Solar Batteries – Are They Worth It?

Tesla Powerwall 2 installed. Energy storage Melbourne, Sydney and beyond

Many of us in the solar industry, along with many solar PV system owners have been long awaiting the day when solar battery prices will drop sufficiently for them to offer a reasonable financial return.

If You’ve been looking for an in-depth article about energy storage in Melbourne, Sydney, Brisbane and beyond, then read further as we’ve developed a comprehensive guide which will help answer your burning questions.

Solar Choice regularly updates this article to provide a scientific view of “are we there yet?”. Since our first analysis back in February 2017, we have modified our calculators, assumptions and methodology to reflect the changes in the market.

If you have any feedback on our methodology or results, we’d love to hear it – send us an email.

3 User Types Identified for Solar Battery Storage

To make the results relevant for your situation we recommend looking at the below 2 scenarios and pick the one that is the closest fit. We have considered 3 common user types and matched their electrical usage patterns with data we have in our model. If there is nothing you believe to be relevant to your situation, you can read our methodology and put your own parameters into the Solar Choice Solar & Battery Calculator – Advanced Version.

1. Young adults / Older Family
  • Usage focused early in the morning and in the evenings
  • More usage during the day on weekends

Average usage 20kWh per day

Young adults energy usage pattern for battery storage
2. Retirees / Young Family
  • Someone at home during the day
  • Some heating/cooling through summer and winter

Average usage 30kWh per day

Retirees energy usage pattern for battery storage
3. Big energy user
  • Swimming pool
  • Electric water heater
  • 5 or more people in the house
  • Air conditioning in summer and winter

Average usage 50kWh per day

Big users energy usage pattern for battery storage

Sizing the Solar Panels and Solar Batteries for Each User Type

To get the greatest utility from your solar battery you need to ensure that it will still be able to fully charge from your Solar Panels most days through winter when you are receiving the lowest amount of sunlight. In our calculator, we looked at various solar battery options and found the below options provided a good balance between grid energy independence and financial return. You can also use our advanced calculator to trial different battery sizes and see what size could be charged most days through the months with the lowest sunlight (June, July and August).

Given system performances will depend on sunlight patterns and the location within Australia, for the below figures we have used data from Sydney’s weather patterns. You will see that our results have been broken down into capital cities and our calculator has all the data built in.

  Average Usage Per day Optimal Solar System Size Solar Output in Winter Solar Output in Summer Solar Battery System Size
1. Young adults / Older Family 20kWh 5 kW 13 kWh / day 24 kWh / day 3.5 kWh
2. Retirees / Young Family 30kWh 6.6 kW 18 kWh / day 31 kWh / day 6.5 kWh
3. Big energy user 50kWh 13 kW 35 kWh / day 62 kWh / day 13.5 kWh

Compare solar battery quotes from qualified installers online

 

Our Methodology and Key Assumptions

We inputted the below information in our advanced calculator which was developed by Solar Choice’s engineers. It utilises a functionality from our model which we have used to consult with businesses across many of Australia’s largest commercial solar roll outs and utility-scale solar farms.

Assumed Electricity Prices

Using our electricity plan comparison tool, we found some of the most competitive retail electricity plans on offer in each city (both flat and time of use) and plugged them into our calculator. The figures we ended up using are detailed in the table below. (Important to note that the rates in the table below are inclusive of retailer discounts – for example, pay on time discounts and/or pay online discounts.)

    Flat Rate Time Of Use Rates
  Solar Feed In Tariff

(cents per kWh)

Consumption Charge

(cents per kWh)

Daily Supply Charge

(cents per day)

Consumption Charge

(cents per kWh)

Daily Supply Charge

(cents per kWh)

Adelaide 8 27.50 84.70 Peak 35.32

Shoulder 17.08

Off-peak 21.22

77.40
Brisbane 8.5 19.18 87.07 Peak 26.40

Shoulder 16.50

Off-peak 13.75

110.00
Canberra 9.5 20.00 61.00 Peak 34.06

Shoulder 23.38

Off-peak 16.23

84.59
Darwin 8 24.23 47.76 Peak 28.58

Off-peak 21.79

47.76
Hobart 8.5 26.95 96.58 Peak 28.00

Off-peak 14.00

75.00
Melbourne 10.2 17.28 76.02 Peak 29.29

Shoulder 17.52

Off-peak 17.52

113.30
Perth 7 29.33 105.14 Peak 55.77

Shoulder 29.21

Off-peak 15.36

105.14
Sydney 7.5 19.4 53.00 Peak 44.75

Shoulder 20.76

Off-peak 12.28

85.10

Solar Battery Storage Options

We have selected to use the below batteries for each system size. LG Chem Resu10 Silver[Please note: Solar Choice is agnostic to product manufacturers and we have no desire to influence your choice of product. We have just selected products that are commonly used in the Australian market]

  • For the ‘large’ battery system, we used Tesla Powerwall 2, which has a usable energy storage capacity of 13.5 kWh;
  • For the ‘medium’ battery system, we used LG Chem RESU, which has a usable energy storage capacity of 6.5 kWh; and
  • For the ‘small’ battery system, we used BYD B-Box, which has a usable storage capacity of 3.5 kWh.

All solar and battery output and technical information has been set in line with the verified product specifications published for each product. The results would not change materially if the above products were swapped for different brand names with the same capacity.

