Home solar batteries have long been awaited by those in the solar industry and owners of PV systems as the day when the cost will come down enough to yield a reasonable return on investment.
As part of its ongoing effort to provide a scientific perspective on “Are we there yet?”, Solar Choice regularly updates this article.
Through scientific analysis and real-world examples, the article explores solar battery costs for residential homes and examines whether they’re worth the investment. As well as explaining how these batteries work, it also explains their advantages, including lower energy bills, reliability during blackouts, and battery prices and rebates available from the government.
Despite the fact that battery prices are dropping, solar batteries have uncertain financial benefits. You will often have to wait an extended period of time to recoup your investment, which is often longer than the batteries’ warranties. The financial value of solar batteries has not yet been compelling for most homeowners, unless you value blackout protection and the positive environmental impact. Find out more below.
What is a solar battery & how do they work?
Let’s take a moment to recap how solar batteries work before we begin our cost analysis of solar batteries. Solar panels produce electricity during the day while the sun is shining. In order to supply energy to a home, the power is used first to fulfill its needs, and excess energy is usually exported back to the grid. To buy energy back from customers, some energy retailers offer solar ‘feed-in tariffs.’
Home battery storage systems can be used to reduce the amount of power a homeowner must purchase from the grid by charging batteries instead of exporting energy back to the grid.
An energy-storing solar battery is a DC-powered device. It can be connected to a hybrid solar inverter via DC cables. Some inverters are built into them so that they can easily be connected to the main switchboard like any other AC appliance (such as the Tesla Powerwall 3) Read more on solar battery storage AC and DC connections.
How do you benefit from a solar battery?
An array of benefits can be gained by homeowners by connecting a solar battery to their solar panels.
Saving on energy bills
You reduce the amount of power that you need to buy from the grid, which is obviously a financial benefit.
Without a battery, a typical residential solar system will cover approximately 30%-50% of household electricity consumption, while a battery can increase this to 80%, 90% or possibly even 100%.
It is important to consider that you will be forgoing some solar feed-in tariff revenue when charging a battery. For example, if you charge a 10kWh battery during the day, you will have a 10kWh less solar feed-in tariff than you had previously.
Buying power has always been cheaper than selling it back to retailers because you always pay much more for it than they are willing to pay.
Keep the lights on during a blackout
The electrical network is more likely to be affected by blackouts in certain areas than in others. Blackouts are disruptive, frustrating, and dangerous.
Some battery models require additional hardware to ensure that the battery continues providing power during a power outage. With most solar batteries on the market today, a power outage is not a problem.
With the energy market closing in mid-2022 due to soaring energy prices, some Australians are looking for ways to become more independent. Solar and batteries effectively take a large part of the costs and requirements out of your hands, while helping to reduce your greenhouse emissions.
Reduce your carbon footprint
Australia has made amazing progress in building out renewable energy infrastructure. However, a large portion of the energy generated on our grid still comes from fossil fuels, which are carbon-intensive.
If you install solar panels, you can start reducing your carbon footprint immediately, but if you add a solar battery, your carbon footprint can be reduced by as much as twice.
Solar Battery Virtual Power Plant (VPP)
The number of Virtual Power Plant schemes in Australia has grown significantly over the past few years.
In the case of participating homeowners, the VPP operator may discharge or charge their solar batteries at times when they can earn money on the wholesale or ancillary market.
VPP operators offer homeowners benefits that might include one or more of the following in exchange for this usage (which is usually only a few times a year):
- Bonus feed-in tariff (very high rate for power that is used)
- Annual fixed fee for participating
- A discount on the installation of the battery
How much do solar batteries cost?
Using our Solar Battery Price Index, Solar Choice tracks the average price of solar batteries in Australia from our database of over 200 solar installers. Depending on the brand, size and location of the solar battery, residential solar batteries usually cost $1,000 to $1,300 per kWh of capacity installed.
We have provided the following table showing our current price index excluding all state-based rebates:
| Average Solar Battery System Costs (Fully Installed) – February 2024 |
| Battery Size | Battery Only Price | Battery + Inverter/Charger |
| 3kWh | $4,080 | $4,890 |
| 8kWh | $9,920 | $11,360 |
| 13kWh | $17,030 | $19,240 |
| 18kWh | $25,380 | $28,260 |
Getting the battery only price is applicable if you are installing solar and batteries together, or if you already have a hybrid inverter for your solar system
Battery retrofitting is an option for solar systems that did not have the capacity to integrate batteries in the future, thus requiring an additional inverter/charger along with the batteries
Notes on Pricing:
- Wiring and other components, as well as installation costs, are included
- The rebates available in each state and territory are not included
State rebates for solar batteries
Some state governments have implemented rebate programs designed to keep residential batteries on the market despite not having a federal rebate like the STC rebate for solar panels.
Victoria
As of 30 June 2023, Solar Victoria has discontinued their solar battery rebate program without indication that they will reintroduce it.
