The biggest news in the industry these past few days has undoubtedly been the major overhaul of Australia’s household savings subsidy! The subsidy fund has been expanded to AU$7.2 billion, along with adjustments to the subsidy rules and phase-out mechanism.
So, after this adjustment, will the subsidy still be able to cover 30% of the installation cost in the future?
To understand this issue, the first thing to do is to understand the adjusted subsidy rules.
The original rule was simple: batteries with a capacity of 50kWh or less were eligible for subsidies for their entire capacity.
After the adjustment, it becomes a tiered system:
0-14kWh: Full capacity subsidy
Over 14kWh, 14-28kWh: 60% subsidy
Over 28kWh, 28-50kWh: 15% subsidy
For example:
Suppose you install a 48kWh battery. Under the original rules, you would receive a subsidy of AU$372 per kWh (after deducting administrative fees, the actual subsidy is AU$330/kWh).
Original subsidy amount:
48kWh × AU$330/kWh = AU$15,840
After adjustment:
The first 14kWh: Subsidy:
14kWh × AU$330/kWh = AU$4,620
Then, for the 14-28kWh portion, the subsidy is reduced by 60%:
14kWh × AU$330/kWh × 60% = AU$2,772
Finally, the remaining 20kWh receives a subsidy of 1.5%. Discount:
20kWh × $330/kWh × 15% = AUD 990
Adjusted subsidy amount:
4,620 + 2,772 + 990 = AUD 8,382
The subsidy amount has been almost halved… But this isn’t the final conclusion; it will actually be even less! Because: the subsidy will be further reduced.
This is the most complex part of the subsidy. The Australian household savings subsidy isn’t a direct government handout. The mechanism behind it is:
STC Certificates
Simply put, for every 1kWh of battery you install, you contribute to environmental protection and earn green certificates. By selling these certificates (which are acquired by the federal government), you can obtain subsidies.
How many certificates can be generated per kWh of battery?
The number of certificates is determined by the STC coefficient.
The current STC coefficient is 9.3, meaning that 9.3 certificates can be generated per kWh of battery.
Installing a 48kWh battery will generate:
48 × 9.3 = 446 certificates (rounded down)
The STC coefficient is expected to change over the next 4 years as follows:
The number of certificates is determined by the STC coefficient.
The current STC coefficient is 9.3, meaning that 9.3 certificates can be generated per kWh of battery.
Installing a 48kWh battery will generate:
48 × 9.3 = 446 certificates (rounded down)
The STC coefficient is expected to change over the next 4 years as follows:
As can be seen, the subsidy is reduced every six months, and the reduction is faster than before.
The actual subsidy amount can vary. This is precisely the “ingenious” aspect of the subsidy design: it incorporates a market adjustment mechanism.
When the market is overheated, the number of certificates increases, prices decrease, and subsidies decrease. When the market cools down, certificate prices rise, and subsidies increase.
Now, we can finally calculate the actual subsidy amount!
Let’s recalculate the example above. Assume you install a 48kWh battery pack next May. At that time, the STC factor is 6.8, corresponding to a subsidy of $272/kWh:
The first 14kWh: Subsidy:
14kWh × $272/kWh = AUD 3,808
Then, for the 14-28kWh portion, the subsidy is reduced by 60%:
14kWh × $272/kWh × 60% = AUD 2,284
* This actually represents a 60% reduction in the number of STC certificates generated.
Finally, for the remaining 20kWh, the subsidy is reduced by 15%:
20kWh × $272/kWh × 15% = AUD 816
Total subsidy:
3,808 + 2,284 + 816 = AUD 6,908
Compared to now, this is approximately a 40% reduction! Therefore, starting next May, installing a large-capacity battery with a capacity of more than 14kWh will not be very cost-effective!