs include an inverter, which is a device that you need to coordinate the power flow between your solar, home and battery.

When it comes to cost, battery prices are expected to drop even more in the coming years, which will also reduce the absolute value of the discount off the subsidy.

Batteries are following a similar cost curve experience as solar, which has plummeted in cost as more solar is manufactured and installed around the world.

The same technology underpins electric cars and grid scale batteries, so the costs are being driven down as these technologies take off.

Average global battery prices have plunged

The price for lithium-ion batteries used for energy storage and EVs are now a fraction of what they used to be.

How much will I save on power bills?

Every household is different, and every home has a different economic case for a household battery.

According to Labor’s modelling, a household with existing rooftop solar could save up to $1,100 extra off their power bill every year, and up to $2,300 a year for those with new solar, around 90 per cent of a typical bill.

Rewiring Australia has crunched the numbers on how much Australian homes will save if they electrify everything, including installing a battery, and came up with a similar figure of $1,000 annually in savings from a battery.

As Rewiring Australia puts it, a solar-and-battery installation “flattens” the costs of energy going forward and protects homes from extreme fluctuations in electricity costs.

“The energy system is going to keep being volatile for the next 10 years in Australia. I think everyone can agree about that. And a battery is a great way to make your house more resilient and give you a bit more of the upside of that volatility,” Francis Vierboom said.

Is this better bang for buck for my solar?

Australia has an abundance of rooftop solar in the middle of the day, which has changed the shape of the electricity grid.

It means that the price households get for selling their solar into the grid, known as solar feed-in tariffs, has plummeted.

Having a battery means those homes can maximise the benefits of their own solar, according to Bruce Mountain, the head of the Victoria Energy Policy Centre at Victoria University.

“Battery makes good sense for households with solar now because the export price that they’re getting for the surplus that they feed into grid and most households — roughly two-thirds of the electricity from their rooftop solar is actually sold into the grid — they’re now getting almost nothing for that,” he said.

“I think that’s going to make a big difference to the cost of installation and the attractiveness to different households, most notably to the larger households with larger amounts of solar. I imagine that such a policy will see the rapid expansion of storage.”

Will I be completely off the grid with a battery?

No, for most homes, a household battery isn’t going to mean they disconnect entirely from the grid, although that is possible with the technology.

Instead, it’s about reducing reliance on the grid, whilst still having it there as a backup.

But when the grid is down in a disaster, such as the recent Cyclone Alfred, most new batteries set-ups allow homes to keep power running and charging from solar.

“On resilience, batteries are a massive upgrade and make a big difference. In your own house, you can definitely set up a battery so that if the grid goes down, you can run your house on your battery and you can have your solar panels recharging your battery,” Vierboom said.

“So even if your house is offline and off the grid for a week, as long as the sun’s coming out, you’ll be able to keep powering your house and especially all the essential things that you need in that house, the battery can cover easily like the fridge and lighting and so on.”

Getting more battery and solar systems on community buildings like sports centres or school halls also means that in the event of a disaster, it’s a place where emergency services can operate from and people can charge their phones and access the internet.

If you decide later that you want to upgrade to go completely off-grid, or just to add more battery capacity, some battery systems today are “stackable”, which means you can add capacity down the track to beef up your system.

Are there benefits for people who can’t get batteries?

So it’s clear that batteries offer a lot of benefits for the millions of Australian households with solar, but that isn’t everyone.

If you’re a renter, in an apartment, don’t have solar, or can’t afford the up-front cost of a battery, there is a silver lining because more household batteries across the country will benefit you too.

The electricity system works as a market, so when there is that spike in demand for power in the evening, it drives the wholesale cost of power up. Most people don’t pay the wholesale price for power, but those price spikes are accounted for when an energy retailer works out how much to charge.

If more Australian homes have batteries, they won’t be drawing power from the grid at those critical moments.

“If we didn’t have that spike in demand every day, then the amount of infrastructure would be proportionately reduced. So by increasing household storage, power prices actually fall for everyone,” the SEC’s John Grimes said.

They modelled what would happen to peak power prices if there were 1 million batteries installed in Australia, and found that it would save $1.3 billion every year on wholesale power prices.

Plus, the electricity system is built to have capacity for those peak moments, and building and maintaining the infrastructure that allows this costs a lot of money that adds to power bills.

“The more we generate electricity from solar and batteries that are in our communities, the more the energy is actually being generated and delivered locally,” Vierboom explained.

“We will need to build some transmission to make sure that we can move renewable energy around the country, depending on where it is that day. But at the same time, it does minimise the need for transmission if we’ve got a lot of the energy already stored in our communities.”

What about the climate?

At the end of the day, maximising solar power and reducing the amount of fossil fuel power used in Australia is a major win for the climate.

Currently, gas is used a lot to provide power in those peak demand moments and coal is still used in the electricity market.

“Getting rid of that evening peak through greater use of batteries, if they’ve been charged by solar electricity, allows you to close down inflexible coal-fired generators, which in turn allows you to continue to expand clean energy,” Bruce Mountain said.

“So the addition of storage is essential for the energy transition.”

By climate reporter Jo Lauder