The re-elected Albanese Government’s $2.3 billion commitment to subsidise battery installations is a significant step toward reshaping Australia’s energy landscape. Under the scheme, which comes into effect from 1 July 2025, households will be eligible for a 30% discount on installed battery systems—potentially saving up to $4,000. Small businesses and community facilities will also benefit, with support extending to battery systems up to 100 kWh.
This initiative builds on the Small-scale Renewable Energy Scheme that helped make solar panels a mainstream investment for Australians. And it raises an important question for commercial and institutional building owners:
Is now the time to seriously consider battery storage?
Batteries are becoming critical to the grid
At Buildings Alive, we’ve long advocated for grid-interactive, efficient buildings. Batteries are a natural extension of this philosophy: they enable demand flexibility, reduce peak demand charges, and help integrate more renewables – all while cutting emissions.
With more solar power being generated than ever before, particularly in the middle of the day, Australia now faces an abundance challenge: there’s often more electricity than the grid can handle when the sun is shining, but a shortfall when it isn’t. Batteries offer the potential to smooth this imbalance by storing excess solar energy and dispatching it when the sun sets—keeping the grid stable and reducing the need for fossil-fuelled peaking generators.
Battery prices will likely follow the solar path
The parallels between the price and market uptake trajectories of solar photovoltaic (PV) panels and batteries are illuminating (if you’ll pardon the pun). As the following plot shows, since 2009 the levelised cost of a megawatt-hour (MWh) of electricity generated from PV panels has dropped from 4.3x the cost of generating from gas and 3.2x the cost of generating from coal, to 0.6x and 0.3x the cost of gas and coal respectively. These figures are from the USA, but they apply equally to Australia and are consistent across most regions globally.
Source: Lazard Inc. (2023). Levelized Cost Of Energy+. https://www.lazard.com/research-insights/2023-levelized-cost-of-energyplus/. Version of simplified plot via Wikipedia.
Over the same period, the amount of electricity being generated from solar has grown exponentially.
In 2009, less than 0.1% of Australia’s electricity supply mix was from solar. In 2024 it was almost 20%. In 2024, batteries on the national electricity market (i.e. utility scale, in front of the meter) accounted for about 0.4% of demand and 0.3% of supply—the difference being due to losses. In 2009, governments were beginning to heavily subsidise solar PV to encourage uptake, and these subsidies were wound back over time. In 2025, governments are introducing significant battery subsidies, and these too can be expected to wind back over time as the component costs (but not the labour and balance of system costs) drop.
Between 2023 and 2024, the levelised cost of battery storage projects dropped by one third to USD $104 MWh, while the cost of a typical fixed-axis solar farm fell by 21% .This puts solar + battery projects already within striking distance of price-parity with coal-fired power stations. The following plot which combines an academic study of battery cost forecasts and more recent data from BloombergNEF (black columns), shows the dramatic price drop that has been underway for many years.
Sources: Mauler. L, et al. (2021). Battery cost forecasting: a review of methods and results with an outlook to 2050. Energy Environ. Sci., 14, 4712-4739. https://doi.org/10.1039/D1EE01530C ; Black columns are taken from BloombergNEF. (2025, February 6). Levelized Cost of Electricity report, see https://about.bnef.com/blog/global-cost-of-renewables-to-continue-falling-in-2025-as-china-extends-manufacturing-lead-bloombergnef/
BloombergNEF forecasts that battery energy storage will drop to USD 53 per MWh of supply by 2035, and solar will fall below USD $20/MWh. It is therefore almost inevitable that solar PV combined with battery storage will be the cheapest form of energy within a decade and soon begin to dominate electricity grids and markets, noting that forecasts have consistently underestimated the rate of reduction in both battery and solar prices.
What should building owners do?
If you’re managing real estate funds or ESG considerations, you should be thinking of batteries as part of a broader resilience and sustainability strategy. What are your long-term energy and emission reduction goals? How exposed are you to market volatility or grid interruptions? A battery can help de-risk these challenges—especially when deployed alongside solar PV and building tuning initiatives.
If you’re a building operator, start by asking: What’s our current load profile? When do we peak? What’s our load-flex capability? How much solar do we generate and how much do we export? These data points will inform whether a battery makes operational sense—and what size and type will deliver the best return.
For commercial and institutional building owners, now is the time to assess your energy storage and load-flex opportunities. Consider:
- Load profiles: When do you use the most energy, and how could batteries or other storage technologies help?
- Solar potential: Are you maximising your onsite generation?
- Participation in energy markets: Can your building provide demand flexibility or grid services?
- Data and analytics: Are you equipped to optimise battery operation for both savings and revenue?
At Buildings Alive, we’re helping building owners navigate this new landscape. Our technology turns complex data into actionable insights, supporting the fastest and most cost-effective decarbonisation strategies.
The Australian Government’s subsidy is a clear signal that storage is no longer a futuristic concept. It’s here, it’s practical, and could soon be cost-effective for commercial and institutional buildings—especially with the right strategic guidance and operational insight.
Want to learn more about how batteries and grid-interactive buildings can benefit your portfolio? Contact the Buildings Alive team for a tailored assessment.