Shared storage, shared future – incentivising community batteries

Community batteries are an emerging development in the energy sector. Introduced in Australia in 2020, they serve as a shared energy storage solution for local neighbourhoods, allowing residents to collectively store excess solar photovoltaic (PV) energy during the day and draw upon that stored power at peak demand to reduce reliance on grid electricity.

Benefits

As community batteries are still an emerging technology, their full benefits are yet to be realised. Nonetheless, there are a range of anticipated benefits that will significantly improve Australia’s green energy landscape. Community batteries are expected to:

• make energy storage more cost-effective as the community batteries are designed to charge during periods of low electricity demand;¹
• allow households that cannot install solar panels (such as apartments) to utilise renewable energy;²
• support voltage regulation and improve the overall quality of the local electricity network;³
• lower emissions; and
• lower electricity bills overall.⁴ 

Case studies on successful deployments

1. Mandurah (WA)⁵ 

In 2021, two community batteries were installed in Mandurah as part of Western Australia’s first community battery storage trial, providing the community with a combined 221kW of solar energy storage. Western Power described the initiative as a significant success, noting that it contributed to Mandurah becoming 221 times more sustainable.

Several factors have contributed to this strong outcome. Mandurah has a well-established track record of proactive efforts to reduce its environmental footprint. At the time of installation, it was recognised as Western Australia’s leading solar suburb. This pre-existing enthusiasm for renewable energy played a crucial role in the successful uptake and operation of the community battery trial.

2. ‘Power Melbourne’ Program⁶ 

In 2024, the City of Melbourne announced plans to deploy three community batteries at Council House, the Boyd Community Hub and the Library at the Dock as part of its long-term strategy to transition to 100% renewable energy by 2030 and achieve net-zero emissions by 2040.

In a densely populated urban centre like Melbourne, approximately 83% of residents live in apartments, which typically preclude the installation of individual solar energy systems. This program was designed to provide the community access to clean, renewable and cheaper energy, resulting in the powering of more than 70 homes on a daily basis.

The community battery at Council House was successfully deployed in July 2024, with the other batteries to be switched on at Boyd Community Hub and Library at the Dock in due course.

3. Community batteries for household solar program: the Illawarra⁷ 

As of late March 2025, Endeavour Energy has deployed 13 new community batteries in Illawarra through funding received from the federal ‘Community Batteries for Household Solar’ program. By installing these batteries, the initiative aims to continue lowering energy bills by up to $400 annually for 600 solar and non-solar residents, while actively advancing Australia’s endeavours towards a more sustainable and reliable electricity grid.

This deployment comes after extensive consultation with residents, reflecting strong community support for sustainability and extensive access to renewable energy sources.⁸

On the horizon

The rollout of community batteries has historically encountered significant delays. In instances where deployment has occurred, the anticipated benefits have yet to materialise to a significant extent.

Notably, since the Albanese government came into power in 2022, only 21 of the 400 community batteries promised under Labor’s initiative are in operation.⁹ There are a number of potential reasons for this delay, such as supply chain and procurement issues, grid integration challenges, and regulatory and policy complications. However, to mitigate this issue and help Australians lower energy costs as community batteries continue to be gradually deployed, the Labor Government announced the ‘Cheaper Home Batteries Program’ in April 2025. The $2.3 billion initiative will aim to reduce the cost of home battery systems by approximately 30% from July 2025.¹⁰

Despite unprecedented delays, there is continued appetite for community batteries, with federal initiatives and funding supporting multiple projects in the pipeline. As of 10 April 2025, plans are in place to install 10 community batteries at the University of Wollongong to support the energy requirements of research laboratories, medical research facilities and other academic infrastructure.¹¹  This project is part of the Australian Renewable Energy Agency (ARENA) Community Batteries Funding Initiative, that has received a total of $171 million to develop at least 342 community batteries.¹²

At a state level, there are several initiatives that are well underway, including:

• Victoria: The Victorian government commenced the ‘100 Neighbourhood Batteries Program’ to support Victorian communities successfully transition to renewable energy, lower costs, increase energy reliability, and overall expand the deployment of operational models for neighbourhood-scale batteries.¹³  The Victorian Government currently funds 26 projects, but promises a total installation of 90 batteries throughout Victoria.

