Having just published an article on the state of Australia’s battery storage market at the beginning of 2017, we decided we would endeavour to shed a bit more light on payback period differences between each capital city. Which cities have the best conditions for home solar battery storage? We’ve ranked them below (with an explanation of our process & assumptions at the bottom of this article).
1. Perth – 7.3 years average payback
- Flat rate tariff details: 27c/kWh
- TOU tariff details: Peak – 50c/kWh, Shoulder – 26c/kWh, Off-peak – 14c/kWh
Perth was the best overall city for solar battery storage, thanks to low solar system prices, high grid electricity prices and ample sunshine. Paybacks were best for the smallest battery system on a TOU tariff, coming in at an impressively short 6 years.
2. Brisbane – 8.2 years average payback
- Flat rate tariff details: 26c/kWh
- TOU tariff details: Peak – 35c/kWh, Shoulder – 25c/kWh, Off-peak – 18c/kWh
High electricity costs coupled with competitive solar installation prices also helped to make battery storage attractive in Brisbane. The average payback period for the city was 8.2 years, but this could go down as low as 7.7 for ‘small’ battery system owners on a flat rate tariff.
3. Adelaide – 8.4 years average payback
- Flat / block rate tariff details: 35c/kWh (first 10.96kWh of day), 39c/kWh thereafter
- TOU tariff details: Peak – 33c/kWh, Off-peak – 20c/kWh (plus summer demand charge of 47c/day and winter demand charge of 20c/day for grid demand over 1kW)
Solar & battery system paybacks were on average just over 8 years, with flat rate tariff customers having shorter paybacks than TOU customers based on our initial assessment. However, paybacks on TOU systems could be shorter if associated demand charge savings are also taken into account (our modelling assumes customers will pay the demand charge every day, but the system may help them to avoid this charge). Additionally, residents of Adelaide’s downtown area may be eligible for battery system rebate of up to $5,000 depending on their situation, which will shorten paybacks further.
4. Sydney – 9 years average payback
- Flat rate tariff details: 24c/kWh
- TOU tariff details: Peak – 45c/kWh, Shoulder – 18c/kWh, Off-peak – 11c/kWh
While 9 years appears to be the average payback period for a solar & storage system in Sydney, the shortest payback that popped up in the results was 8.1 years for a small battery bank on a TOU tariff.
5. Darwin – 10.4 years average payback
- Flat rate tariff details: 26c/kWh
- TOU tariff details: Peak – 30c/kWh, Off-peak -23c/kWh
At just under 10 years, the large battery option had the shortest payback period in Darwin for both flat rate & TOU tariff customers. The average for the city was just over 10 years.
6. Hobart – 11.4 years average payback
- Flat rate tariff details: 26c/kWh
- TOU tariff details: Peak – 31c, Off-peak – 15c
In spite of being the least sunny capital city and having some of the highest solar prices, Hobart ranked surprisingly high in the results, with an average payback period of just over 11 years for solar & storage systems. High electricity rates go a long way towards explaining why this is the case.
7. Melbourne – 12.3 years average payback
- Flat rate tariff details: 18c/kWh
- TOU tariff details: Peak – 31c/kWh, Off-peak – 17c/kWh
Retail electricity competition is strong and wholesale electricity prices are low in Victoria, which means that Melbourne is home to some of the lowest flat retail electricity rates in the country. Meanwhile, solar system prices for Melbourne tend to be on the high side, due in part to the smaller incentive available through the federal Renewable Energy Target because of the smaller amount of sunshine the the average square meter of roof receives over the course of the year there. While there is still a strong case for rooftop solar on its own in Melbourne, adding batteries appears to blow out payback periods to beyond the recommended 10-year benchmark for customers on a flat rate.
That being said, the average payback period for systems installed in a home with TOU billing was only 10 years, which means that it is certainly possible for Melbourne homes to break even (or better) on a battery storage system – provided that they get a good deal and maximise use of the battery to the utmost. We recommend getting a small battery bank to start off with. Furthermore, the recent announcement that the state’s mandatory minimum feed-in tariff will be upped to 11.3c/kWh from July 2017 will help to improve the overall case for getting solar & batteries.
Lastly Melbourne residents keen on batteries shouldn’t lose heart at the figures in the table below: Battery prices are coming down rapidly, and it’s likely that the outlook will change very soon!
8. Canberra – 12.7 years average payback
- Flat rate tariff details: 17c/kWh
- TOU tariff details: Peak – 25c, Shoulder – 17c, Off-peak – 13c
Like Melbourne, low electricity rates in the Australian Capital Territory mean that it’s harder to make batteries worthwhile without incentives – which is probably why the government has introduced its NextGen program for energy storage, which will subsidise battery installations (among other types of storage) for thousands of households. The exact shape that these incentives will take is not 100% clear to Solar Choice at the moment, but we’re looking into the details.
Even without added subsidies, batteries are already beginning to look attractive for homes on TOU tariffs who opt for a smaller system, with paybacks around the 10 year mark. As with Melbourne, we recommend that ACT residents watch this space.
All results by city & tariff type
Important caveats about these results
The payback period and returns for a given battery storage system will depend on the exact circumstances of the home in question. The conclusions we’ve drawn here (using SunWiz’s PVSell software) are based on only a handful of scenarios and are meant to act as a bellwether for the viability of battery storage in Australia’s capital cities. Also keep in mind that we’ve also left out incentives available in Adelaide, the ACT and parts of WA – which could make a big difference in reducing payback times and increasing the attractiveness of a battery storage investment.
Solar Choice has a number of free, handy tools that allow you to delve into the details a bit more yourself, including our Solar & Battery Storage System Sizing & Payback Estimator. The results from this and other tools we offer will allow you to roughly work out what size system would best work for your home – putting you in a good position to assess quotes and initiate a discussion with installers.
Remember – in the end, a system that is customised for your home & habits will deliver the best value and greatest possible savings. When looking at the results below, keep this fact in mind and see if you can find better outcomes for yourself!
|Energy usage pattern:||‘Day focus’ (homes with young children or a home office)|
|Solar system prices:||Average for each capital city as of February 2017 (see table below)|
|Battery system installation prices:||Same for each city (see table below). Battery systems were chosen for their size (small, medium, large), relative affordability & similar performance specs. Actually prices will vary with installer & location.|
|Electricity rates:||Best rates available for each city (as found on EnergyMadeEasy.gov.au)|
|Solar feed-in rates:||We’ve assumed a uniform solar feed-in rate of 8c/kWh for all cities; actual rates may be higher (n.b. Victoria from July 2017)|
|Battery charging type:||Solar charging only (no charging with grid)|
|Battery discharge settings:||Discharge whenever needed (i.e. benefits of tariff arbitrage on TOU tariffs not accounted for in calculations)|
|Battery degradation:||Not accounted for in calculations|
|Battery incentives (ACT, Adelaide, WA):||Not accounted for in calculations|
|Purchase type:||Results are all based on the assumption that the systems are purchased with cash (no financing), with both solar & battery components of the system being purchased at the same time (no battery retrofits)|
Electricity tariff details by city (flat & time of use tariffs):
Average solar system prices for each city as of February 2017:
Assumed battery storage prices (actual prices will vary with installer and location):
Detailed results by battery product:
Check out these useful resources:
Learn more about battery storage: Check out our Battery Storage 101 page
Check out our Battery Storage Product Performance Comparison Tool
© 2017 Solar Choice Pty Ltd
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