The winners and losers of the Cheaper Home Batteries Program

The Cheaper Home Batteries Program (CHBP) is an Australian Government initiative that provides households, small businesses, and community organisations with a discount of approximately 30% on the upfront cost of installing small-scale battery systems. Administered by the Clean Energy Regulator, the program aims to lower electricity bills and reduce emissions by allowing users to store renewable solar energy for use during peak demand.

Since the Cheaper Home Battery Scheme launched on 1 July 2025, Australian households have been installing batteries at a pace that would have seemed extraordinary just a few years ago. In just seven months, more than 250,000 installations have been completed, matching the total accumulated over the five years prior to the scheme's introduction. Households have also adopted much larger sized batteries since the scheme started, averaging 24 kWh per installation, which is more than double the average size of 11 kWh historically.

Australian households are now adding battery capacity at a scale that rivals the build-out of utility-scale storage (capacity that is connected into the transmission network rather than the distribution network). In only seven months, households have added 6 GWh of distributed storage capacity across Australia. This is equivalent to a quarter of the combined capacity of utility-scale battery in the National Electricity Market (NEM) on the east coast and Wholesale Electricity Market (WEM) in Western Australia, and larger than any single utility-scale battery on the NEM (largest is Eraring BESS ~1.8 GWh) and WEM (largest is Collie BESS ~2.2 GWh).

Looking ahead, projections show another million installations between now and the end of 2030, adding a further 25 GWh of storage capacity.

What impact does this have on the electricity sector in Australia?

Home batteries deliver genuine benefits to Australia's electricity system. Relative to a scenario without significant home battery uptake, they reduce commercial curtailment of grid-scale wind and solar by absorbing rooftop PV exports during the day. That stored energy is then dispatched during the morning and evening peak periods, reducing household demand from the grid precisely when coal and gas generation has historically dominated.

In that same scenario, grid emissions are lower during peak periods because households with solar batteries demand less from the grid in the evening, displacing coal and gas generation. This does, however, result in smaller decreases in hydro, wind and grid-battery output as a consequence.

At sufficient scale, high home battery uptake may reduce the effort required to achieve the 82% renewables target by 2030. In the longer term, the fleet offers the prospect of deferring new investment in grid-scale renewable generation and storage. Despite these benefits, the large capital outlay required for home batteries is a significant cost that cannot be ignored. The unsubsidised cost per MWh of distributed battery storage is roughly twice that of grid-scale alternatives. Any savings in network losses and network infrastructure spending are unlikely to offset that additional cost, because most battery households remain connected to the grid and continue to require the infrastructure that supports that connection.

A hedge against grid risk

Despite higher unit costs, distributed battery storage is expected to deliver other benefits, particularly around risk mitigation in the context of the electricity grid's transition.

There is a real risk that the 82% renewables target is not met by the end of 2030, due to connection delays, high build costs, long construction lead times, and the potential for demand to come in higher than expected. Distributed batteries present a meaningful contrast here. They are rolling out with much shorter lead times than utility-scale storage and are not subject to the same delays affecting major transmission projects or large-scale renewables construction (noting a large portion of utility scale battery development projects are now being coupled with a renewable energy project).

There is also the question of what happens if electricity demand exceeds forecasts. Faster growth in data centres, quicker-than-anticipated electrification by businesses and households, and higher underlying demand from households that have installed solar and battery systems could all place pressure on the grid. Home batteries are expected to help absorb that pressure across a range of plausible scenarios, contributing to the 82% target by reducing the amount of curtailed renewable generation even where other parts of the system fall short.

Who benefits from the battery scheme?

The most direct beneficiary is the household that installs a solar battery, which receives an upfront reduction in its electricity bills. While the cost of subsidy – estimated to be around $7 billion across the life of the scheme – are spread across all taxpayers, the scheme benefits higher income households who can afford to participate, while lower income households are largely excluded. At this stage, most household solar batteries are not aggregated or participating in a virtual power plant (VPP), which in effect hands control of the battery to an aggregator (including retailers). Their charging profile is effectively static, set by daily household need rather than responding to wholesale spot prices every five minutes as grid-scale batteries do.

This raises a genuine question: is the growing fleet of home batteries more valuable operating individually, or aggregated into VPPs? The perspective of the battery owner and the broader consumer are in tension here. The household that invested in the battery will receive the most direct benefit through reduced bills and is unlikely to want to hand control of its asset over to an aggregator. On the other hand, all consumers stand to benefit from a VPP that may be more effective at putting downward pressure on wholesale prices. A further consideration is whether VPPs will retain their value over time. Given the large volume of committed and proposed utility-scale batteries in the NEM and WEM, there is a possibility that utility-scale storage becomes saturated, compressing arbitrage spreads and eroding the commercial case for VPP participation.

Beyond individual bill savings, home batteries have the potential to disrupt traditional retail business models and place downward pressure on retail bills more broadly. Over the past decade, the significant uptake of rooftop PV has made small customer consumption increasingly peaky, with demand concentrated in shorter windows. A peakier load is typically more expensive for a retailer to supply due to hedging and contracting costs. With the addition of home batteries, consumption profiles are likely to become flatter, which may reduce the cost to supply these customers and create the conditions for lower bills across the market (all other things equal). Key stakeholders will be watching this development closely. The Australian Energy Market Commission (AEMC) will be attuned to its implications for tariff reform. The Australian Energy Regulator (AER) and regional regulators including the Queensland Competition Authority (QCA) and Victorian Essential Services Commission (ESC), which set price caps and regulated retail tariffs, will factor these dynamics into their determinations, and new and existing retailers will need to adapt in an increasingly competitive market offering innovative products and services.