 

• South Australia: In South Australia, the government have partnered up with local councils to deliver community batteries for their citizens through the ‘emPowering SA’ program.¹⁴ The first two batteries under this program are emPowering Magill and emPowering Edwardstown, which will lower residential electricity rates to at least 600 tenants combined over their expected 15-year life, totalling an estimated $5 million worth of benefits.

Policy considerations

1. Legislative and jurisdictional alignment

Federal government programs for community batteries need to align with city councils for continued installation. Without a clear alignment of environmental goals and continued conversations between governmental bodies, nor a formal national framework in place, the operation of community batteries within our current energy landscape will continue to be hindered or outright rejected.

For example, in March 2025, the Brisbane City Council denied three development applications under the ‘Community Batteries for Household Solar’ federal program.¹⁵ The batteries would have been placed in public parks, which the Council argued would cause a loss of green space. This decision has been contentious, with concerns about delaying the rollout of such important infrastructure being voiced.

2. Economic viability

Economic viability of community batteries hinges on well-aligned network and storage tariffs, market incentives and government grants, especially for non-Distribution Network Service Providers (DNSPs).¹⁶ Punitive storage and network tariffs disincentivises community-led battery initiatives because it is not financially viable. This can pose an issue because local governments and community-led groups tend to garner stronger trust within communities, which may lead to smoother implementation of community battery projects.¹⁷  There needs to be supportive tariffs and more government grant allocation for non-DNSPs to increase economic viability for all groups that are advancing the deployment of community batteries.

For both DNSPs and non-DNSPs, the commercial outcomes of community batteries are heavily dependent on market conditions, which are known to be volatile.¹⁸ This can pose risks on the potential revenue generated from community batteries.

Economic viability is a key consideration for consumers, too. Ausgrid reported that cost savings was the primary factor in focus group participants’ interest in community batteries, suggesting there needs to be continued rebates on exporting solar energy, low energy bills, and low network costs for maximum community engagement.¹⁹

3. Equitable access

There is a growing public sentiment that community batteries should benefit all members of the community, not just solar panel owners.²⁰ Future policy design should incorporate the need for equitable access to community battery benefits to encourage genuine community involvement, which will result in increased positive attitudes within the wider community towards creating a sustainable future.

Regulatory considerations

1. Ownership constraints

The current National Electricity Rules (NER) allow DNSPs to own community batteries. However, unless DNSPs are granted an approved waiver from the Australian Energy Regulator, they are limited to only delivering regulated network services such as supporting voltage in weak parts of the network or deferring a larger network investment. DNSPs cannot provide contestable services such as selling energy or participating in Frequency Control Ancillary Services markets.

Although the purpose is to maintain market contestability by preventing any monopolies from being formed, it may result in disincentivising DNSPs from installing batteries on their networks.²¹

2. Market registration and participation requirements

There are several complex regulatory requirements set for battery operators that intend to provide, or trade, energy or ancillary services in the National Energy Market (NEM). These requirements include registering as Small Generation Aggregators for batteries under 5MW, partnering with a registered market participant, or, for those who own, operate or control a battery system with a nameplate rating of 5MW or greater, registering as both a Scheduled Generator and a Market Customer, unless the battery system never imports electricity from the grid.²²

Furthermore, there are additional financial, technical and compliance obligations imposed. For example, irrespective of the model, deploying community-scale batteries will require enhanced technological capabilities that will need to be coordinated by a community battery provider.²³ This may include new metering, integration, telemetry and control systems.²⁴

Projects will also require management and governance structures to meet the interim arrangements of the Australian Energy Market Operator (AEMO), who manage the NEM. This includes:

• NER-compliant metering at each connection point;
• providing real-time data on the state of charge, charge/discharge rates, and other operational metrics to AEMO; and
• negotiating Generator Performance Standards.²⁵

These requirements pose challenges predominantly for small councils or community-led groups due to a lack of resources and funding.

