Enabling distribution-connected batteries

The NSW Government is investigating options to support the delivery of batteries on the electricity distribution network, helping ensure they provide benefits for NSW energy consumers. Find out how you can get involved. 

Distribution-connected batteries

Distribution-connected batteries are battery energy storage systems that store electricity and are connected directly to the electricity distribution network, rather than the high voltage transmission network or individual homes or businesses. 

Small batteries can be mounted on top of power poles, while larger ones are usually installed on the ground next to power poles or inside electricity substations. 

In NSW, electricity distributors, retailers and other providers have started using different business models to deliver these batteries. 

One example is community batteries. These allow energy from rooftop solar to be stored and shared with residents in the local community. Households and businesses near the battery can sign up to a plan to access this stored energy. In some cases, you do not need to own rooftop solar to join. This means renters and others who cannot install rooftop solar can still benefit from renewable energy produced in their community. 

Benefits of distribution-connected batteries

Like other batteries, these systems store electricity when it costs less and is most abundant, and then release it when demand and prices are high. They also help support grid stability by rapidly absorbing or supplying energy when needed. 

When set up close to homes and businesses, these batteries can:

• store excess energy produced from rooftop solar, helping owners to get more value and encouraging more investment in rooftop solar
• reduce the risk that, in future, rooftop solar output will need to be limited during the day to keep the grid secure.

When installed at or near substations, they can: 

• store energy during low-demand periods and release it during times of peak demand, deferring the need for costly network upgrades
• enable more renewable energy from large solar and wind farms to be generated and stored, putting downward pressure on electricity bills
• support the secure integration of more renewables into the grid. 

Depending on the business model, these batteries can also share the benefits of energy storage with households and small businesses that cannot install their own solar or battery systems – such as renters. 

How the NSW Government is supporting the development of distribution-connected batteries

The NSW Government is investigating options to support the delivery of batteries on the local electricity network. This includes looking at:

• policy, regulatory, and market settings that might slow down or prevent distribution-connected battery projects
• business models that share the benefits of battery storage with local communities. 

Feedback from stakeholders shows that there are barriers such as national regulations, tariff structures, connection costs and timelines, and limited access to site and network information. 

The government is evaluating options to overcome these barriers so electricity distributors and other providers can build batteries that share benefits back with local communities. This may include introducing a regulation under the Electricity Supply Act 1995, which allows the Minister to set rules for community batteries up to 30 megawatts in capacity. 

Get involved

The NSW Government is engaging with stakeholders to better understand and overcome barriers to distribution-connected batteries. We will release a consultation paper outlining policy positions in the first half of 2026. 

We invite stakeholders interested in this work to engage with us now, ahead of the consultation paper’s release. Please contact: [email protected], using the subject line: ‘Stakeholder feedback: Distribution-Connected Batteries’.