The Australian Competition and Consumer Commission (ACCC) made the warning on Monday after Federal Assistant Treasurer Stephen Jones issued a proposed recall notice for the LG Home Energy Storage Systems Batteries.
The batteries, manufactured between 2016 and 2019, have damaged property in 13 incidents, including a fire that destroyed a house in Victoria, and caused one smoke inhalation injury.
Mr Jones said he was considering a compulsory recall as "one or more suppliers of the affected LG batteries have not taken satisfactory action to prevent those consumer goods causing injury to any person".
ACCC deputy chair Catriona Lowe said the formal recall notice represented the next stage in tackling the risk posed by the batteries that could overheat and cause fire.
"A proposed recall notice is a formal step towards a compulsory recall and highlights the serious risk posed by the around 5000 affected LG solar storage batteries that have not yet been located," she said.
"We are urging everyone (who) has a solar energy storage system to check whether they have an affected battery and, if they do and it has not been remediated, to switch it off and contact LG immediately."
The government notice said more than 6200 affected solar batteries had yet to be replaced or updated in Australia, and another 4950 had not even been located.
Ms Lowe said the batteries were installed in solar storage systems from LG and other brands, including SolaX, as well as unbranded systems, and urged anyone using a solar battery to check its serial number against recalled models.
Stephen Jones is considering a compulsory recall for suspect LG solar storage batteries. (Mick Tsikas/AAP PHOTOS)
LG supplied the batteries to 22 distributors in Australia.
The South Korean brand has issued voluntary recalls for affected models in Australia, the United States, United Kingdom, New Zealand and Europe, with remedies including replacements, refunds and software updates, depending on the battery model.
LG has also offered financial compensation to customers who receive higher electricity bills as a result of being unable to use their solar battery.
Mr Jones urged the company to commit to advertising its voluntary recall until all affected models had been identified, and said the company's current plan did "not reflect the urgency or sustained efforts required to reach remaining consumers".
In a statement issued late on Monday, LG said its energy companies were "carefully considering the (proposed recall notice) and next steps," and planned to provide a "comprehensive explanation to the ACCC".
"LG Energy Solution remains committed to engaging with the ACCC about progressing the recalls and engaging in this process with utmost sincerity," the statement said.
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