A solar battery storage system added to your current solar system can provide considerable financial and environmental benefits.
For the average home, a solar system will have a return on investment (ROI) of roughly 3-5 years. However, for a solar system and a battery, you would look at an ROI of approximately 7-10 years.
What is the payback on a solar battery?
If you are considering adding lithium-ion battery storage to your existing or new solar PV system, you are not alone. Battery inquiries and installations in Australia have gone up because of the 3 million solar power systems on rooftops. Additionally, energy retailers are now paying less for exported electricity. The question is what is the payback?
Not many Australians have a battery
Although less than 10% of installed PV systems have batteries, many Australian households are interested in buying solar power storage batteries. This is to decrease their dependence on traditional power supply systems.
Batteries are being hailed as the future of household electricity supply. Solar energy generated during the day is stored for use in the evening when the solar system stops working. Still, household consumption continues or even goes up.
If you have a solar storage battery, it will provide power for your electricity use at night. This means you will import less energy from the grid and pay less for it. The battery stores the electricity generated by your solar system during the day.
Additionally, Time-of-Use (ToU) tariffs can significantly raise the kWh cost of mains electricity. Some areas have higher electricity prices after 5 p.m. when people use more electricity for air conditioners and stoves. This makes the cost of electricity more expensive in the early evening. A home battery storage system can cushion the blow of the ToU.
Solar system owners often question if buying a battery is worthwhile, despite the clear advantages of having one. They feverishly try to calculate the payback on investment numbers to make a decision. Yet, ironically, the same owner has never asked for the ROI on their new car, suit, or pool.
The initial solar battery cost is coming down
Residential solar battery prices vary between $900 and $1,200 per kWh, including installation. Things that can affect the cost of a solar battery are the brand, technology, battery management system, monitoring, and battery size. Other costs to think about are getting your home ready and preparing the place where the battery will go. In addition, cable runs, brackets, enclosures, and potential meter upgrades can all add to the costs.
Consider your current situation to understand whether solar battery storage is worth the investment. For example, if your area gets a lot of blackouts, a battery will save your food from spoiling in the fridge. If you dislike your energy retailer and seek energy independence – a large battery can achieve this.
The payback question
In a financial sense, a solar system alone still has a lower payback than a solar and battery system combo. A modified battery may not give you the best return on investment, but it can still be useful in certain situations. For example, it allows you to charge your electric vehicle and save over $3000 per year on petrol expenses.
As a rough average, a solar-only install has an ROI of 3 to 5 years with a 15 to 25-year life span. A solar battery combo pays back in 6 to 8 years.
A battery retrofit pays back in 8 to 12 years. Batteries typically last 10 to 15 years. Batteries typically last 10 to 15 years.
Can you receive government incentives?
Government incentives such also rebates and tariffs help improve the financial case for battery purchases. These can be pretty generous, like in the ACT, but smaller in other States. So it depends on where you live to see what battery incentives are available.
There could be upfront battery rebates or demand response programs that reward you with reduced load on the power network. Considering a decent, long-lasting solar battery system may cost an average of $12,000 to $15,000, these incentives should be utilised if available.
Australia has many active battery programs. These vary from one State to the next. Some examples around Australia include the Victorian Solar Homes Program which offers solar battery rebates up to a value of $4,174 per household; South Australia’s Home Battery Scheme offers $3,000; NSW provides an interest-free loan up to $14,000; the NT $6,000 and the ACT a rebate of $825 for each kW of power, up to 30kW or $4,000 in total.
Incentives can make it more feasible to use batteries. They either reduce the upfront cost or increase savings over the long term.
The future of energy
When getting a solar battery, you, your family, or your business will be able to live pretty much without the grid for long periods of time. You may not need it right now, but you will not regret the purchase of a quality battery over time. For example, suppose you decide to invest in an electric car. In that case, you can get a battery installation, such as the Tesla Powerwall or a Sungrow battery, an LG Energy Solution, or a Sonnen battery.
This will allow you to be ready for anything, even if the grid goes down. If money is not an issue, and you can afford the repayments of a solar and battery combo, go for it. You can install as many panels as your roof allows.
The more panels you have, the more energy you can use. Why not invest in your home and reduce your carbon footprint? Your personal convictions and choices will determine what makes sense for you.
What about the warranty?
Many home battery storage have warranties that go beyond the standard 10-year warranty. Some even come with a warranty for a certain number of cycles, which is much more feasible for a decent ROI, especially when combined with government incentives. The longer the warranty, the fewer small details and exceptions, and the bigger the manufacturer – the stronger the battery warranty. Avoid new battery suppliers as they may not have reliable after-sales service yet.
- As a golden rule, a battery as a retrofit has a longer ROI than a solar and battery combo. So when buying a new solar system now, consider adding 2-3 years to the ROI and get the whole solar and storage battery combo.
- A solar battery is a beneficial addition to homes. However, it may not be worth the cost for some Australians. This is until they also purchase an EV. In this instance, the battery will assist in the EV vehicle charging process.
- Solar panels with batteries are a good option when local electricity costs are very high, especially with the time-of-day tariffs.
- State Government incentives can also help tip the balance for battery purchases. The benefits of battery storage go beyond financial. As we move towards a zero-carbon future, more Australians are looking to energy storage to help them achieve energy independence while reducing their carbon footprint.