Australia’s battery boom is reshaping the grid, but few are sharing the power

SYDNEY – For Sydney resident Ken Enderby, energy bills are a thing of the past. In fact, his power retailer owes him about A$600 (S$550) in credit.

The former teacher estimates he is saving more than A$5,000 a year after installing a 10.5-kilowatt rooftop solar system and a 13.5 kilowatt-hour Tesla Powerwall battery at his suburban home. The solar panels and battery easily meet most of the electricity needs for his home and electric vehicle (EV).

He has spent a total of A$2.87 to run his EV over the past 2½ years, plus A$345 in maintenance.

Soon after installing his battery, Enderby joined a virtual power plant (VPP), which allows his energy retailer to automatically manage when the battery charges and discharges, including sending electricity back to the grid when prices are high.

He retains the ability to override the system. In 2025, he made nearly A$800 from exporting electricity. He is now looking to add a second battery and another 5kW of solar, mainly to cover additional usage in winter.

“I was selling quite a lot of power into the grid... but I couldn’t get my hands on the savings that I was making, I couldn’t cash it out,” he said. “The only way you could do that is to join a virtual power plant.”

Enderby’s experience is far from typical but points to a bigger change under way in Australia’s electricity market.

One in three homes – or 4.3 million – has rooftop solar, the highest per-capita rate in the world. The combined capacity of these solar systems is 28.3 gigawatts – or more than twice Singapore’s total installed power generation capacity. Even farmers are turning to solar.

Now, a proliferation of batteries is turning those homes into miniature power plants. During the day, batteries charge up via solar panels; at night, that stored energy powers the house or gets sold back to the grid, cutting peak evening power bills.

Battery installations have been turbocharged by a federal subsidy under the government’s Cheaper Home Batteries Programme through which households, businesses and community organisations can get a discount of about 30 per cent on the upfront cost of installing battery systems. Depending on the type and size, these can cost A$9,000 to A$14,000 after the subsidy.

Energy Minister Chris Bowen announced on Aug 14 that the federal battery programme crossed 500,000 installations nationwide, taking total battery capacity to 14,000 megawatt-hours, barely a year after its launch.

That is roughly the amount of power to run 2,300 homes for a full year, or enough to run 6,400 EVs for an entire year.

Bowen noted that Australia has more home batteries than the United States, which has total battery capacity of 9,000 megawatt-hours.

But beneath the headline numbers lie some key questions: Can these batteries, scattered across neighbourhoods, be knitted together to behave like a coordinated source of grid capacity? And will home owners let energy retailers control their batteries?

The virtual power plant paradox

Although large amounts of battery capacity now sit in homes, only about 24 per cent of battery owners participate in VPPs, according to latest data from the Australian Competition and Consumer Commission (ACCC).

That is well short of the Australian Energy Market Operator’s (AEMO) forecast of a 50 per cent long-term participation rate. Achieving that level could avoid A$7.2 billion in additional generation and network investment.

For consumers, the financial case appears attractive: ACCC data shows customers with solar-and-battery systems saw median annual bills that were 20 per cent to 52 per cent lower than those of regular customers, while those participating in VPPs saw bills 57 per cent to 63 per cent lower.

Most retailers, including Origin Energy and AGL, run VPP schemes, while Australia’s most populous state, New South Wales, offers households up to A$1,000 for signing up. Despite this, persuading home owners to hand over control of an asset they have just spent thousands of dollars on has proved difficult.

“Consumer energy decisions tend to be quite complex already, a lot of consumers struggle to engage with energy plans,” said Jay Gordon, energy finance analyst at the Institute for Energy Economics and Financial Analysis.

“If you add to that, having a battery and VPP offerings, it can tend to be quite confusing. A lot of consumers also don’t have trust in their energy retailers.”

Brisbane home owner David King knows the feeling. He installed solar panels and an 8 kilowatt-hour battery in July 2025 under the federal scheme, cutting his monthly bill from about A$80 to between A$10 and A$20. Since then, he has not needed to draw electricity from the grid during the evening peak.

But he has resisted joining a VPP. “I’m not so keen on the VPP yet, because I would lose control of some of that timing of when things will be taken out of a battery,” he said. King is open to the option if he gets more storage capacity installed and is confident enough reserve capacity will remain for his own needs.

That highlights a central challenge for VPP operators: giving home owners confidence they will retain enough control over a battery they have paid for.

Some do this by putting limits on battery discharge, leaving 20 per cent to 25 per cent capacity reserved for the home owner.

But the problem is also financial: VPPs generally automate battery dispatch to maximise electricity trading returns – for instance, selling power in the evenings when demand and wholesale prices spike.

“The traditional VPP model is... automate for the retailer and keep the majority of the spoils, sharing a little bit with the customer. That little bit has not been well received,” said Tim Barson from Amber Electric, an energy retailer.

The issue is that retailers can profit by tapping stored battery energy and selling it when electricity wholesale prices spike, without sharing that profit fully with battery owners.

Amber charges a flat A$25 monthly fee on its VPP plan, passes on the wholesale energy price without taking a cut, and allows customers to intervene and retain manual control of their battery.

Asked what customers want from their batteries, Barson has a blunt answer: “No more power bill.”

Sharing the power

Even without widespread VPP adoption, the impact on Australia’s energy system is already profound. AEMO chief executive Daniel Westerman noted in June that consumers with full control over their batteries deliver enormous benefit to the grid by reducing evening peak demand.

The shift is measurable: Gas-fired electricity generation in Australia recently hit its lowest level since 2003, partly because grid-scale and household batteries are covering power demand after sunset.

Analysts say batteries operating passively are reducing peak demand more than expected.

The coordinated use of VPP lets retailers charge thousands of batteries when power is cheap and draw on them when demand spikes, giving the network greater visibility over distributed storage and reducing the need for expensive generation and network investment.

The challenge is convincing home owners the trade-off is worth it – a problem that is partly economic, but also one of trust and transparency.

Heidi Lee Douglas, chief executive of consumer advocacy group Solar Citizens, said households need clearer pricing, stronger consumer protections and more transparent VPP offers to unlock the value of their batteries for the wider system.

One potential answer is to make the financial reward more obvious. Currently, households might pay 15 Australian cents per kilowatt-hour to import power while receiving only four Australian cents for exporting the same amount.

Douglas said her group is pushing for symmetric tariffs – paying households the same rate for exporting as importing at any given time – alongside clearer signals so consumers feel confident that sharing their stored power will be properly rewarded.

Moreover, about a third of Australians cannot install batteries because they live in rented accommodation or apartments. For them, vehicle-to-grid (V2G) technology, which turns electric vehicles into mobile batteries, may be the most viable path. Solar Citizens is proposing that V2G inverters be covered under a federal rebate.

Amber’s Barson agrees V2G is the next frontier, opening savings to EV owners who cannot install a home battery.

Singapore, where most people live in apartments, offers a useful counterpoint to where Australia might be headed.

Douglas points to a workaround already in motion: Australia will expand its small-scale renewable energy scheme from October to cover commercial and industrial rooftops, enabling shared power arrangements that apartment dwellers could plug into.