Spotlight on Australia - August 2025

1 in 3 Australian homes have solar panels, which is among the highest rates in the world. However, only 8% of homes with solar panels have an electric battery. During the day, a lot of electricity is going to waste! Seeing an opportunity to accelerate Australia’s path to net-zero emissions, the federal government recently introduced a subsidy for residential electric batteries. Early adoption numbers have exceeded expectations. It may also be a lifeline for Australian industries struggling with higher electricity costs since the pandemic and the Ukraine war..

The growth of rooftop solar

Rooftop solar’s share of total electricity generation has increased from 2.7% in 2016 to 12.4% in 2024.

Australia is blessed with abundant sunshine with Sydney having an average of 110 sunny days per year and Perth 149. However, it took advances in solar technology, declining costs,  and government subsidies for rooftop solar to become widely adopted. Australia first introduced subsidies for rooftop solar in 2007. Today, solar energy is Australia’s cheapest form of electricity.

“Rooftop solar has become a staple of the modern Australian home,” Con Hristodoulidis,

Clean Energy Council General Manager - Distributed Energy.

Batteries included

However, the problem with rooftop solar is that much of the electricity it generates is wasted. This is because rooftop solar produces most of its electricity during the middle of the day when demand is low (see chart below of electricity demand for New South Wales).

Selling excess rooftop solar energy into the grid does not overcome the problem of waste. The supply from rooftop solar typically far exceeds national demand for electricity during the day. In some states, electricity prices are even going negative during the middle of the day.

Further, in some areas, Australia’s transmission infrastructure cannot cope with the amount of solar power coming from rooftops resulting in limits in installation and transmission to the grid. The large amount of rooftop energy can also make it hard for the operator of the grid, the Australian Energy Market Operator, to manage the amount of electricity in the grid. 

The solution is storage. Storage allows solar energy produced in the middle of the day to be used during peak times later in the day. This reduces the cost of electricity and the dependence on electricity generated by fossil fuels.

But what type of storage? The federal government has invested in the pumped-hydro Snowy Hydro 2.0 mega-project. Renewable energy is used to pump water back up into the main dam so that it can be released at night or when needed to generate electricity through the turbines. The project will provide an additional 2.2 gigawatts of on-demand electricity. However, the project is over 6 years late and its estimated cost has increased from around AUD 2 billion to over AUD 12 billion. 

A simpler storage solution is electric batteries. Electric batteries are a less mature technology than solar panels or hydro but their cost keeps falling while their storage duration keeps improving. Global battery costs have fallen by around 86% since 2013. The upfront cost of large-scale batteries have fallen by 20% alone in 2024. Part of the reasons from the falling costs is that lessons learnt from building batteries for electric vehicles (EVs) have been applied to batteries for storing renewable energy.

In Australia, state governments and private companies have been building large-scale electric batteries to complement growing commercial renewable energy projects. In 2017, the South Australian government commissioned Tesla to build what was then the “world’s largest battery”. Last year, New South Wales brought the 350 megawatt “Super Waratah ” battery online. At the end of 2024, the total capacity of large-scale batteries was around 3 gigawatts (see chart below). This is expected to increase to 10.3 gigawatts by 2026. 

However, even ignoring the storage capacity taken up by large-scale renewable projects, the current and future storage capacity of Australia’s large-scale batteries falls far short of the 20 gigawatts currently being produced by Australia’s rooftop solar, and the output from rooftop solar is set to triple by 2054! A lot more battery storage is needed. What every house with rooftop solar needs is an electric battery!  

The installation of household electric batteries has been growing fast over the last six years (see chart below), but with only 8% of households with rooftop solar having electric batteries, there is still plenty of room for growth.  While the cost of domestic electric batteries has been falling in recent years, cost still remains a barrier for many households. Battery costs plus installation ranges from AUD 7,000 to 22,000 depending on battery size.

To increase household adoption rates, the federal government introduced its AUD 2.3 billion Cheaper Home Batteries Program on 1 July 2025. The government is providing a 30% discount to buy and install electric batteries. The program is also available to small businesses and community groups. This is on top of existing state government provided subsidies. In NSW, homeowners can now benefit from AUD 5,000 in subsidies for a typical 11.5 kw/h battery.

Like the rooftop solar subsidy before it, the policy is a winner as the public money put towards electric batteries is more than doubled by investment from everyday Australians, who also directly benefit. Further, with Trump’s second term, there has been a cooling of enthusiasm among large private investors for large-scale renewable energy and batteries in Australia.  

“Batteries are good for bills – but are also good for the grid because more cheap, fast, safe solar energy is available in our homes night or day, when and where it’s needed,” Chris Bowen, federal minister for energy and climate change.

In its first month, the new subsidy has seen a big jump in domestic battery installations (see chart below). If this trend continues, the scheme could blow past expectations. It could also represent a seismic shift in the Australian electricity market. If the current rate of installations continues, then Australia would realise an extra 10 gigawatts of storage within five years.

A battery in every garage

An electric battery for every house could also be paired with a two-way charging electric vehicle (EV) in every garage, providing power to homes and the grid. While most electric batteries are around 10 kilowatts, EVs have a capacity ranging from 50 to 70 kilowatts.

However, not all EVs currently allow two-way charging; most Tesla’s don’t. However, the number of EV to grid batteries is expected to grow fast over the coming years and under a best-case scenario could provide 20 gigawatt in storage by 2050 (see chart below).

Speeding to net-zero and saving manufacturing

The triumvirate of large grid-based electric batteries, household batteries, and two-way EV batteries will speed Australia to its 2050 net-zero emissions target and accompanying target of 82% of electricity from renewable sources by 2050. This is a win for the global fight against climate change.

In addition to the environmental benefits of better utilising rooftop solar, there is also a strong economic benefit. With the current high cost of base-load gas, many industries from steel makers to manufacturing are finding energy costs debilitating. Australia’s largest aluminum smelter is threatening to close.

Australia is moving from a reliance on coal for base-load power towards an increasing reliance on natural gas. But Australia’s gas industry is focussed on LNG exports so current high global demand for LNG is resulting in high gas prices for Australian power stations (see chart below). Western Australia is an exception because of its gas reservation policy.

Solar energy is Australia’s cheapest form of energy - a third of the cost of coal and one-sixth of gas (see chart below). Electricity from batteries is falling fast but is currently very expensive. However, even if rooftop solar is not used directly by industry or via batteries, household batteries will ensure less demand for base-load energy by households, which will help to bring overall electricity prices down. Household batteries also take pressure off transmission lines allowing more capacity from large-scale renewable projects.

Australian industry has long relied on cheap coal-fired electricity as a competitive advantage. Those days are gone. But solar can fill in the gap with zero carbon emissions to boot.

Final thoughts

Electric batteries are the logical next step for Australian households and the economy. With its large amount of uranium, nuclear will retain a fascination for future Australian governments, but solar and electric batteries are here and now and just keep improving in cost and effectiveness. Solar and electric batteries can also provide an energy lifeline to Australian industry and could eventually usher in a new era of cheaper and greener Australian electricity.