The NSW Government is launching an initiative aiming to make solar batteries more affordable for households and businesses. But those keen on grabbing an incentive will have to wait a bit before getting one installed.
Announced Friday morning, the incentive is part of New South Wales’ Peak Demand Reduction Scheme (PDRS).
Peak demand in Australia’s electricity system has changed greatly over the years thanks to the influence of renewables; particularly solar power. Not so long ago, mains grid peak demand was far more common around the middle of the day and this was when wholesale electricity pricing was also expensive. Nowadays, so much solar electricity is going into the grid between mid/late morning to mid-afternoon, it’s increasingly pushing wholesale electricity costs during that timeframe into negative territory. It’s also creating some challenges for system stability.
As the sun drops lower in the sky in the late afternoons and into the evenings, and of course overnight, solar energy can’t help out on its own. To reduce peak demand in the late afternoon and evenings, and boost electricity system stability generally, one of the things that needs to happen is the surplus solar energy produced during the day is stored in batteries big and small. But like solar panels were years ago, home batteries are currently quite expensive.
Enter the PDRS battery incentive/rebate/subsidy or whatever you want to call it. The New South Wales government has opted for referring to it as an incentive.
How Much Is The NSW Battery Incentive?
For homes and businesses with existing solar installations, the subsidy will be between $1,600 and $2,400 off the up-front installation cost. The incentive can also be incorporated into a solar + battery installation quote. Additionally, there will be a $250 to $400 incentive for connecting a battery to a Virtual Power Plant (VPP), which can also be claimed a second time (3 years later).
When Is The Subsidy Available?
It won’t be available until November 1, 2024; 5 months from now.
Incentives take a lot of organising, but the long lead-time may result in many households and businesses putting off a solar battery installation they would otherwise have gone ahead with. It could be slim pickings in the interim for installers just doing batteries – although most do solar panels and other energy solutions as well. It could also mean a rush once launched, dragging out installation times. And keeping in with supply and demand, battery installation costs could go up.
Which Batteries Will Qualify?
Batteries will need to appear on the approved product list specified by the Scheme Administrator, which is yet to be released. Furthermore, suppliers will have to be approved as Accredited Certificate Providers (ACPs) under the NSW Peak Demand Reduction Scheme. The eligible battery capacity range is 2kWh – 28kWh and it’s not clear yet how many incentives will be available, or for how long.
What’s The Payback Period For A Home Battery?
Your mileage will vary depending on solar and battery size, and other important factors including energy consumption profile and the type of electricity plan you’re on. A good way to get an idea of savings and payback periods is to use SQ’s solar and battery calculator. Here’s a quick example using the calculator’s default settings, which can be tweaked to suit various scenarios:
- A 10 kW solar-only system installed in Sydney costs around $10,000 after the national solar rebate and has a simple payback of around 7 years, 4 months.
- The same system paired with a Tesla Powerwall costs around $25,100 (not including PDRS incentive) and has a simple payback of around 13 years, 10 months. Note that many battery warranties are only good for ten years.
- 10 kW solar + Tesla Powerwall costs around $22,700 including maximum PDRS subsidy and has a simple payback of around 12 years, 9 months.
Again, how you use energy could make a really big difference either way to savings and payback, and something that isn’t clear at the moment is if Powerwall (13.5 kWh usable capacity) and similarly- sized batteries will be eligible for the maximum incentive.
Should You Sign Up For A VPP As Well?
Co-ordinated by a central operator, a Virtual Power Plant is a network of distributed battery systems, and may include other energy resources and controlled loads. The network operator determines when the batteries should be discharged to the grid.
Another $250 – $400 incentive for signing up to a VPP won’t go astray and participation can help further accelerate payback through generous feed-in tariffs; but VPPs are still evolving. The benefits of joining any VPP currently available need to be weighed up against allowing a third-party to control your battery. Many VPPs can hammer your battery as hard and as often they wish, which will impact on its life and may have some warranty implications.
Some VPPs may also leave little or no reserve battery capacity available for the system owner, meaning the owner could be exposed to high mains electricity prices, and no backup electricity supply during a blackout event. However, the PDRS info page mentions “partial dispatch” of a battery, without providing further detail.
Learn more about Virtual Power Plants here.
Note: the VPP participation incentive will be available for batteries that have already been installed; assuming it has at least 6 years of the manufacturers’ warranty left and meets the equipment requirements.
Go Solar Now – Or Wait?
While putting off a buying a home battery may make sense for many at this stage, often the best time to go solar is right now – and this new incentive doesn’t change that. Waiting means at least 5 months of electricity bills much higher than they would otherwise be with solar panels on your rooftop.
