Background

1. The Australian Government (the government) is aiming to reduce Australia’s emissions by 62–70 per cent below 2005 levels by 2035 and to achieve net zero by 2050. It is also aiming to increase the proportion of electricity from renewable sources to 82 per cent by 2030.

2. In October 2022, the government committed $222.43 million over four years from 2022–23 for the Community Batteries for Household Solar program (the program).¹

• The Department of Climate Change, Energy, the Environment and Water (DCCEEW) received $30.6 million to deliver 58 community batteries at pre-determined locations. It engaged the Business Grants Hub (BGH) to run four rounds of grants from 30 January 2023 to 8 November 2024.
• The Australian Renewable Energy Agency (ARENA) received $188.5 million to deliver 342 community batteries. It ran two rounds of grants — the first ran from 31 March 2023 to 29 March 2024, and the second round ran from 17 March 2025 to 1 September 2025.

3. The program aims to lower household electricity costs; contribute to lower emissions; support the electricity network; increase solar hosting capacity; and share benefits with households without solar installations.

Rationale for undertaking the audit

4. The government funded the program in 2022 to contribute to the target of net zero carbon emissions by 2050, and the target of 82 per cent of electricity from renewable sources by 2030.

5. Previous ANAO audits of grants programs administered by DCCEEW or ARENA have found the entities did not always have appropriate arrangements in place to evaluate and report on the achievement of program outcomes.

6. The audit was conducted to provide assurance to the Parliament as to whether DCCEEW and ARENA are effectively managing the program.²

Audit objective and criteria

7. The objective of the audit was to assess the effectiveness of DCCEEW’s and ARENA’s delivery of the Community Batteries for Household Solar program.

8. To form a conclusion against the objective, the following high-level criteria were adopted.

• Was the program effectively designed and planned?
• Were funding decisions made appropriately?
• Have effective monitoring, evaluation and reporting arrangements been established?

Conclusion

9. Delivery of the program by DCCEEW and ARENA is largely effective, consistent with the government’s policy intent and stakeholder feedback. Program planning, assessment and decision-making have largely occurred in accordance with requirements, however, program evaluation was not adequately considered during planning. The program is expected to deliver more than the planned 400 batteries. The program has experienced delays, with 66 per cent of the DCCEEW-funded projects having extended their project end dates by an average of 40 weeks. As at January 2026, 41 DCCEEW-funded and 17 ARENA-funded batteries were operational.

10. Program design and planning was largely effective. DCCEEW and ARENA largely had regard to required program design considerations and developed grant guidelines that largely reflected the government’s policy intent. DCCEEW did not provide the Australian Government with advice on the appropriateness of the pre-determined locations announced during the election. DCCEEW and ARENA did not fully coordinate to consider how different program approaches may influence the overall program outcomes. Both entities took into account stakeholder feedback and legal advice in designing and planning the program, and prepared program probity plans.

11. DCCEEW’s and ARENA’s assessment and decision-making was largely appropriate. Both entities considered external technical advice, in accordance with the grant opportunity guidelines and probity advice. For both entities, there were deficiencies in the management of conflicts of interest. DCCEEW did not assess grant applications against an agreed provision related to the cost per kilo-watt hour (kWh) of battery capacity, potentially impacting value for money.

12. DCCEEW and ARENA have partly effective arrangements to monitor, evaluate and report on the achievement of objectives and outcomes. Both entities are managing grant agreements in accordance with requirements. There have been delays with the delivery of batteries under DCCEEW’s program. Neither DCCEEW nor ARENA adequately prepared for program evaluation during program planning. In 2025, both entities developed approaches to program evaluation. There is a risk of duplicating evaluation effort. All grants must report on progress against program outcomes. ARENA has provided guidance for data collection. DCCEEW has not provided such guidance and it is not clear how reporting will be aggregated to provide evaluation of program outcomes. Public reporting on the program does not provide sufficient information about the effective and efficient delivery of the program.

Supporting findings

Design and planning

13. Program costs and benefits were determined by modelling commissioned by the Australian Labor Party when in opposition. DCCEEW tested this modelling through stakeholder feedback. It did not provide advice to the government on program costs and benefits, the suitability of pre-determined battery locations, or suggest alternative locations. A higher percentage of marginal electorates and Labor-held electorates received community batteries in pre-determined locations. DCCEEW advised the government on the risks to achieving stated program benefits. Grant opportunity guidelines reflected the government’s policy intent. DCCEEW ensured the legal basis for its delivery, had regard to the Commonwealth grants rules and guidelines (2017), and used lessons learnt to inform later grant rounds. DCCEEW did not finalise its probity controls until it assessed round 1 applications. (See paragraphs 2.3 to 2.48)

