Two publicly funded pilots have launched in New South Wales, Australia, both testing ways to extend the benefits of distributed solar and battery storage to households that cannot install their own systems.
The NSW and federal governments have announced an AU$11 million (US$7.4 million) virtual power plant (VPP) pilot for social housing tenants in the Illawarra.
Separately, Ausgrid has begun an AU$13.2 million trial, backed by the Australian Renewable Energy Agency (ARENA), storing surplus rooftop solar in a network of community batteries across Sydney and the Central Coast.
Illawarra social housing pilot targets tenants in Australia’s first urban REZ
The Social Housing Virtual Power Plant pilot, announced on 28 September, will install rooftop solar panels and batteries on selected social housing properties in the Illawarra Renewable Energy Zone (REZ), and then connect them to a VPP to export stored power when it is most valuable to households and the grid.
Try Premium for just $1
- Full premium access for the first month at only $1
- Converts to an annual rate after 30 days unless cancelled
- Cancel anytime during the trial period
Premium Benefits
- Expert industry analysis and interviews
- Digital access to PV Tech Power journal
- Exclusive event discounts
Or get the full Premium subscription right away
Or continue reading this article for free
The Australian government is providing AU$10 million of the funding, drawn from the Albanese government’s recent AU$145 million expansion of the Social Housing Energy Performance Initiative, with the NSW government contributing the remaining AU$1 million.
The Initiative has already funded upgrades to around 400 homes in the Illawarra REZ, including the installation of 136 rooftop solar systems.
A market sounding has opened to gather feedback from solar and battery installers and VPP operators to help shape the pilot’s design, with responses due by 25 October 2026.
NSW minister for energy Penny Sharpe said the pilot would demonstrate how solar, batteries and VPP technology can lower bills for tenants who typically cannot access those benefits directly.
Federal assistant minister for climate change and energy Josh Wilson said the investment was intended as practical cost-of-living relief that also supports the broader transition to cheaper, cleaner energy.
The pilot sits within a wider push to develop the Illawarra as Australia’s first urban REZ, a model that differs from traditional REZs by focusing on distributed generation and consumer energy resources rather than utility-scale wind and solar.
That distinction matters for how NSW is sequencing its REZ rollout: construction is already underway on the state’s Hunter-Central Coast REZ, a AU$590 million network upgrade delivered by Ausgrid and EnergyCo that will add 1GW of transfer capacity to support utility-scale generation and storage, giving NSW two REZ models running in parallel, one built around transmission-scale infrastructure and one built around what households and small businesses can generate and store themselves.
Ausgrid’s Community Power Network extends a growing state-wide battery storage fleet
Meanwhile, Ausgrid’s Community Power Network trial takes a different approach to the same underlying problem.
Rather than installing solar and battery storage systems directly on individual properties, the trial encourages large rooftop owners, including industrial sites, shopping centres and schools, to install more solar capacity than they need, then stores the surplus in a network of community batteries for release to around 32,000 nearby Ausgrid customers during the evening peak.
Ausgrid CEO Marc England said the model was designed to let renters, apartment dwellers and other households without their own solar or battery storage access share in the savings, estimating potential annual bill rebates of AU$150 to AU$200 for a customer without solar.
Community consultation on battery storage locations is underway in the first trial area, spanning Botany, Mascot, Pagewood, Eastlakes and Roseberry, with consultation for the Central Coast to begin next year.
The trial builds on infrastructure Ausgrid has been developing for several years. The company launched an energy storage-as-a-service (ESSaaS) offering in 2024 alongside its ninth community battery in Bondi, giving retail customers a way to draw on stored community battery energy directly.
Meanwhile, ARENA confirmed earlier this month that its Community Batteries Funding Initiative had reached its 100th installation nationally, with Ausgrid separately receiving AU$8 million under Round 2 of that programme for a network-led scale-up of 21 further community batteries across Sydney, the Central Coast and Hunter regions, funding distinct from the Community Power Network trial but reflecting the same underlying strategy.
Deployment models for community batteries continue to vary by jurisdiction. For instance, the ACT government completed its first three-battery network in March 2026 with a 450kWh system in Dickson, a smaller, territory-government-led programme.
Never miss an Australian energy storage story. Sign up for our Australia newsletter and get the latest project announcements, policy updates and market analysis delivered directly to you.
