LG Chem RESU3.3

What are the best cities for home solar battery storage?

by James Martin II on June 6, 2017

in Solar System Products,Batteries & Energy Storage,ACT,NSW,NT,QLD,SA,TAS,VIC,WA

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).

Please note that payback periods for solar systems on their own (without batteries) are generally still much shorter than solar + battery systems in Australia (see here), mainly due to the price of battery storage – which remains high. As of now, we recommend batteries mainly to people who are focused on energy independence and lower energy bills, but they do not yet make great sense as an investment decision.

That being said, we’ve seen a ton of interest in battery storage from our customers, and as such have put together this ranking of capital cities based on their battery-friendliness.

This article was originally published in February 2017 and has since been updated. We will be compiling new analysis in August 2017, when many of the retail electricity plans around the country change.

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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
  • Assumed feed-in tariff rate: 8c/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.

Perth battery payback estimates

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
  • Assumed feed-in tariff rate: 8c/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.

Brisbane battery payback estimates

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)
  • Assumed feed-in tariff rate: 8c/kWh

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
  • Assumed feed-in tariff rate: 8c/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.

Sydney battery payback estimates updated

5. Melbourne – 10.3 years average payback

  • Flat rate tariff details: 26c/kWh*
  • TOU tariff details: Peak – 31c/kWh, Off-peak – 17c/kWh
  • Assumed feed-in tariff rate: 8c/kWh

Solar system prices for Melbourne are slightly higher than the previous four cities listed in this ranking, due in part to the smaller incentive available through the federal Renewable Energy Target (which is in turn due to the smaller amount of sunshine that falls on Melbourne on average throughout the year).

That being said, electricity rates in Victoria’s capital are still about as high as they are in Sydney, Brisbane & Perth, making solar a worthwhile investment on its own, and increasingly attractive for solar + battery systems as well.

Note that the Victorian government has set a new minimum solar feed-in tariff rate of about 11c/kWh which is due to come into place from 1 July 2017; this is not accounted for in our modelling. However, if retail electricity rates go up along with the feed-in rate increase, the payback estimations below won’t change much. If the gap between the retail rate and the feed-in rate decreases, on the other hand, paybacks will be slightly longer (see notes below about Darwin).

*N.b. an earlier version of this article incorrectly put the approximate flat rate tariff charge for Melbourne at 18c/kWh. We have since updated the article to reflect the actual standard rate.

 

6. Hobart – 11.4 years average payback

  • Flat rate tariff details: 26c/kWh
  • TOU tariff details: Peak – 31c, Off-peak – 15c
  • Assumed feed-in tariff rate: 8c/kWh

In spite of being the least sunny capital city and having some of the highest solar prices, Hobart ranked surprisingly high in the results (even beating out Canberra and Darwin – see below), 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.

Hobart battery payback estimates

7. Canberra – 12.7 years average payback

  • Flat rate tariff details: 17c/kWh
  • TOU tariff details: Peak – 25c, Shoulder – 17c, Off-peak – 13c
  • Assumed feed-in tariff rate: 8c/kWh

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.

Even before 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.

If you live in Canberra, do your research to understand how the incentive program will affect the payback period for the system that you buy – you may find the results are significantly rosier than those detailed in the table below.

Canberra battery payback estimates

8. Darwin – Don’t get batteries*

  • Flat rate tariff details: 26c/kWh
  • TOU tariff details: Peak – 30c/kWh, Off-peak -23c/kWh
  • Assumed feed-in tariff rate: Equal to retail tariffs (Assuming 26c/kWh for flat-rate customers, 30c/kWh for TOU customers. Note that under TOU customers are actually paid the off-peak rate between 6pm and 6am, but due to limitations in PVSell we have only used the peak rate.)

Despite the fact that Darwin is Australia’s sunniest capital – and the only one located in the tropics – the incentives for solar system owners in the state mean that batteries do not make any financial sense at all.

Here’s why: Sending solar into the grid in every state besides Darwin will net a solar system owner only about 8c/kWh (approx). This is significantly lower than the rate that customers pay for electricity from the grid; someone with a solar system would save more money by using the solar energy directly (‘solar self-consumption‘), thereby reducing their electricity bill by avoiding the purchase of expensive grid electricity (about 25c/kWh in most places).

But most solar system owners cannot use all of their solar energy during the daylight hours, and inevitably have ‘excess’ energy. Batteries allow them to ‘save’ their solar energy for use later in the day, when they’re more likely to use it (e.g. around dinner time, after the sun has gone down). By doing so, they save about 17c/kWh (the difference between the feed-in rate and their retail rate).

The smaller the difference between the feed-in tariff rate and the consumption rate, the less value that batteries offer. For Darwin customers, there is no difference between the feed-in rate and the consumption rate. This means that there is virtually zero opportunity to save money by installing batteries. Furthermore, because batteries are not 100% efficient, it’s almost inevitable that you will lose money for every kWh of solar energy that you ‘shift’ for later use via your batteries.

Key takeaway: All in all, in Darwin the payback period will be longer for a solar + battery system than it will for a solar only system – even if you spend the same amount of money (e.g. $18,800) on the system. Until the feed-in tariff rate drops, batteries will make no sense for Darwin customers.

*N.b. An earlier version of this article incorrectly assumed that the solar feed-in rate for Darwin customers was 8c/kWh. In reality, the rate is equivalent to the retail tariff rate at time of export.

Important caveats about these results

The payback period and returns for a given solar + 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!

Assumptions used

Scenario assumptions
Energy consumption: 30kWh/day
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 except Darwin; actual rates may be higher  or lower (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:

5kW and 7kW solar system prices by city updated

 Assumed battery storage prices (actual prices will vary with installer and location):

Battery storage products and prices

Detailed results by battery product:

Tesla Powerwall 2

Alpha-ESS Storion Eco

LG Chem RESU3.3

Check out these useful resources:

Compare solar & battery storage quotes for your area

Compare Solar & Battery Quotes

Learn more about battery storage: Check out our Battery Storage 101 page

Try our Solar & Battery Storage Sizing & Payback Estimator Tool or our Battery Retrofit Sizing Estimator Tool

Check out our Battery Storage Product Performance Comparison Tool

© 2017 Solar Choice Pty Ltd

James Martin II

James Martin II

James has been Solar Choice's analyst and communications manager since 2010. He is Solar Choice's primary writer, and is responsible for composing Solar Choice's monthly Solar PV Price Index articles.
James Martin II

{ 6 comments… read them below or add one }

Jonathon March 17, 2017 at 11:02 am

Are the payback times calculated on the entire system? (i.e. solar + battery vs nothing) or on the battery component (solar + battery vs solar only)

Reply

Solar Choice Staff March 20, 2017 at 11:21 am

Hi Jonathon,

Yes, those are the paybacks for the system as a whole. Battery retrofits would have longer paybacks, while solar-only systems would have shorter ones.

Good idea for another topic, though – we’ll look into it.

Best,
James

Reply

Jonathan March 15, 2017 at 12:12 pm

It seems 7kW solar is cheaper than 5kW solar, or they are back to front.

Reply

Solar Choice Staff March 15, 2017 at 3:56 pm

Hi Jonathan. You’re correct – the numbers are in the wrong column. I’ve updated the chart to correct the problem. Thanks for pointing it out!

Reply

andrew March 12, 2017 at 12:49 pm

Is there a typo in your Melbourne graphic? It says $113,900 for Tesla!!!!

Reply

Solar Choice Staff March 13, 2017 at 10:31 am

Thanks for spotting that, Andrew – we’ve just updated it.

Reply

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