Neighbourhood batteries are smaller than utility-scale batteries, making them easier to site and quicker to construct.
Designed to serve entire communities, these distributed BESS solutions provide a cost-effective and scalable approach to energy storage and distribution.
Funding details and BESS project requirements
Through the Neighbourhood Battery Initiative grant programme, the Victorian state government is offering up to AU$400,000 per project to applicants who can demonstrate multi-use case applications for BESS.
A total of AU$42 million is available for relevant projects under the programme.
The initiative covers systems that include a neighbourhood battery, solar PV, a generator, and a management system. Each battery must have a minimum size of 20kW/40kWh and a maximum size of 5MW/20MWh.
This funding round prioritises projects that benefit diverse, low-income, and vulnerable households, as well as those in outer suburbs and regional areas of Victoria.
The programme is expected to help Victoria achieve its target of 100 Neighbourhood BESS installations, further advancing the state’s renewable energy goals.
Victoria’s minister for energy and resources, Lily D’Ambrosio, emphasised the program’s potential to reduce energy costs and benefit communities.
Neighbourhood batteries and BESS adoption in Australia
Neighbourhood and community batteries, including BESS, have become a focal point for Australian policymakers, given their ability to harness the country’s extensive distributed rooftop solar PV generation capacity.
The technology has garnered significant attention from industry leaders and government agencies.
In July 2024, the Australian Renewable Energy Agency (ARENA) approved AU$143 million in funding through its Community Battery Funding Round 1 initiative to scale BESS technology.
This scheme will deploy 370 community batteries across Australia, benefiting all states and the Northern Territory. ARENA anticipates the initiative will unlock around AU$359 million in renewable energy infrastructure investment.
One of the awardees of ARENA’s initiative was the not-for-profit consultancy Yarra Energy Foundation (YEF), which has installed several community BESS in Melbourne and its surrounding suburbs.
YEF was an early adopter of community batteries, starting with its Fitzroy North BESS in Melbourne, installed in 2022.
Earlier this year, YEF reported that its Fitzroy North community battery generated AU$8,423 in revenue (excluding GST) for the 2023-24 financial year.
The revenue primarily came from energy arbitrage (AU$8,158), with a smaller portion derived from Citipower’s bidirectional community battery trial tariff (AU$1,046). YEF explored these findings further in a guest blog on Energy-Storage.news in February 2025.
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