ACT
There is a loan option in the ACT that supports the uptake of a range of eco-friendly products, including solar and battery systems, with an interest-free loan up to $15,000. The eligibility criteria are quite broad and support a wide range of eco-friendly products.
Solar battery ROI, savings and payback period
We put together a typical Australian household scenario to demonstrate the potential return on investment of solar batteries. By using the most recent electricity prices and solar feed-in tariffs, and by using our proprietary model, we were able to simulate the project’s outcome hourly over the next two decades.
You can use our advanced solar and battery calculator if this scenario does not match your circumstances.
Energy Usage Scenario
The scenario includes peak energy usage in the morning and evening with a total energy consumption of 30kWh per day. The energy rates assumed are flat at 30 cents per kWh and feed-in tariffs of 5 cents per kWh, respectively.
Solar and Battery Solutions
Based on the above graph, we have analyzed the impact of a 6.6kW solar system with a 10kWh solar battery on a household that consumes 30kWh per day. As a result of the solar and battery systems combined, 66% of the house’s energy needs would be covered (from 39% to 6.6kW with solar panels).
Since batteries are expensive, we recommend adding enough solar panels so that the battery is fully charged on 98.5% of the days.
Financial return
This table summarizes the outcome of the above scenario. The key takeaways are that the solar battery will pay off within 12 years. The majority of solar batteries available on the market have a warranty period of 5 to 10 years, so in this case, it is unlikely that the battery will be able to pay for itself over the course of its lifecycle.
| System | Cost | Annual Savings | IRR | Payback Period |
| 6.6kW Solar & 10kWh battery | $17,340 (total)Breakdown:$4,940 (solar)$12,400 (battery) | $2,742 (total)Breakdown:$1,566 (solar)$1,082 (battery)$94 (feed-in) | 16.5% (total)Breakdown:31% (solar)2% (battery) | 7 years (total)Breakdown:3 years (solar)12 years (battery) |
Assumptions:
- 36 cents per kWh flat rate for electricity and 5 cents per kWh feed-in tariff
- A Solar Choice Price Index and a Battery Price Index give you solar and battery prices in Sydney
- According to the load profile above, 30kWh of electricity is used each day
- Discount rate of 5% on future cash flows and inflation rate of 3% for energy prices
Interested in calculating your ROI for advanced solar and batteries? Put your own details into our Advanced Solar and Batteries calculator.
Conclusion: Solar Batteries Financially Challenged
The case for installing a residential battery with an attractive financial return has not yet been presented to us based on our numerous analyses over the years.
Even after taking into account the additional benefits associated with participating in a Virtual Power Plant, the payback period for solar batteries is usually longer than the battery’s warranty life. As shown above, it takes 12 years for a battery to pay for itself, and most batteries come with a 10 year warranty.
Therefore, it is generally worth installing a solar battery if homeowners are interested in reducing carbon emissions and protecting against blackouts.
The current market price for residential solar battery capacity is closer to $1,000 per kilowatt-hour, whereas Solar Choice previously estimated that prices would need to fall to $200-$300 per kWh to provide an attractive return.
There have been instances when batteries have proven to be financially viable in commercial applications and off-grid situations where revenue calculations differ from on-grid applications.
Frequently Asked Questions
1. Is it worth it to get a solar battery?
It depends on many factors, such as how much energy you use, local electricity rates, incentives available, and the cost of the solar battery system, whether or not it is worthwhile to get a solar battery.
As a general rule, solar batteries can help you store excess solar energy generated during the day so that it can be used when sunlight is weak or energy demand is high, reducing your dependence on the grid and reducing your electric bills in the long run. The long-term benefits of solar battery systems should, however, be weighed against the upfront costs.
2. What is the lifespan of a solar battery?
There are a number of factors that affect a solar battery’s lifespan, including the chemistry of the battery, usage patterns, and maintenance. The lithium-ion batteries commonly used in solar battery systems have a lifespan of around 10-15 years or more with proper maintenance and care. For specific information regarding the expected lifespan of a specific solar battery model, it is essential to check the warranty and specifications of the manufacturer.
3. What are three drawbacks to storing solar energy in batteries?
Battery storage of solar energy has the following three disadvantages:
- Initial Cost: Batteries may be expensive for some homeowners to purchase and install, which may discourage them from making a purchase.
- Limited Storage Capacity: It is important to bear in mind that solar batteries have limited storage capacity, which may not suffice to store all the electricity you may need during low sunlight or periods of high demand.
- Maintenance Requirements: It is important to perform periodic maintenance on solar battery systems to ensure optimal performance and longevity. This includes monitoring battery health, updating software, and possibly replacing components over the course of their lifespan.
4. What is the payback period for solar batteries?
Solar batteries have a different payback period depending on how much they cost, how much electricity they use, what incentives are available, and how much energy they can store and utilize. According to these factors, solar batteries generally pay back between five and fifteen years. To determine your exact payback period, you should conduct a detailed financial analysis or speak with an expert in solar energy.
