The solar and battery industry in Australia is experiencing a rollercoaster ride, with installation rates for household batteries plummeting by over 70% following changes to a multi-billion-dollar subsidy scheme. This dramatic drop occurred after the federal government tightened the Cheaper Home Batteries Program, scaling back rebates for larger systems. The industry, once characterized by wild swings in demand depending on government incentives, is now facing a quiet period as customers rush to buy before deadlines. This phenomenon, aptly named the 'solar-coaster' by industry experts, highlights the artificial demand brought forward by the government's own deadline for changes to the scheme.
The Labor battery subsidy scheme, announced in the run-up to the 2025 federal election, has been hugely popular. With almost 450,000 batteries installed so far, the federal government targets two million installations by 2030. The scheme provides a subsidy worth about 30% of the up-front cost of a system, aiming to slash the cost of a typical, 10-kilowatt-hour battery by about $4,000. However, the original design allowed customers to attract far greater subsidies for much larger systems, with a 50-kilowatt-hour system collecting about $18,000 in taxpayer subsidies.
In response to the over-selling of large batteries, the federal government tightened subsidy rules in December. While the full subsidy is still available for the first 14kWh, it is scaled back to a maximum of 50kWh for subsequent capacity. The government also invested a further $5 billion into the scheme, bringing its overall cost to $7.2 billion. Industry experts argue that some customers may have bought systems that are too big for their needs, but others suggest that households are on an electrification journey, and larger batteries will be needed as energy demands increase.
Despite the drop in installations, the industry expects demand to remain steady as consumers seek greater independence from the grid. The scheme also helps sustain rooftop solar installation rates, with over four million small-scale solar installations across Australian rooftops. As battery prices fall and the cost of buying power from the grid rises, batteries are becoming increasingly attractive to consumers in the long run. Industry experts predict that households and businesses with solar and batteries will play a crucial role in Australia's decarbonisation efforts, transforming the way energy is generated, stored, and consumed.
The volatility in the solar and battery markets is expected to continue as subsidies diminish every six months until the scheme's expiry at the end of the decade. Consumers and installers will need to stay agile, as the diminishing incentives likely mean no immediate end to the boom and bust cycles. However, the long-term economic trend of falling battery prices and rising grid costs will continue to make batteries an attractive investment for consumers, reshaping Australia's electricity system.
