Is the federal home battery rebate being cut? Here’s what we know
Key takeaways
- Treasury is reportedly looking at ways to scale back the $7.2 billion Cheaper Home Batteries Program as the government seeks savings ahead of its mid-year budget update.
- Options include reducing the upfront discount or making it conditional on joining a virtual power plant (VPP).
- The rebate is already set to shrink on 1 January 2027. Depending on battery size, households could get $240 to $1,120 less off their battery than they would right now.
Australians looking to install a home battery could see the federal home battery rebate cut.
According to the Australian Financial Review (AFR), Treasury is working on options to scale back the $7.2 billion Cheaper Home Batteries Program ahead of the Mid-Year Economic and Fiscal Outlook (MYEFO).
This is the government's mid-year budget update.
These include reducing the upfront discount or making it conditional on households joining a virtual power plant (VPP).
Did you know?
Why is the government considering cuts to the home battery rebate?
Environment Minister Murray Watt said all ministers have been asked to find savings in their portfolios.
The scheme has been much more popular than expected, pushing costs well beyond the original forecast.
More than 600,000 home batteries have been installed since the home battery rebate launched in July 2025.
The program was originally expected to cost $2.3 billion over four years.
That estimate has since grown to $7.2 billion, with more than $5 billion already spent in less than 18 months, according to AFR's analysis of Clean Energy Regulator data.
Prime Minister Anthony Albanese hasn't ruled out means-testing the rebate, which would limit access to households below a certain income threshold.
Energy Minister Chris Bowen, meanwhile, has defended the scheme, pointing to its popularity and the role batteries are playing in putting downward pressure on wholesale electricity prices.
The Coalition and One Nation have both called for the scheme to be scrapped altogether.
What does this mean for households?
It could make home batteries less affordable for households and discourage some people from adopting one.
Australian Energy Market Commission research from last year found the average payback period for a home battery was 14.5 years without government subsidies, compared with 7.3 years with the federal rebate.
The savings can be even greater in some states.
For example, NSW households joining a virtual power plant (VPP) and accessing the additional state incentive could bring their payback period down to around 4 years.
How much is the battery rebate dropping on 1 January?
The home battery rebate is set to run until 2030, but the discount will gradually shrink every 6 months. The next reduction is due on 1 January 2027.
The discount is calculated using a system called small-scale technology certificates (STCs).
The number of certificates your battery can generate depends on its usable capacity, while the rate used to calculate them changes over time.
Keep in mind the rate is based on when your battery is installed, not when you buy it or sign a contract.
So with all that said, at an STC value of $40, the maximum discount could fall by an estimated $240 to $1,120, depending on your battery's usable capacity.
| Battery size | Max discount until 31 Dec 2026 | Max discount from 1 Jan 2027 | Difference |
|---|---|---|---|
| 5kWh | $1,360 | $1,120 | $240 |
| 10kWh | $2,720 | $2,280 | $440 |
| 15kWh | $3,960 | $3,320 | $640 |
| 20kWh | $4,760 | $4,000 | $760 |
| 25kWh | $5,600 | $4,680 | $920 |
| 30kWh | $6,160 | $5,160 | $1,000 |
| 35kWh | $6,360 | $5,320 | $1,040 |
| 40kWh | $6,560 | $5,480 | $1,080 |
| 45kWh | $6,760 | $5,680 | $1,080 |
| 50kWh and above | $6,960 | $5,840 | $1,120 |
The actual discount you get off your battery could be different, depending on what the certificates sell for and any admin fees charged by your installer or retailer.
Batteries larger than 50kWh can still qualify, but the rebate only applies to the first 50kWh of usable capacity.
Any further cuts Treasury announces would come on top of these scheduled reductions.
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