Home battery storage systems are a hot topic at the moment but are they actually worth the investment? From a financial return perspective in most cases the answer is still no, even with rebates in place. This is due to the high cost of batteries and the retailer feed in tariffs making it less viable to store power for evening use. If your are on a remote site with no grid power, a stand alone system may well be viable but if you’re connected to the grid already, justifying the high cost of batteries currently is not easy.
As a concept we love the idea of being self sufficient and the development of the technology is an exciting space but unfortunately the price is still far too high for it to be a good investment. It is a far better investment to install a larger grid connected Solar PV system and sell the excess energy back to the grid. We do sell batteries and have happy customers with battery installations which in rare cases can be justified. Only when every part of usable roof space is covered with high efficiency solar PV panels and you are up to the limit with grid limitations should you consider batteries.
Subject to approval you can now install up to 13.2kW (10kW Inverter capacity) on single phase or 19.95kW (15kW Inverter capacity – potentially more) on three phase. If you have the roof space available upgrading to three phase at approximate cost of $3000 and installing a larger system could be arguably the best and safest investment a homeowner/business owner could possibly make in the current economic climate. Returns of around 30% per annum are typical and the money you are investing is only going to be spent on power in the long run anyway. We have real case studies to show how this is possible.
Why batteries aren’t the best investment right now
Unfortunately solar battery installers often sell the face value of the battery and tell you want you want to hear without really considering how the investment is going to work for you. You must understand the return on investment of the battery itself and don’t just consider your price of power at night, you have to consider what you have lost from not selling the power back to the grid. Also when combined with solar the overall investment might look quite good but in reality the battery is getting in the way of you achieving even better returns.
10kW LG Chem example
An LG Chem RESU10 (9.8kWh) battery conservatively costs $8500 installed. The usable storage is 8.82kWh at 90% Depth of Discharge (DOD). So providing this battery is fully charged everyday (no cloudy days) at an average rate of 25c/kWh this is a usage saving $804 per annum. We then have to consider the fact that if the battery wasn’t installed we would have sold the excess power back to the grid for between 9.3c – 20c/kWh (an average of 14.65c/kWh). Therefore the actual saving from the battery is only the difference between the rate of power and the feed in tariff, in this case 10.35c/kWh. So 8.82 x $0.1035 = $0.91 per day or $333.19 per annum. So in reality the return on investment of the battery is 25.51 years (3.9% per annum) or after the $3000 rebate the ROI is still 16.50 years (6% per annum). This is assuming the battery storage capacity remains as new for many years beyond its 10 year warranty period.
With Energy Australia’s current offer of 28% discount the out of pocket for peak power is 19.96c/kWh and the feed in tariff is 16.1c/kWh. So if you have access to this deal your benefit of having the battery is $0.0386c/kWh x 8.82kWh = $0.34c per day or $121 per annum. Giving you an ROI on the battery without rebate of 70.24 years (1.42% per annum!) or with the rebate 45.45 years (2.2% per annum).
Tesla 2 Examples
- A Tesla 2 battery costs around $12,500 installed.
- Usable Storage: 13.5kWh
Telsa 2 Energy Australia Retailer Example
- Rate of power after discount $0.1996/kWh
- Feed in tariff $0.161/kWh
- Battery benefit: $0.0386/kWh
- 13.5kw (Usable storage) x $0.0386 = $0.5211 per day or $190.20 per annum
- After rebate Tesla 2 price $9,500.00
- ROI payback period: 49.94 years or 2% per annum
If you are in Rural QLD and you get enough power cuts to cost you hundreds of dollars per annum in business downtime or lost produce from defrosting then you might just about be able to justify the investment of a hybrid battery installation. But if you have a generator back up, that could be a more cost effective solution.
Tesla 2 – Absolute Best Case Scenario Rural QLD
- Ergon Rate of power $0.27828/kWh
- Ergon Feed in $0.09369/kWh
- Battery benefit: $0.18459/kWh
- 13.5kw (Usable storage) x $0.18459 = $2.49 per day or $909.56 per annum
- After rebate Tesla 2 price $9,500.00
- ROI payback period: 10.44 years or 9.5% per annum
As electric vehicles become more widely used this could be a driving factor for the price of batteries to come down (no pun intended!). When batteries are manufactured on a larger scale and the market is developed further we could see the prices of batteries come down by up to 70% just like we have seen with the price of PV in recent years. Until that time get in touch with us about installing a state of the art renewable power station on your roof!
Already have solar? Feel free to get in touch about the possibility of upgrading your system.