The new Liberal state government in South Australia is being urged to rethink its policy on household battery storage, with major investments in the country’s first battery storage manufacturing facility, and the expansion of its only solar module manufacturer, at stake.

The new government led by Steve Marshall was quick out of the blocks after its poll win in March with a vow to discontinue the previous Labor government’s support of a privately-funded scheme to provide solar and storage to low income households.

The government was taken aback from the sharp response to that stance, given that it had proposed its own $100 million grant funded scheme, which is now criticised because it will only support those with the money to pay for the bulk of the storage costs.

Meetings were held between South Australian government officials and representatives of sonnen in Adelaide last week about its proposal to set up the first battery storage manufacturing plant in Australia.

That proposal was part of a Labor announced plan to provide zero interest loans to households to encourage the rollout of battery storage, and to ensure that low-income households have access to the technology.

It is one of three schemes that are now being considered by the state government – its own grant scheme, the low-interest loan scheme, or the Tesla-proposed virtual power plant.

The Tesla proposal was to install, free of charge, 5kW of rooftop solar and a 13.5kWh Tesla Powerwall battery storage unit in low-income households, starting with Housing Trust tenants.

The investment would be recouped through payments for the use of the solar and storage, but would still deliver a 30 per cent reduction in bills to those tenants.

Only the initial rollout of 1,100 has been guaranteed support by the new government, because of contracts written before the election campaign, but the remaining program of 48,900 has been left in limbo.

The proposal would seek to add much-needed new competition to the local market because it would be rolled out by a new retailer. So far, it is believed that only a few dozen batteries have been installed.

Another company with an interest in the government’s next move is Tindo Solar, the only solar manufacturer in the country, which was looking to double its production line on the basis of the Tesla and sonnen initiatives, which both required high levels of local supply for the modules.

Local installers interviewed at last week’s Smart Energy conference indicated that decisions on solar installations by local households were being delayed pending the outcome of the government’s deliberations.

This, however, has not flowed through to official data, which show that rooftop solar installations in the state doubled in the March quarter, as part of a country-wide trend to install more solar in reaction to high grid prices and inadequate energy policies.

The South Australia government did not respond to enquiries about last week’s talks. Sonnen also would not comment, other than to say that it is still the company’s intention to set up a battery manufacturing plant in Adelaide.