The scrapping of a $2500 solar panel sweetener has been defended by a state energy minister after critics labelled the move a "slap in the face".
As a federal battery subsidy kicks in on July 1, NSW will replace its home battery installation rebate with a smaller incentive to create more virtual power plants.
The move comes as other states power down their own battery incentives.
Virtual power plants connect solar-powered batteries owned by households and small businesses to the grid, allowing owners to generate ongoing revenue by selling the excess energy stored in their battery when demand is high.
The NSW government argues households and businesses will benefit by stacking the new scheme - worth up to $1500 - on top of the federal program, which slashes up-front costs by about 30 per cent.
"The real value of virtual power plants is that we don't waste energy that's in the batteries," NSW Energy Minister Penny Sharpe told AAP on Thursday.
But renewable energy advocacy group Solar Citizens said ditching the state battery subsidy on June 30 was a "slap in the face" for solar panel owners.
They were promised up to $2500 in addition to the federal program if they invested in a home battery.
"This surprise decision is a blow to solar-home owners planning to buy a home battery in coming months," the group's chief executive Heidi Lee Douglas said.
She described the rebate's removal as a "betrayal" of the Labor government's election promise of the federal Cheaper Home Batteries program, which can be topped up with state rebates.
"We designed the Cheaper Home Batteries program to be stackable with state incentives, and it is," a spokesperson for Energy Minister Chris Bowen told AAP.
The $2.3 billion federal government scheme will subsidise the up-front cost of installing eligible small-scale battery by about 30 per cent from July 1.
In Western Australia, solar battery customers are still able to receive both federal and state battery subsidies starting from July.
But NSW follows other states turfing battery sweeteners.
Victoria ended an interest-free solar battery loan worth $8800 in May while Queensland closed its $4000 battery rebate in December.
Australia has the highest take-up of rooftop solar in the world, with panels on more than two million homes providing about 13 per cent of electricity needs for the national grid in the past year.
The nation could slash $4 billion a year off power bills by the end of the decade if households embrace solar batteries in larger numbers, a Climate Council report found.
