The federal STC discount is paid because of what the battery is and how it is installed. It is not paid in exchange for joining anything. That is the short answer, and the detail below explains where confusion comes from.
What the federal program actually requires
For an on-grid battery to earn STCs under the Cheaper Home Batteries Program (from 1 July 2025), it must be:
- on the Clean Energy Council approved battery list,
- 5 to 100 kWh usable capacity (up to 50 kWh counted),
- installed by an accredited installer, one per property,
- VPP capable.
Being VPP capable is a product requirement. Joining a VPP is a customer decision. The two are separate, and the discount does not depend on the second.
What “VPP capable” means
In plain terms, the battery system, including its inverter, can connect to the grid and to outside parties, directly or through a cloud service, and can receive and respond to remote signals using a communications protocol an operator can use. It is what lets a virtual power plant operator tell the battery to charge or discharge. The capability has to be present on the product, not necessarily switched on for a specific operator.
A VPP-capable battery is not automatically compatible with every operator. Each VPP maintains its own list of supported batteries and inverters, so check before you sign a VPP agreement. Our answer on VPP battery rebates covers what operators offer.
Where joining is compulsory
Some state programs make VPP enrolment a condition of their own incentive. Western Australia’s battery scheme is the main example, and it is reported to require an approved VPP. A state scheme with a VPP condition does not change the federal rule: you can keep the federal discount whatever you decide about the state scheme. In NSW, the PDRS incentive is paid for connecting an eligible battery to a VPP, so there it is a reward for joining rather than a condition of the federal rebate. See how the stack works.
What this means for homeowners
Ask your installer to confirm in writing that the battery quoted is on the CEC list and VPP capable, then decide on a VPP separately and at your own pace. Compare any VPP offer on its term, exit conditions and effect on your warranty. The pillar page on battery STCs outlines the full eligibility checklist.
What this means for installers
You do need to evidence VPP capability when you lodge, and you should not tell a customer they must sign with a VPP to get the discount. If a retailer bundles a VPP agreement with the sale, make sure the customer understands it is separate. Our battery submission guide lists what a complete claim carries. A complete, pre-checked claim gets paid faster: see /start-trading/ and the rate on /pricing/.