Go solar now, install the battery later – but make the installer aware you’ll be adding a battery in the not-too-distant future. Aside from design considerations, the lure of repeat business could influence the quote side of things, and help lock in a supplier you’re familiar with for when that time comes (assuming they become an ACP under the PDRS).
Brush Up On Home Batteries
One of the advantages of the NSW incentive’s availability being so far off is it gives potential purchasers plenty of time to engage in research to determine if a battery is right for them, and what type they should get. SolarQuotes to the rescue – check out these guides:
- Understanding Home Batteries – This covers topics including how they work, the different types of energy storage and how it can save you money.
- Buying Solar Batteries – How to go about purchasing a good quality system at a reasonable price – and how to identify some of the traps.
- Owning A Battery System – How to maximise the benefits it can provide.
Further information on the NSW battery incentive can be found here and the PDRS scheme here.
Update: Anthony’s blogpost furthers reviews the battery incentive and offers advice on how to navigate the waiting period before the rebate kicks in. Finn has also looked into which batteries will be eligible.
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Still waiting for distributors to put in their own batteries to harness solar and regulate supply, rather than the individual consumer. Imagine eventually having battery installations at each substation. A combination of both would be ideal. The transition to renewable will have some pain, but I don’t see a way to avoid that.
Was any eligibility criteria mentioned for this? The most recent battery booster program launched in QLD had an income criteria which was tied to the amount of rebate a person can get. So would this be the same here or just linear as a solar rebate?
From a retailer and installer’s perspective, this is awesome (long awaited battery ‘rebate’ is finally real) but also incredibly really frustrating. I’ve had a few customers calling back from the last couple weeks of sales all wanting to delay their installations until November 1 – which is fine, I don’t blame them at all and we’re letting people rebook.
The problem is now we have an influx of enquiries, as will the whole industry, for orders and installs that can’t take place for 5 months. Our in-house team will be booked out most day from Nov 1 until end of year, and I’m sure I’m going to have trouble finding subbies to take up the extra jobs, most of whom I reckon are gonna increase their usual rates to make up for the drop in the volume of work they’ll have in the next 5 months, and also to capitalise on the surge in demand in the install market.
Shame the gov couldn’t have just built the system, processes, etc. keeping it reasonably down-low, then announced it with the ability for installers/customers to start claiming almost immediately. Even a 1 month wait time would’ve been more manageable for the industry to keep stock levels, scheduling, revenue, etc. all more consistent.
It wouldn’t surprise me if supply + install pricing for many units actually increases slightly because of the surge in demand… potentially even offsetting in part or full the amount of subsidy customers will receive at point of sale…?
In terms of customers starting from zero who want solar and battery, are you looking at installing solar + hybrid inverter now, and then dropping in the battery in November, with 2 separate invoices?
Yep that’s what we’re doing for now – just doing the PV and inverter and coming back to clip the batteries on later with a broken down progress payment rather than what was initially agreed (10% deposit, 90% on completion is now more like 10-50-40). It’s a bit messy for the accounting end of things where we already a decent amount stock in the warehouse or ordered on the way, and had it assigned, or have some older battery stock that we may have to actually get out of the box and manually charge up so it doesn’t brick itself. At this point I’m anticipating we won’t install a single battery until Nov 1 – wouldn’t make sense to.
The cashflow problem is even more frustrating where it is just AC coupled retrofit jobs which for us is the majority of jobs involving a battery. Retailing and installing batteries is pretty capital intensive.
Not the end of the world, I’m just having a whinge because this is a great thing poorly executed and causing problems for the industry, particularly for smaller installers. Completely avoidable if they’d just built all of the compliance and regulatory systems they’re talking about, onboarded installers and then starting doing all the PR stuff about it right before customers are able to benefit.
Also another point to this – I’m not saying customers should just get 1 week notice and then boom there’s a rebate and if you had it installed on Oct 30 or prior too bad you miss out. I’d be totally frustrated and annoyed if that happened to me, especially if I’d been waiting years for a subsidy (as many people have) then you finally pull the trigger and get stung by the timing.
Better process would’ve been to announce the subsidy when it’s ready go, so as to not disrupt the market, but then allow a backdated grace period prior to the rebate going live where customers could retroactively claim the subsidy if their installation was completed in the last 6-12 months and it otherwise met all the relevant eligibility criteria.
That’s just my opinion anyway…
Very good points, can you share this with the relevant ministers who will be responsible for the policy?
and then of course there’s V2G. An EV’s battery is many more times the size and capability of a wall battery. The added benefit is it reduces the cost of the EV by the cost of the wall battery (approx. $10k+)
V2G isn’t here yet but expected later this year or early 2025 with bidirectional EVs following soon after.
