Melbourne startup Relectrify has received a $1.49 million grant from the Australian Renewable Energy Agency towards the $3.3 million project.

It will extend the lifetime of electric vehicle batteries, which are usually replaced by drivers when they reach 80 per cent of their original capacity.

Relectrify hopes the technology can provide backup power for farms, micro-grids and rural networks.

Through the trial, 20 commercial-scale repurposed batteries will be installed across Australia, which could then lead to a bigger rollout.

Energy Minister Angus Taylor said the trial was expected to help reduce the cost of installing batteries and help renewables become a bigger part of the electricity grid.

"Importantly, it will also help to address end-of-life battery waste issues by repurposing and reusing electric vehicle batteries," he said.

Mr Taylor has recently released his future fuels strategy, which includes the government's electric vehicle policy.

Subsidies have been ruled out to make such cars more affordable, with the minister instead opting to help businesses go electric for their company cars.

The government believes helping firms switch to electric and hybrid vehicles will result in them being sold second-hand, reducing the cost for individuals and increasing uptake.

Australian Associated Press