Due to such complex regulations, there are existing reforms and ongoing proposals at the federal level to expand the market and be more inclusive through the ‘NEM Reform Program’²⁶ such as:

• the establishment of the Integrating Energy Storage Systems project, which introduced a new registration category called ‘Integrated Resource Provider’ that will accommodate hybrid battery systems to easily register in the market;²⁷ and
• integrating price-responsive resources into the NEM so that they are appropriately considered when determining energy demands, resulting in increased efficiency of energy, security and reliability services for consumers.²⁸

 

3. Network tariffs and cost recovery

 

Currently, network tariff structures are not designed for localised, bidirectional energy systems.²⁹ This creates a major barrier for the feasibility of community-scale batteries within the NEM. To tackle this issue, there are current proposals and trials underway,¹³⁰ including:

• the local use of service tariff which is proposed to reward electricity that is locally generated and consumed; and
• allowing DNSPs to apply network tariffs to households for excess solar PV exports to levy customers for the cost of network usage associated with exporting the energy.

Overall, as community batteries are a very recent addition to the energy landscape, regulatory amendments are continuing to unfold and adapt to accommodate issues that arise as the batteries continue to be expanded.

Act now

The deployment of community batteries is a promising initiative pioneering Australia’s transition to a cleaner, more resilient energy system. While the technology holds immense potential, from enabling equitable access to renewable energy to alleviating grid pressure and reducing electricity costs, large-scale deployment remains in its early stages. The success stories from Mandurah, Melbourne and the Illawarra illustrate that when implemented thoughtfully, community batteries can deliver meaningful benefits. However, regulatory hurdles, economic viability, and intergovernmental coordination continue to challenge progress.

To unlock the full potential of community batteries, it is crucial for governments, regulators, and communities to work collaboratively. Policy frameworks must evolve to better support innovation, ensure fair access, and create economic incentives for all stakeholders. As Australia continues to navigate the complexities of integrating distributed energy resources into the grid, community batteries, deployed effectively, could become a cornerstone of our clean energy future.

 

The Hamilton Locke team advises across the energy project life cycle – from project development, grid connection, financing, and construction, including the buying and selling of development and operating projects. For more information, please contact Matt Baumgurtel.

 

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¹ ‘Community Batteries’, Citipower and Powercor Australia (Web Page) <https://www.powercor.com
.au/network-planning-and-projects/network-innovation/community-batteries/#:~:text=Community
%20batteries%20provide%20a%20role,there%20is%20lower%20electricity%20demand>.

² ‘Community Batteries for Household Solar Program’, Department of Climate Change, Energy, the Environment and Water (Web Page) <https://www.dcceew.gov.au/energy/renewable/community-batteries>.

³ ‘Community Batteries’, Ausgrid (Web Page) <https://www.ausgrid.com.au/In-your-community/
Community-Batteries>.

⁴ ‘Community Batteries for Household Solar Program’ (n 2).

⁵ ‘How Battery Storage is Helping the City of Mandurah Community Thrive’, Western Power (Web Page, 29 April 2021) <https://www.westernpower.com.au/news/how-battery-storage-is-helping-the-city-of-mandurah-community-thrive/>.

⁶ Joshua S Hill, ‘Community Battery Switches On to Help Power CBD Apartments with Excess Rooftop Solar’, Renew Economy (online, 27 June 2024) <https://reneweconomy.com.au/community-battery-switches-on-to-help-power-cbd-apartments-with-excess-rooftop-solar/>.

⁷ Sarah MacNamara, ‘NSW Community Batteries Switched On’, Energy Magazine (online, 21 March 2025) <https://www.energymagazine.com.au/nsw-community-batteries-switched-on/>.

⁸ ‘Wollongong Council Clears Path for More Community Battery Sites’, City of Wollongong (Web Page, 24 March 2025) <https://www.wollongong.nsw.gov.au/council/news/articles/march/wollongong-council-clears-path-for-more-community-battery-sites#:~:text=Wollongong%20Council%20clears%20path%20for%20more%20Community%20Battery%20sites,Monday%2024%20March&text=Wollongong%20City%20Council%20has%20taken,across%20the%20Local%20Government%20Area>.

⁹ Steve Blizard, ‘Just 21 of 400 of Labor’s Community Batteries Operational’, The Australian (online, 31 March 2025) <https://www.theaustralian.com.au/nation/just-21-of-400-of-labors-community-batteries-operational/news story/e60f3b778fa60995766e52256002151e>.

¹⁰ James Shand, ‘Ultimate Guide: Labor’s $2.3 Bn Cheaper Home Batteries Program (2025)’, Solar Choice (Web Page, 7 April 2025) <https://www.solarchoice.net.au/learn/solar-rebates/government-battery-rebate/>.