Commentators suggest an EV with V2G could earn the owner up to $12k p.a!
A no brainer?
The naysayers point to the apparent reduction in the EV battery’s life if you use it cyclically for V2G or V2H. However surely that (if true) should be offset against the obvious savings in other areas, and EV manufacturers’ battery warranties be expressed in charging cycles (or some other appropriate metric) instead of years. The societal potential of EV batteries sitting in garages (ie excluding the vehicles used all day for work) is enormous. I really wonder if governments and utilities actually care.
It looks like the eligibility criteria do not preclude the addition of a second battery for claiming the incentive.
This is relatively straightforward with a Powerwall 2, although my understanding is that it is best to not mix old and new batteries, even if they have the same specs.
Other Blogs on at Solar Quotes have ruled out second batteries. Nothing on this blog or at:
https://www.ecovantage.com.au/features/battery-perks-the-new-nsw-battery-rebate-explained/
does.
If you look at the lined pagek the certificates for batteries info is no consistent with the minimum size battery and $1600 minimum rebate. Already have a battery and would be keen to add module/s to it on Nov 1.
Hi Matthew,
I think you may be disappointed? If you are then I would raise hell with your local member because this is a major oversight in the scheme. You should be able to add more in my opinion.
Part 1 Eligibility
There must not be an existing battery installed at the same National Metering Identifier(s).
https://www.solarquotes.com.au/blog/nsw-battery-rebate-get-ready/
This will likely coincide with the release of Powerwall 3, which could be another big driver in demand. I was personally holding off my 10kw+battery install until the new battery release to also save on an inverter, hoping wait times don’t push out too far into the new year.
If PW3 does indeed get priced fairly close to the currently available model, the integrated inverter plus this new incentive could make for a very tidy system that might be a stone’s throw from $20k. Happy to hear if I’ve got that calculation wrong.
Why are you basing your comparison off of one of the most expensive battery solutions in the market? I would be using a Sungrow system with DC coupled battery as a good example considering Sungrow is the number one inverter brand installed in Australia. As far as price goes, they are priced in the mid range so would be a better example to use.
Apologies, but we try to keep news posts short and to the point. In this case that means picking one battery for the example.
Powerwall is the most popular battery in Australia, so it’s a reasonable choice.
P.S. have you seen the sheer number of articles and videos we’ve made about Sungrow inverters and batteries?
Depending where you live, cost of a sungrow battery can be almost the same price depending on how many local installers available, distance from closest city metro etc. Here, quotes from 6 different installers for Shoalhaven came back $2000 higher than Sydney providers. You also get what you pay for when paying a “good price”. Personally I was fine paying a bit extra to a local installer who has been around for 20 years than to save 1500 and get some cowboy subcontractor outfit slap a tesla in and hope they did the job properly.
Can’t we know the amount of rebate per kWh? Hard to imagine it would match the ACT’s $825/kWh.
Great question – the NSW bureaucrats make it complicated. Here’s the formula:
Long story short, it’s about $160 per kWh.
(A PRC varies in value – currently about $2)
Thanks, Finn.
At around 10% of battery cost, the subsidy does not create a significant incentive.
On my calculations, based on a 10-year battery life, to be feasible (without regard for value of continuity of power) the cost per kWh needs to be about 40% lower than the current cost of around $1200/kWh.
Payback calculations for solar do no seem to include opportunity cost (eg cost of capital or lost earnings on capital) and nor do mine.
A battery can only save a consumer the lower of the number of kWh and the average daily kWh supplied by it.
When displacing grid power at, say, $0.30/kWh, the payback for a $1200/kWh battery, even after a solar rebate, is 10 years, excluding opportunity cost, presuming no change in the cost of energy from the grid.
That payback shortens considerably with time of day billing and higher peak electricity rates, but that would be somewhat artificial when there is little benefit from cheaper power in daylight hours when solar is on the roof.
Accordingly, my price target for batteries is $600-$700 before rebates, meaning some way to go, unless continuity of supply or “sticking it up” the generators, or some other factor, comes into play.
Based on a subsidy of around $160/kWh and the article referring to “the subsidy [being] between $1,600 and $2,400 off the up-front installation cost”, there seems to be an assumption that most PV batteries will be between 10kWh and 20kWh, or more. My night time energy consumption averages 5kWh/day against 7kWh during the daytime (household of four adults).
Best way to achieve ROI is using a wholesale provider like Amber Electric. If you don’t tend to use up most of your own battery power at night, you can clear some very impressive returns that achieve ROI in a few years, leaving your battery paid off and pure profit for 2/3 of its remaining warranty. You gotta do a lot of research though and follow trends. Smart shift is a neat idea but the AI isnt perfect, I usually discharge manually.