We first heard about the Labour Government’s plans to reduce the costs of household solar batteries back during the election. Well, as of July 1st, those plans have finally kicked into effect with the rollout of the Federal Government’s Cheaper Home Batteries program.
Although the program does offer opportunities to save on solar battery installation and unit prices and could alleviate spikes in demand to local power grids, there are some concerns surrounding lengthy payback periods and the cost-value benefit for participation in the program, as subsidies are set to reduce over the next five years – so what happens after 2030?
Will solar batteries be easier to buy and install independently and without government subsidies? Or will rising energy costs under the Australian Energy Regulator’s rate hikes make it more cost-effective to switch to solar batteries for your home now?
What is the Cheaper Home Batteries program?
Designed to act as an additional solar concession program within the Small-Scale Renewable Energy Scheme, the Cheaper Home Batteries program instead focuses on making solar battery investments more affordable and accessible to Australian households and businesses.
The program itself offers subsidies that at this point in time, may cover up to 30% of the overall cost of installing small-scale solar batteries. This subsidy is set to gradually decrease from 2025 to 2030, in alignment with projected reductions in value to solar battery units.
Financial considerations for participation in the program
Although the most immediate cost many households may consider when looking into the program is the upfront cost of solar batteries and even solar PV solutions (plus factoring in any ongoing interest-free payments into their monthly budget for the next few years), there’s one financial consideration that’s less likely to come to mind. This often overlooked consideration is how installing a solar battery on your property may also affect your home insurance.
You will need to update your home insurance policy to cover the cost value of your solar battery system, as the Cheaper Home Batteries program is only designed to cover the costs of the unit and unit installation. When it comes to securing your solar battery investment, this additional tech-heavy fixture on your property will likely result in a slight increase to your policy premium.
Granted, this may not be an issue in itself as much as it’s a symptom of a bigger issue. After all, insurance rates in Australia have been growing steadily decade on decade, with industry analysts attributing increasing prices to the impacts of climate change.
While we’re in this transitional phase of solar adoption, the added cost of solar unit investments and system installation may result in higher household budgets over the short term, but the lasting advantages of solar in fighting climate change may see expenses like insurance stabilise due to reduced climate risks. Only time will tell here, however.
To recap, here are the key financial considerations that must be made before your household considers participating in the program:
- Solar battery unit costs (across suitably sized batteries for your property)
- Solar installation costs (for batteries and photovoltaic solar panels)
- Any ongoing monthly interest-free repayments resulting from solar installations
- Impact of solar integration on your home insurance policy
How the AER’s rate hikes fit into the Cheaper Home Batteries rollout
Alongside the Cheaper Home Batteries program being rolled out July 1st, the Australian Energy Regulator made their own announcement to kick off the new financial year: energy rate hikes!
Originally announced back in May, the AER’s plans to increase the Default Market Offer (DMO) for the 2025-2026 financial year were designed to facilitate a sustainable increase to energy rates from Australian energy providers. The DMO effectively places a cap on rate increases for energy providers, reducing risks of non-compliant, overblown price hikes across Australia’s network of providers.
The good news is that the AER’s efforts will help Aussie households avoid being ripped off by their energy providers. The bad news is that residential energy consumers can expect increases ranging between 0.5% to 9.7% for their energy rates, and businesses can expect increases anywhere between 0.8% to 8.5% (both depending on their energy usage and location).
The simultaneous release of the DMO for 2025-2026, plus the Labour Government’s Cheaper Home Batteries program, speaks to a unified effort from the Federal Government’s Department of Climate Change, Energy, the Environment and Water. With climate impacts continuing to contribute to Australia’s cost-of-living crisis, greater encouragement for Aussie households and small businesses to participate in the solar rollout seems to be the driving objective behind both the Cheaper Home Batteries program and other initiatives under the Small-Scale Renewable Energy Scheme.
So, will cheaper home batteries add up to cost savings for Aussie households?
So will investing in solar now add up to cost savings for your household? In an immediate sense, no. You will still have to bear upfront costs and potentially even ongoing monthly repayments for your solar investment, with payback periods stretching anywhere between six to ten years.
You will likely also experience a slight increase in your home insurance policy with the addition of high-value fixtures (i.e. your solar PV panels and your solar battery).
And if your solar battery doesn’t capture enough solar power to keep your home powered during peak periods, you’ll need to shell out for higher energy rates under the new DMO for the 2025-2026 financial year.
That being said, the costs of solar adoption are only likely to be temporary, whereas energy costs for grid users are still expected to just keep growing. With these projected rate hikes in mind for 2026 and beyond, the Cheaper Home Batteries program strives to prepare Australians for a greener future that is definitely in sight, but still thousands of dollars away for most Aussie families.
If you wanted to become an early participant in the Cheaper Home Batteries program, however, the subsidies are the highest they will ever be in the 2025 calendar year. Be sure to partner with a CEC-approved solar installer to secure your solar battery subsidy as quickly as possible.