‘Home batteries are now an economically rational way to get bills even lower than with solar panels alone … There is a lot more choice nowadays, with reputable brands including PowerPlus Energy, BYD, genZ and SolarEdge.’ Photograph: MediaNews Group/The Riverside Press-Enterprise/Getty Images‘Home batteries are now an economically rational way to get bills even lower than with solar panels alone … There is a lot more choice nowadays, with reputable brands including PowerPlus Energy, BYD, genZ and SolarEdge.’ Photograph: MediaNews Group/The Riverside Press-Enterprise/Getty Images
Change by degreesEnergy This article is more than 3 months old

How to tell if a home battery could save your household money in 2023

This article is more than 3 months old

The economics of solar batteries has changed considerably in recent years, and could now reduce your total power bill – and emissions

For many years, the idea of installing home batteries in Australia was, to put it bluntly, a bad deal.

Salespeople would spin numbers in their favour, conveniently ignoring the 20-plus-year payback period on a battery with just a 10-year warranty.

Furthermore, the environmental maths didn’t add up: these batteries could emit more CO2 than they saved.

But battery economics have changed since Elon Musk unveiled the first Tesla Powerwall in 2015, and for many Australians they’re now an economically rational way to get bills even lower than with solar panels alone.

What’s changed?

Home batteries haven’t gotten much cheaper
Despite advances in technology, home batteries haven’t seen a significant drop in price. But that’s not the point because other factors have shifted the equation in their favour.

Batteries cost $7,000 to $18,000 depending on the capacity you go for, plus $1,500 to $3,000 for installation. There is a lot more choice nowadays, with reputable brands including PowerPlus Energy, BYD, genZ, Delta, Huawei, Redback, Sungrow, SolarEdge and Pylontech.

The cheapest reliable energy system to meet Australia’s climate targets? Solar and wind, no question | Temperature CheckRead more

Solar adoption has rocketed
Solar panel use has soared, with seven times more rooftop solar capacity now than in 2015 and the pace of new installations speeding up dramatically since 2019.

There are now so many panels on Australian roofs that solar farms will often curtail their output on sunny days as prices turn negative. This means stored solar energy used after sunset can reduce emissions more than solar used during the day.

Electricity costs have risen
Not only have power prices risen, they also fluctuate more throughout the day.

The mass adoption of solar has reduced daytime wholesale prices, but generators now charge more in the evenings. Evening prices are often 10 times higher than during the day – making battery-stored energy much more valuable than it used to be. This will significantly shorten the payback period of a home battery if you can ride through the pricey evening peak on battery power.

In South Australia, Western Australia and Queensland, you can even get a super off-peak rate during the day to top up your battery from the grid for as little as $0.08 a kWh, helping ensure your battery gets fully charged even on overcast days.

(As an aside, these super off-peak daytime rates open up the possibility of renters being able to use a battery in their home even without solar panels. A rebate for landlords to encourage reconfiguration of their switchboard to accept a renter’s battery would help here.)

Feed-in tariffs have dropped
The rates at which you’re paid for feeding excess solar energy back into the grid have dropped significantly over the last two years. Solar owners who were enjoying more than $0.20 for each kWh of exported solar are now seeing feed-in tariffs closer to $0.07, reducing the financial benefit of exporting excess solar during the day.

VPPs have appeared
Virtual power plants have sprung up, allowing homeowners to support the grid by charging and discharging at critical times, and getting paid to do it. It involves giving up control of your battery to someone else, but you can earn hundreds of dollars a year by doing so.

Home battery reliability has improved
In 2016, the Canberra Battery Test Centre painted a dismal picture of home reliability, with only two of 26 home batteries tested being fault-free. But technology improves quickly, and a study published in 2020 in the journal Energies says in moderate climates (20-32C) with daily use, lithium-ion home batteries should last 14-16 years. In climates up to 40C, the study expects 12-14 years. Some home batteries now have warranties for 15 years.

So should I be thinking about getting one?

Let’s examine some basic calculations to help you determine if investing in a home battery is financially viable.

The key numbers you need to look out for are how much you’re being paid by the grid for your excess solar energy (your solar feed-in tariff), and how much you pay for electricity in the evening.

Some households will be on a set rate for power all day (a single-use tariff), others will pay different amounts based on the time (time of use tariff). Since energy costs can differ significantly depending on your location, consult your latest bill for accurate per kWh figures.

skip past newsletter promotion

Sign up to Afternoon Update

Free daily newsletter

Our Australian afternoon update breaks down the key stories of the day, telling you what’s happening and why it matters

Privacy Notice: Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Privacy Policy. We use Google reCaptcha to protect our website and the Google Privacy Policy and Terms of Service apply.

Here are two examples* – you should be able to substitute the numbers used here for ones gleaned from your own electricity bill.

Graphic showing examples of how long it could take to pay a battery back depending on your power bill

These examples assume you will have 100% battery utilisation (ie you’ll charge and discharge the whole battery once a day, every day). If not, and you’re on a time of use tariff, you should be able to roughly calculate how much energy you use in an average evening from your latest bill, and substitute that number for the initial 10kWh in these equations. There are also some other calculation notes listed at the bottom of this article.

You do the maths

There’s no question that the financial and environmental equations for home batteries have improved significantly. While they’re still not for everyone, for many Australians, the numbers now add up in their favour with a payback just over five years possible for some homes.

Before, you’d need to be a true believer to invest in a home battery. Now, you just need to do the maths.

  • Finn Peacock is an engineer and the founder of solarquotes.com.au

  • Change by Degrees is our new Saturday column offering life hacks and sustainable living tips to help reduce your household’s carbon footprint

Calculation notes from the above examples.

Things the calculation ignores that will make your payback worse:

  • Battery efficiency (~90%)

  • Degradation (~2% a year)

  • Keeping 20% reserve capacity for blackout protection

Things the calculation ignores that could make your payback better:

  • Cycling the battery more than once a day – which is possible where your tariff includes cheap overnight electricity and an expensive morning peak

  • VPP bonuses and battery subsidies

  • Any value placed on blackout protection

  • Improved visibility of your energy through the battery’s energy monitoring app often results in better energy use habits

Assumptions:

  • 100% battery utilisation (ie you’ll charge and discharge the whole battery once a day, every day)

  • That you’ve chosen a tariff that gives you the lowest bill without a battery

ncG1vNJzZmivp6x7tbTEoKyaqpSerq96wqikaJmlqMGzrcuimGamlazAcK%2FOpqSepqSewKe%2BxJ5ma2hiaHy0sc9oaWxno6S5or6Mm5itrJWntqa%2FjKGmpp1dl661wMSrsGavn6fBqXnIrWSbnaOperC806Kmp6tdl7%2BiusOsZK2do6GubrzOsJyrr5GhuW68zrCcq6icqsBusc2eqaCxXZfGpXnGnqWzZaOkuaK%2BjJ6boJ1dlsK0wNGao6KZXZi1orrGnmSbsV2Zsqi%2BxJ6q