The solar and storage market is experiencing a natural cooling after a frenzied period, thanks to the federal government's intervention in the Cheaper Home Batteries scheme. This scheme, designed to encourage the adoption of home solar and storage, had seen a surge in demand as consumers rushed to take advantage of the full rebate on super-sized batteries and larger solar arrays. However, the break-neck rate of uptake was unsustainable, and the government had to step in to ensure the scheme's longevity.
The new settings, which came into effect in May, have had an immediate impact. Monthly battery installations plummeted from April's record high to 1.51 gigawatt-hours in May. This is not a genuine downturn, but rather a correction after the pre-rebate rush. Installers are now focusing on smaller battery systems, with growth emerging in the sub-20kWh segments. The average battery size has only slightly decreased to just under 38 kWh, with 40 and 50 kWh systems still dominating the market.
The rooftop solar market has also seen a slowdown, with May installations at 341 MW, down 22% month-on-month. However, this is still roughly 46% above installation levels from a year ago. The total volume for January-May is the highest ever and running ~36% ahead of the same point in 2025. The looming rebate cut pulled large-format battery demand forward into April, producing the record spike, and May reflects the comedown from that surge.
The Cheaper Home Battery Program continues to act as a multiplier on PV, and electrification of appliances and EVs is the likely next leg of the cycle. While the market has cooled, it is still well above historical averages, and the scheme's impact on the solar industry is undeniable. The government's intervention has successfully calmed the market, but the question remains: what will be the long-term impact of these changes on the solar and storage industry?
Personally, I think the cooling of the market is a natural correction after a period of frenzied demand. However, the impact of the new settings on the industry's growth and sustainability is yet to be fully understood. What makes this particularly fascinating is the delicate balance between encouraging innovation and ensuring the scheme's longevity. In my opinion, the government has successfully navigated this challenge, but the true test will be in the coming months as the market adjusts to the new settings. From my perspective, the solar and storage industry is at a crossroads, and the decisions made now will shape its future trajectory.
