Do Solar Batteries Actually Save You Money?

Battery storage technology is generating a lot of discussion within the energy industry – and for good reason. It’s been hailed as the future of electricity, and as Australia has the highest penetration of roof-top solar panels in the world, we’ve become a focus-market for many retailers.

Concerns over increasing electricity costs have led many Aussie households to turn to renewable energy solutions, such as solar storage, as an alternative to drawing power from the grid. But are they really worth it? Unfortunately there is no black and white answer to this as it entirely depends on your situation. In this article, we take a look at what to consider before installing a solar battery and whether or not it can save you money.

Chances are that you’ve probably never purchased a solar battery before, so you might not be too sure what to expect. If you’re thinking about a solar battery for your home or business, here are some things you need to know.

What solar batteries are available?

Australia is a hotspot for solar storage retailers, so we have plenty of choice when it comes to choosing batteries. One of the most recent well-known and recent additions to the market is the much-hyped Tesla Powerwall, with 6.4 kilowatt hour (kWh) storage capacity. There are many other battery storage systems available however, including Aquion’s AHI batteries, LG’s Lithium-ion batteries, Redback’s Smart Hybrid System, Enphase’s modular AC batteries and Ecoult’s ‘Ultrabattery’ to name just a handful. These storage units vary considerably in size, price and efficiency. Canstar Blue has a more complete list of available solar storage units here.

How much do solar storage units cost?

The biggest factor impeding further growth in the solar storage market is the current cost of the battery devices. Prices for solar batteries largely depend on the storage size, with costs around $1,000 – $2,000 per kWh storage capacity.

If you first need a solar panel system installed, then that can cost anywhere from $2,000 to $12,000 depending on system size. Most households with storage units will opt for a 4kWh solar system, which will cost around $6,000 to $8,000. If you want to know more about installing solar panels, here’s our guide.

You will also need to pay for a compatible inverter as well as installation costs which will usually run in to the thousands of dollars, depending on the complexity of the installation. Nearly all solar companies will request a quote before they can give you some idea of how much this will set you back.

What sized solar battery will I need?

Solar storage systems come in a myriad of sizes to suit a range of needs. Some models, such as the Aquion AHI battery, can even stack upon one another to increase overall storage size to suit your needs. Most solar batteries within a reasonable price bracket will not be able to completely cover your electricity demand. Remember that the larger the battery, the more expensive it will usually be, so only purchase what you think you will need.

Battery efficiency

Efficiency in the context of solar batteries refers to how much energy is successfully stored and converted to useable electricity. It’s currently impossible for a solar battery to be perfectly efficient, but some models come much closer than others. Take for example, Tesla’s Powerwall which has an efficiency of 92.5%, meaning it loses 7.5% of solar generated electricity in the storage process. This is still considerably higher than some models on the market.

How long will the storage battery last?

Solar battery life is measured in cycles, which refers to the process of filling and emptying a battery with electricity. When measuring a life span in years, it’s usually assumed there is one cycle per day. Obviously the more cycles, the more durable the battery.

What is your feed-in tariff?

A feed-in-tariff is a rebate on your energy bill for each kWh of electricity that a household solar system generates but doesn’t actually use, meaning it’s fed back into the energy grid. This raises the question – if you’re getting paid for your excess solar power, why should you store it? It’s a good question, but while some areas of Australia receive high tariff rates (upwards of 20c per kWh), some states have reduced or completely removed their feed-in-tariff subsidies, meaning the rate you’re paid is usually around 4-6c/kWh.

Will a solar battery save me money?

Now for the question everyone is wondering – are home battery units even worth the mammoth cost? They’re marketed as being able to help you cut your electricity bill, and they certainly deliver on that. Earlier this year, the ABC reported that the first Australian household to install the Tesla Powerwall had its electricity bill cut by 90 per cent. Impressive right?

Well, not so fast, remember that solar batteries are quite the financial investment. The household we just mentioned spent $16,000 on the installation of its 7kWh Tesla battery and compatible 4kWh solar system. This means that – despite the incredible savings on ongoing electricity bills – it’s unlikely the entire solar system will pay for itself before the solar battery’s warranty expires.

Let’s take the below case example to illustrate the costs and savings associated with a solar storage system.

Case Study: Solar Battery Storage

Let’s take a Sydney household with a 4kW solar system already installed. The standard four-person Sydney household consumes 20kWh of electricity a day on average, according to Energy Made Easy.

The 4kW solar system should be able to produce 16kWh of electricity each day, if conditions are optimal. Most of this production will be throughout the day, so let’s assume that the household is able to use 8kWh of solar power, while another 8kWh is left unused.

This would mean the household would be paying for 12kWh of electricity usage each day. Assuming an electricity usage rate of 24c/kWh, this means the house is spending $2.88 per day on usage charges alone. If the household was eligible for a feed-in tariff of, say 4c/kWh, then it would receive a 32c discount per day for its 8kWh of excess energy. Without factoring in supply charges or other fees, the household would be paying $2.56 per day.

If this household were to add a home storage unit…

To complement its current solar system, let’s say the household decides to purchase the Tesla Powerwall, which Gizmodo estimates will cost around $9,500 for the unit, inverter and installation. The Tesla Powerwall can hold 6.4kWh of electricity.

Remember that this household uses 20kWh of electricity per day and its solar system produces 16kWh a day. Half of its solar electricity is used throughout the day, 6.4kWh will be stored by the Powerwall, and 1.6kWh will feed into the grid. That means the household will now be paying for 5.6kWh of electricity. After again factoring in the feed-in-tariff, they will now be paying $1.28/day for electricity. That happens to mean the house has halved its electricity usage spending and is now saving $1.28/day, so how long will it take those savings to justify the cost of the Powerwall?

The payback time would be slightly over 20 years…

Given that the Powerwall has a 10-year warranty and 15-year life expectancy, this means that the household in this particular situation would be losing money on their purchase. If you don’t currently have a solar system installed and paid off, then you will also need to factor in the costs of solar panels as well as their potential savings.

So what’s the verdict?

A home storage unit will definitely help you reduce your grid energy demands, however it’s unlikely that you will ultimately save money given how expensive storage units currently are.

With that said, nearly anyone with a bit of energy know-how will insist a solar panel system is still a good investment – especially if you’re smart about energy usage. But unfortunately most households usually won’t find any additional value by adding a solar storage unit at this point in time.

Solar batteries may still be worthwhile for certain households however, particularly ones that are ineligible for feed in tariffs or are charged high electricity usage rates. The payback period will vary across different households, so consider your personal situation before deciding if a home battery unit is right for your home. The price of storage units are likely to fall in years to come, so if it’s not right for you now, keep your eye on the market.

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