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The NSW Government has moved towards enabling wider diffusion of residential battery storage. This opens significant opportunities for NSW, offering a new catalyst for directing economic growth in support of climate and energy policy goals by building the future infrastructure the state needs. Through a mission driven framework, NSW can drive a new wave of innovation, jobs growth and industrial capacity by establishing ambitious residential battery storage (RBS) targets.

The promise of battery storage in the energy transition has gained further momentum with the NSW Government making a series of policy announcements. It has approved large scale battery projects across multiple Renewable Energy Zones and has pledged to speed up grid connections. It has bolstered EV uptake by improving charging infrastructure, particularly in regional areas and urban locations lacking off-street parking. Households have been offered substantial financial incentives to install batteries through a rebate scheme. Finally, the government has commenced development of a new critical minerals and high-tech metals strategy, hoping to position NSW as a major global supplier while also processing more of these materials onshore to capture greater economic value.

A more complex environment

At the same time, the government has also taken steps to address growing safety and sustainability concerns, issuing warnings about the rise of lithium-ion battery fires and initiating measures to improve their safe disposal and recycling. In addition, it has been concerned about the growing unreliability of coal power stations and a looming gas “shortage” on the east coast which is placing pressure on energy affordability and security.

The wider energy transition in NSW is also facing critical headwinds, such as a lack of skilled workers, inflationary cost pressures, prohibitive cost of capital, issues with social licence, and regulatory barriers which are slowing down grid scale renewable energy projects. Climate change also continues to represent a threat to our energy system as we enter a summer of potential heatwaves.

Consequently, there is an opportunity for the NSW Government to harness residential battery storage to maintain energy security and affordability in an increasingly complicated policy environment.

But what are the benefits of RBS?

Expanding horizons: from grid to home

In recent months, the NSW Government has announced significant new incentives for the installation of RBS which may enable a more rapid and equitable energy transition. Expanding RBS using rebates and other financial incentives offers households an opportunity to offset their expenses as inflation and interest rates remain elevated.

RBS expansion can also overcome the roadblocks encountered with grid scale battery projects, improving grid stability and reliability while reducing the need for large scale infrastructure. A pivot to households can also unlock new opportunities for innovation – as demonstrated by the growth of virtual power plants and bidirectional EV charging. RBS also offers a new way to manage peak demand, offering a hedge against power outages and emergencies in a climate changed world.

The growth of RBS also comes at a fortuitous time, as new technological innovations in the battery space and the expansion of industrial capacity mean that batteries are following Wright’s Law, portending greater mass availability of residential batteries at much lower cost. This aligns well with the NSW Government’s industrial policy agenda, potentially fostering job creation in battery manufacturing and installation while supporting investment in innovative energy business models.

Laying more strategic foundations: time for a “mission” approach

As the NSW Government continues to support the expansion of RBS, there is an opportunity to adopt a more mission driven approach. As championed by economist Mariana Mazzucato, a mission driven approach involves setting ambitious and concrete goals that require cross-sector innovation and collaboration.

A mission-based framework offers a powerful mechanism for attracting and directing private investment towards residential battery storage infrastructure. Missions can “crowd in” private capital by setting a clear, ambitious and long-term policy agenda which reduces market uncertainties while steering the direction of private investment towards wider public goals, such as energy affordability and grid resilience. Missions can also attract greater investment in research and development in new battery innovations by unlocking innovative public-private partnerships, potentially generating unanticipated spillover effects for other applications, such as improving smart grid technologies or electric vehicle grid integration.

If the policy goal is to roll out residential batteries more rapidly and widely, a mission approach could also help the NSW Government to co-design community engagement models, skills development programs, industrial capacity, and policy frameworks in partnership with diverse stakeholders, including NSW households, community representatives and industry. This is due to the long-term and cross-sectoral focus of missions which can drive bottom-up innovation, enhance stakeholder collaboration, and facilitate greater policy experimentation in aligning resources with community needs and interests.

This approach could also help the NSW Government to better calibrate its other battery related policies, such as grid scale batteries, community batteries and EV charging infrastructure. Similarly, it can help the government ensure that financial incentives for RBS are widely accessible across NSW’s diverse communities, especially for regional and rural communities and disadvantaged households.

The RBS revolution offers NSW an historic opportunity to marry social justice, economic empowerment, and technological progress. The challenge is translating this vision into reality. A mission approach can drive the concerted and imaginative action required from government, industry and communities to jointly fulfill the promise of residential battery storage.

Dr Jack Isherwood is a Senior Research Associate at the James Martin Institute for Public Policy, joining the Institute from Western Sydney University, The College in 2023. He has a PhD in Political and Social Thought from the Australian Catholic University on the topic of civil discourse and civil disobedience. He is currently completing a Master of Public Policy at the Australian National University, and has research interests in climate adaption and mitigation, higher education policy, and the management of ‘black swan’ and ‘grey rhino’ scenarios. Alongside his work at JMI, Jack manages short online courses at Western Sydney University, The College.

Image credit: NOWRAphotography