New South Wales will piggy-back the federal home battery scheme to roughly double the financial sweeteners on offer to solar households in the state, including both the up-front discount and the rebate for joining a virtual power plant.
The deal between the federal and state governments will effectively dump the rebate part of the NSW Peak Demand Reduction Scheme (PDRS) – an up-front discount of between $770 and $2,400 – and replace it with the more generous federal offering.
The NSW Minns Labor government will, meanwhile, continue to run the part of the PDRS that offers a cash-back rebate to households who sign their solar battery up to a virtual power plant (VPP).
The Albanese and Minns Labor governments say the changes will mean that NSW households and small businesses can cut the up-front cost of a typical installed battery by around 30 per cent – amounting to around double the current incentive available through the PDRS.
And where the PDRS originally offered a further $500 discount in return for VPP connection, the merged scheme boosts the incentive to up to $1,500, depending on the battery size.
Like the Western Australia announcement before it, the NSW take on “stacking” the two rebates will disappoint many in the battery industry – and those households hoping to double dip – who might have been expecting the two rebates to combine to a Very Big Upfront Discount.
In WA, the merging of the state and federal schemes – announced last week – was used to boost the reach of the state incentive, rather than the amount on offer, to around five times as many WA households.
The WA scheme also requires solar households to sign up to a VPP to be eligible for the rebate, with the promise of “attractive feed-in tariffs” in return for sharing their stored solar with the grid through a third-party aggregator.
In NSW, the government says the PDRS – in its current state – has been a huge success, driving more than 11,400 battery installations in six months. And it expects the boosted scheme to shift uptake to the next level and give a much-needed boost to VPP attachment, which has been poor.
The governments say that under the new regime – which will take effect when the federal rebate launches on July 01 – a household installing an 11.5 kWh system could expect combined support of almost $5,000.
For a 27 kWh battery, the applicant could get a discount of around $10,000 from the federal rebate and up to $1,500 cash-back from the state VPP scheme.
Anyone with a compatible solar battery, including those installed under the NSW incentive since November, who has not yet taken up the VPP incentive, is eligible for the newly doubled offering from 01 July, the government says.
The hope for VPPs is that Australia’s millions of rooftop solar and battery systems will be able to be aggregated by various third parties – such as retailers – and controlled collectively to offer paid services to the grid.
Certainly, the Australian Energy Market Operator (AEMO) is counting on consumers to join VPPs – that part remains voluntary under the federal rebate rules – to help harness the huge rooftop solar resource that so far remains largely beyond of its control.
AEMO says the establishment of VPPs “coordinated at scale and in a predictable and reliable manner” could significantly reduce the scale of network and other investments needed to firm renewables and maintain reliable and secure electricity supply – making its job easier and, theoretically, cutting the cost of electricity for all.
But according to the recent data from SunWiz, consumers remain unconvinced, with most VPPs currently registered with the AEMO to provide grid services remaining small, while others have gone backwards or been wound up.
The NSW government said on Tuesday that it will continue working with stakeholders on future opportunities for the Peak Demand Reduction Scheme, including considering what new activities could be incentivised.
“We know the best benefit for the grid comes when these batteries are linked together, and NSW wants to be world-leading in encouraging households and small businesses to be a part of that,” NSW energy minister Penny Sharpe said on Tuesday.
“By increasing battery uptake we’re reducing demand on the whole grid, putting downward pressure on bills for everyone.”
The Smart Energy Council (SEC) said on Tuesday that combining the two schemes was by and large a good thing, although not for everyone.
“The federal government is doing the heavy lifting here through the Cheaper Home Batteries Program but the Smart Energy Council welcomes support from the New South Wales government allowing households to sign on to virtual Power Plants,” SEC chief John Grimes said.
“The NSW government’s previous battery rebate, administered through the Peak Demand Reduction Scheme and the Independent Pricing and Regulatory Tribunal (IPART) has been beleaguered by long delays and negative impacts on the solar and battery industry,” Grimes added.
“The Smart Energy Council is pleased the NSW government has listened to industry concerns and better integrated the state’s approach with the federal approach, although we note this will see a reduced state battery rebate for many residents.”
The Clean Energy Council, meanwhile, was unequivocal in its support of the move, describing it as a “win for all NSW energy customers.”
“This announcement is especially significant and welcome news, given that the Australian Energy Market Operator has estimated that rooftop solar and home battery orchestration will be one of the largest generation sources in the National Electricity Market, as Australia moves towards net zero by 2050,” CEC general manager of distributed energy, Con Hristodoulidis said on Tuesday.
“The NSW incentive scheme serves as an effective model for other States to follow suit in the near future. We’d love to see all Australians benefit from a scheme like this and increase their savings.”
Sophie is editor of One Step Off The Grid and editor of its sister site, Renew Economy. Sophie has been writing about clean energy for more than a decade.
