The NSW government is ending its battery subsidy scheme - what does that mean for households?

Since November 2024, NSW residents have had access to some generous battery subsidies from the State Government, scoring up to $2,200 in rebates for buying battery storage systems attached to existing rooftop solar set ups, plus up to an extra $600 for joining a Virtual Power Plant (VPP). 

The bad news is that NSW is pulling the plug on that $2,200 rebate program. They’ve decided to end the subsidy on the same day as the federal government’s Cheaper Batteries discount of around 30% kicks off on July 1. Frankly, they could have made that announcement as soon as Federal Labor had won the election instead of disappointing thousands of households who purchased in the past month, hoping they could “stack” both discounts and combine the savings.

But let’s not lose sight of the big picture: on July 1, there’s an even bigger discount available for home batteries with the new Federal subsidy, and more batteries is good for household bills and good for using cheaper, greener, locally produced solar energy.

And there was a ‘good news’ bit in the NSW Government announcement: they have said they will offer a boosted cash-back discount for solar-battery households that sign up to a VPP.

From July 1, the NSW VPP incentive has been bumped up to as much as $1,500 as a one-off payment. The incentive will depend on the size of your battery but according to the NSW government website, it’s going to be around $550 for a 10kw/h battery and $1,500 for a 27 kWh battery. 

What’s a virtual power plant (VPP)? And should I join one?

A Virtual Power Plant (VPP) is a coordinated group of home energy devices - like solar panels, batteries, and even hot water systems - that can be managed to supply extra energy to the grid during peak demand times, or help the grid remain stable. For example, if some powerlines go down during a storm and cause the grid voltage to drop, your VPP (if you’re in one) might send rapid instructions to your battery to send extra energy to the grid to help avoid triggering a blackout in the area (and get paid to do so).

The NSW VPP incentive currently applies to seven VPP offers, listed here.

By default, without a VPP, a battery saves you money in a pretty simple way: it charges up from your solar panels when they’re generating energy instead of letting it flow back to the grid. Later on, when there’s no solar, the battery discharges to power your house, avoiding the costs you would have paid to buy that energy from the grid.

A VPP makes more use of your battery. It lets you earn money by selling your battery’s stored energy back to the grid as well as quickly responding to stabilise the grid. It means using more energy that’s stored locally and close to your neighbours, and can help avoid the need to build extra poles and wires for peak demands. Supporting the grid during peak demand also means less reliance on gas and coal-fired electricity. 

The financial returns on a VPP can vary. Different providers offer varying incentives and plans that apply to the energy you send back to the grid. For example, many of them offer a reward amount for energy exported during the evening period, or other ‘VPP events’. Your VPP provider will take on more of the risk - but they’ll also take their share of the earnings.

It’s also worth considering that if your VPP operator also owns coal-fired power stations (ahem, AGL and Origin), as  they might not be as financially interested in selling your energy against their own generators.

We want to highlight a VPP that’s a bit different to the others. (No sponsorships here, this is just Rewiring Australia’s independent opinion.) Amber Electric offers an energy plan based on the live, variable price of electricity, plus a flat monthly fee. This is pretty different to traditional plans with fixed rates and set time windows. They also offer software called ‘SmartShift’ that can operate your battery automatically to try and optimise for these prices - buying low, selling high. But you can always override the control if you’d rather save the battery for yourself. The amount your battery earns will be different every day, depending on what happens to prices that day - some days you’ll earn a lot, others very little. And if you don’t have any battery power left and you have to buy your energy from the grid at expensive times, it can cost a lot more than traditional energy plans on some days. 

We think of it like this:

• Not signed up to VPP? This is like keeping your money under the mattress. It’s all yours. You’ll still save money on the energy you store from your solar panels and use later.
• Sign up to a conventional VPP offer? This is a bit like putting your money in a high-interest savings account or a term deposit - it’s a great way to add a low-risk extra return on your battery purchase. But different providers will offer you different returns, and different levels of control if you want to change your mind - and in many cases you don’t have much control at all. Plus, it’s worth reading the fine print about introductory bonuses and conditions.
• Sign up to a wholesale energy plan like Amber? This is like putting your money in the share market. You’ve still got full control if you want, and based on the historical average long-term returns you’re more likely to make more money, but it will go up and down every day, so you have to be comfortable with some risk.

If you want to see how VPPs compare, check out this comparison table on Solar Quotes. 

‍