¹¹ Joshua S Hill, ‘University to Host Ten Community Batteries to Soak Up Excess Solar and Be Part of Virtual Power Plant’, Renew Economy (online, 10 April 2025) <https://reneweconomy.com.au/univer
sity-to-host-ten-community-batteries-to-soak-up-excess-solar-and-be-part-of-virtual-power-plant/>.

¹² ‘Powering Communities: Round 2 of ARENA’s Community Batteries Program Launched’, Australian Renewable Energy Agency (Web Page, 26 February 2025) <https://arena.gov.au/news/powering-communities-round-2-of-arenas-community-batteries-program-launched/#:~:text=Building%20on %20the%20success%20of%20Round%201%2C,and%20reduce %20pressure%20on%20the%20electricity%20grid.&text=Community%20batteries%20provide%20energy%20storage%20in%20the,and%20easing%20pressure%20on%20local%20electricity%20grids>.

¹³ ‘Neighbourhood Batteries’, Department of Energy, Environment and Climate Action (Web Page, 13 March 2025) <https://www.energy.vic.gov.au/grants/neighbourhood-batteries>.

¹⁴ ‘Community Batteries’, Department of Energy and Mining (Web Page) <https://www.energymining.
sa.gov.au/consumers/solar-and-batteries/community-batteries>.

¹⁵ Andrew Messenger, ‘Brisbane City Council Blocks Plans for Fridge-Sized Community Batteries Due to Loss of Green Space’, The Guardian (online, 30 March 2025) <https://www.theguardian.com/
australia-news/2025/mar/30/brisbane-city-council-blocks-plans-for-fridge-sized-community-batteries-due-to-loss-of-green-space#:~:text=Brisbane-,Brisbane%20city%20council%20blocks%20plans%20 for%20fridge%2Dsized%20community %20batteries,to%20loss%20of%20green%20space&text=The%20Brisbane%20city%20council%20has,giant%20batteries%20in%20public%20parks%E2%80%9D.&text=If%20playback%20doesn’t%20begin%20shortly%2C%20try%20restarting%20your%20device>.

¹⁶ Anne Delaney, ‘Community Batteries Still Need Grants, But Are Crucial For Energy Transition’, One Step Off the Grid (online, 3 September 2024) <https://onestepoffthegrid.com.au/community-batteries-still-need-grants-but-are-crucial-for-energy-transition/>.

¹⁷ Ibid.

¹⁸ KPMG, Ausgrid Community Battery: Feasibility Study Report (Report, February 2020) 7 <https://www.ausgrid.com.au/-/media/Documents/Reports-and-Research/Battery/Ausgrid-Community-Battery-Feasibility-Study-Report-2020.pdf>.

¹⁹ Above n 9.

²⁰ Above n 10.

²¹ Marnie Shaw et al, Implementing Community-Scale Batteries: Regulatory, Technical and Logistical Considerations (Report, December 2020) 9 <https://arena.gov.au/assets/2020/12/bsgip-regulatory-technical-and-logistical-considerations.pdf> (‘Implementing Community-Scale Batteries’).

²² National Electricity Rules 2005 (Cth) ch 2 (‘NER’).

²³ Implementing Community-Scale Batteries (n 21) 14.

²⁴ Ibid.

²⁵ Australian Energy Market Operator (AEMO), Interim Arrangements for Utility Scale Battery Technology (Information Document, 7 July 2017) 2-3 <https://www.aemo.com.au/-/media/Files/Electricity/NEM/Participant_Information/New-Participants/Interim-arrangements-for-utility-scale-battery-technology.docx>.

²⁶ ‘NEM Reform Program’, Australian Energy Market Operator (Web Page) <https://aemo.com.au/
initiatives/major-programs/nem-reform-program>.

²⁷ ‘Integrating Energy Storage Systems Project’, Australian Energy Market Operator (Web Page) <https://aemo.com.au/initiatives/major-programs/nem-reform-program/nem-reform-program-initiatives/integrating-energy-storage-systems-project#:~:text=Background,units%20until%2003%
20March%202025.>

²⁸ ‘Integrating Energy Storage Systems into the NEM’, Australian Energy Market Commission (Web Page) <https://www.aemc.gov.au/rule-changes/integrating-energy-storage-systems-nem>.

²⁹ NER (n 19) ch 6.

³⁰ Implementing Community-Scale Batteries (n 21) 10.