14. ARENA’s planning for the delivery of the program largely addressed the requirements of its Grants Management Policy. ARENA used stakeholder feedback to design the program, which resulted in some program parameters that differed from the government-approved implementation plan. ARENA and DCCEEW did not fully coordinate to consider how the different program delivery approaches may influence the overall program outcomes. ARENA advised the minister through their office of its intended program design. The minister was not formally advised on how ARENA’s decisions differed from the expected program design parameters. ARENA did not consider how success would be measured during program design. ARENA updated the guidelines in its second funding round based on feedback from round 1. (See paragraphs 2.49 to 2.83)

Funding decisions

15. All grants funded by DCCEEW met eligibility criteria, although grants were not assessed against all provisions in the grant opportunity guidelines, potentially affecting value for money. The average approved amount of grant funding per kWh of battery capacity was $1,586 and the maximum amount was $2,488 per kWh. This was against an agreed provision of $1,000 per kWh. DCCEEW appointed an external technical advisor to assist with grant application assessment. The decision-maker approved funding as recommended and in accordance with delegations, and all funding decisions were appropriately documented. DCCEEW staff involved in receiving BGH assessment recommendations completed conflict-of-interest declarations after receiving BGH’s assessment of round 1 applications, rather than as commencing program involvement. ( See paragraphs 3.3 to 3.34)

16. ARENA assessed applications in round 1 consistent with its core assessment principles of value for money, awarding grants on merit, and achieving program outcomes. Program-specific probity controls did not extend to decision-makers and one potential conflict of interest was not identified for the program. Decisions to award funding in round 1 were made by ARENA’s Board as required, and Board conflicts of interest were managed. ARENA’s Board approved projects for funding as recommended, based on merit and additionality considerations. The Board was provided with appropriate information and reasons for decisions were recorded. (See paragraphs 3.35 to 3.75)

Grants management and evaluation

17. DCCEEW’s ongoing management of grants is in accordance with its responsibilities under agreements with BGH, and DCCEEW’s grants policy. DCCEEW has approved all requested variations, in accordance with documented tolerances and delegations. At August 2025, there had been 78 variations across 58 grant agreements, 88 per cent of which include extensions to project end dates. The average total extension to end dates for DCCEEW projects is 40 weeks. BGH provides DCCEEW with a spreadsheet tracking variations and monthly reports on the progress of individual projects. DCCEEW uses this and information from grantees to track progress of the program against its targets. (See paragraphs 4.3 to 4.20)

18. ARENA’s ongoing management of grants is in accordance with its grants management and variations policies. Milestone payments have occurred following delegate approval of milestone reports. As at September 2025, ARENA had approved 45 variations across 16 grant agreements in accordance with its policy. At January 2026, four projects had extensions to project end dates. During 2025, ARENA established impact teams to improve its visibility over program management. (See paragraphs 4.21 to 4.34)

19. DCCEEW and ARENA have both established program evaluation approaches. There is a risk that evaluation performed by both entities will result in a duplication of effort. Performance measures are set out in the program implementation plan and DCCEEW’s evaluation framework (finalised in October 2025) should allow it to assess the program’s performance against these measures. It intends to evaluate the impact of both the DCCEEW and ARENA components of the program. ARENA did not plan for program evaluation during the design phase, as required by its internal policies. In July 2025, it prepared a program monitoring and evaluation plan and intends to evaluate the program in 2027–28. (See paragraphs 4.35 to 4.65)

20. DCCEEW receives end-of-project reports from grant recipients that contain information that is expected to assist DCCEEW evaluate delivery of the budget measure. Inconsistent methodologies implemented by grant recipients may result in difficulties in collating and validating the information. DCCEEW did not provide any guidance to grant recipients to encourage reporting that could be more effectively collated but expects that its evaluation framework will support qualitative analysis. Similarly, ARENA requires that grant recipients report on progress against program outcomes at milestones and the completion of the project. ARENA has provided guidance on data collection methodologies. Both entities produce a range of reporting. Public reporting does not include the operational status of batteries. (See paragraphs 4.66 to 4.92)

Recommendations

Summary of entity response

21. Relevant parts of the proposed audit report were provided to DCCEEW and ARENA. Summary responses are reproduced below, and full responses are at Appendix 1. Improvements observed by the ANAO during the course of this audit are listed in Appendix 2.

Department of Climate Change, Energy, the Environment and Water

The department acknowledges the ANAO’s audit report on the Community Batteries for Household Solar program and appreciates ANAO’s recognition that administration of the Community Batteries for Household Solar program has been largely effective.

The department is committed to continuous improvement and agrees with the two recommendations for the department. Actions to operationalise each recommendation are either in place or underway.

Australian Renewable Energy Agency

We are pleased the ANAO’s conclusion is that ARENA’s delivery of the program has been largely effective, with program design, assessment and decision-making largely appropriate, and with monitoring and reporting arrangements in place. ARENA accepts all recommendations and has commenced implementation.