As they enable the storage of extra solar energy that may be used when the sun is not shining, solar batteries are a crucial part of the transition to renewable energy. Unfortunately, solar battery prices have remained high rather than falling as anticipated since the demand for electric vehicles (EVs) is now outpacing that for solar batteries.
Since lithium is in such high demand due to the expansion of the EV market, mining is necessary to produce lithium-ion batteries, the most common type of home solar storage battery.
New mining projects are being created to improve supplies, but they will take some time to completely operational.
To reduce the price of solar batteries, new battery technologies that use fewer raw materials and are more widely accessible might be required.
Are solar batteries going to be affordable in the future?
In Australia, 3 million solar systems are on the roofs. Manufacturing has come down, so we consume less electricity in this sector. So we have all this renewable solar electricity in the middle of the day. But we need it more in the afternoon and the evening. So home storage batteries would be excellent, and to get a more considerable uptake, we need solar batteries to become more affordable.
They’re vital to shift the periods in the day that we have power available. But the problem we’re having right now is that the demand for solar battery storage is growing at the same time as the demand for EVs leading to solar battery pricing not reducing as expected. Let’s look at a specific sample.
Two years ago, I had a Tesla 2 home battery installed for $13,500, and today, in 2022, the same battery will cost me close to $16,000 fully installed. Same model, same capacity, just software upgrades; that’s the only difference, only now $2,500 more expensive.
I thought solar batteries would become affordable
What happened? I was told that batteries would follow the solar panel and inverter price curve, meaning when production numbers increase, production costs come down, and the product will be cheaper for end consumers.
Regarding our transition from fossil fuel-based energy to renewable energy. Batteries play a vital role, as without them, we can not utilise renewables when the sun does not shine, and the wind does not blow.
Unfortunately, when it comes to battery home storage products, they are still considered not very affordable. This means bringing cheaper home batteries to the market or providing government subsidies is urgent.
Right now, when one multiplies the electricity bill savings due to the home battery. Let’s say for our sample household, it would be $800 per year, with the life of the battery – let’s say 11 -12 years, then we will have $9600 in total savings over the life of the battery.
This $9,600, unfortunately, does not cover the initial outlay of a 10 to 16kWh battery for $10,000 to $16,000. Maybe these numbers will change over the next few years if electricity prices keep increasing at the current rate. So to progress to a more sustainable energy landscape, affordable solar batteries are a must.
And while many types and brands of solar batteries are on the market, they all have one similarity. The price is not going down.
The reason why solar batteries are still not very affordable
Lithium-ion batteries are the most popular type of home solar storage battery in the market today. Tesla, LG, Panasonic, Sungrow, and BYD batteries all use lithium-ion in their manufacturing. However, lithium needs to be mined and the number of working mines is still restricted. Electric vehicle batteries in their raw material use the same raw materials as home storage batteries.
With the rapid growth of electric vehicle demand worldwide, the need for lithium-ion batteries has increased significantly, and so have prices, making them less affordable. As a result, it is pretty difficult for a relatively small home storage battery manufacturer (other than Tesla and LG) to compete strongly with high-volume vehicle manufacturers such as Tesla, Toyota or VW for raw materials.
While other technologies are available for home storage batteries, such as lead-acid, the performance is less efficient than the new generation lithium-ion products. In addition, while cheaper, lead-acid batteries also require regular maintenance, have a lower capacity for the same physical size battery, and experience a shorter lifespan.
Mining companies are now working worldwide to open new lithium mines and increase supply. Unfortunately, such large-scale mining projects take many years to develop fully, and supply is not keeping up with demand, leading to home battery price increases.
Will new battery technology solve the problem?
Unless new battery technology is coming onto the market requiring less scarce raw materials and being available at a lower price point, the timeframe for seeing many Australian homes adding a storage battery could be a decade or more.
This is not desirable, as this will slow the transition from fossil fuels to renewable power. So we are stuck till the Federal Government finds a way to help Australians acquire more affordable solar batteries.
Maybe one solution would be a means-tested healthy Government rebate. For example, when the Howard Government in 2008 offered an $8000 rebate to get the solar industry moving, no one would have imagined that around 15 years later, over 3 million homes would have a solar system, with the highest residential solar systems penetration in the world and a healthy local renewable energy industry.
But, the more homes buy storage batteries, the more we could see a product supply shortage. Furthermore, the demand for raw materials will add to the price point, which means fewer consumers can afford solar batteries—a problematic situation.
Maybe there is a valuable lesson on how to speed up our transition to renewables with the help of targeted Federal Government initiatives.