Current Solar Battery Prices in Australia

Fortunately Solar Choice has access to the most accurate guide on solar and battery pricing through the Solar Choice Price Index and the Home Battery Price index. This is based on average costs from over 200 installers in Solar Choice’s network and we have been updating the figures on a monthly basis since 2012.

As a rule of thumb, currently residential solar battery storage prices are around $1,000 per kWh including installation and GST. This varies with the size and brand of battery, the solar installers used to complete the works and whether additional works are required to make the battery compatible with your system (like installing an additional inverter).

The below table shows our current price index which excludes all of the state-based rebates:

Average Solar Battery System Costs (Fully Installed)  – May 2021

Battery Size Battery Only Price* Battery + Inverter/Charger**
3kWh $4,050 $5,460
8kWh $8,640 $10,720
13kWh $14,170 $14,690
18kWh $16,740 $18,180

*Includes the installation of the battery only. You must already have a hybrid/battery ready system

**Includes an additional inverter to manage the battery bank for a DC-coupled battery system

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Results by Each User Type

We have calculated the outputs from our calculator based on the individual characteristics of each energy user, system size, relevant system costs by each capital city in Australia. In the below sections we compare the following financial metrics:

  • Payback Period Solar & Battery – the time it takes for the total savings for the project to recover the upfront costs of the solar and battery
  • Payback Period Battery Only – the time it takes for the savings made by the battery to pay for the upfront battery cost (excl. solar costs and savings)
  • Total Year 1 Savings – the amount the energy bill would be reduced by in the first year

Young Adults / Older Family

For Young Adults / Older Families we have assumed an average daily energy use of 20 kWhs. Given the assumed energy use patterns we have recommended 5kW of Solar Panels and a 3.5 kWh battery storage solution.

Flat Rate Time of Use Rates
City Cost Estimate Payback Period Solar & Battery Payback Period Battery Only Total Year 1 Savings Payback Period Solar & Battery Payback Period Battery Only Total Year 1 Savings
Adelaide $8,565* 6.9 years > 20 years $1,307 6.4 years > 20 years $1,430
Brisbane $9,695 9.3 years > 20 years $1,026 9.2 years > 20 years $1,034
Canberra $6,828* 6.8 years > 20 years $1,056 5.6 years 8.4 years $1,366
Darwin $12,475 9.8 years > 20 years $1,245 9.0 years > 20 years $1,365
Hobart $10,715 9.4 years > 20 years $1,115 11.5 years > 20 years $880
Melbourne $6,953* 8.1 years > 20 years $860 6.7 years > 20 years $1,396
Perth $8,295 6.3 years > 20 years $1,421 5.3 years 10.7 years $1,784
Sydney $9,085 9.4 years > 20 years $944 7.2 Years > 20 years $1,315

*Battery price includes the state-based rebate for South Australia, Victoria and ACT

Explore the numbers yourself with our Solar & Battery Storage Sizing & Payback Estimator tool

 

Retirees / Young families

For this energy profile we have assumed an average daily energy use of 30 kWhs with more energy being used during the daytime. Given the assumed energy use patterns we have recommended 6.6kW of Solar Panels and a 6.5 kWh battery storage solution.

Flat Rate Time of Use Rates
City Cost Estimate Payback Period Solar & Battery Payback Period Battery Only Total Year 1 Savings Payback Period Solar & Battery Payback Period Battery Only Total Year 1 Savings
Adelaide $10,820* 5.9 years 14.2 years $2,008 5.4 years 12.3 years $2,256
Brisbane $12,390 8.4 years > 20 years $1,484 8.3 years > 20 years $1,488
Canberra $9,095* 6.4 years 17.2 years $1,516 5.2 years 8.7 years $1,994
Darwin $15,970 8.4 years > 20 years $1,889 7.8 years > 20 years $2,091
Hobart $13,890 8.2 years > 20 years $1,701 11 years > 20 years $1,210
Melbourne $8,410* 7.2 years > 20 years $1,201 6.3 years 12.9 years $1,449
Perth $11,250 5.6 years 14.5 years $2,223 4.7 years 8.8 years $2,803
Sydney $11,970 8.5 years > 20 years $1,400 6.3 years 11.6 years $2,046

*Battery price includes the state-based rebate for South Australia, Victoria and ACT

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Big Energy User

For this energy profile we have assumed a high average daily energy use of 50 kWhs focused in mornings and evenings with some loads shifted to the daytime (e.g. swimming pool). Given the assumed energy use patterns we have recommended 13 kW of Solar Panels and a 13.5 kWh battery storage solution.

Flat Rate Time of Use Rates
City Cost Estimate Payback Period Solar & Battery Payback Period Battery Only Total Year 1 Savings Payback Period Solar & Battery Payback Period Battery Only Total Year 1 Savings
Adelaide $23,722* 7.1 years > 20 years $3,517 6.5 years > 20 years $3,930
Brisbane $27,670 10.2 years > 20 years $2,634 10.1 years > 20 years $2,683
Canberra $22,544* 8.4 years > 20 years $2,681 6.6 years > 20 years $3,632
Darwin $31,375 9.4 years > 20 years $3,305 8.7 years > 20 years $3,603
Hobart $29,828 9.8 years > 20 years $2,974 12.1 years > 20 years $2,312
Melbourne $21,988* 10.0 years > 20 years $2,107 8.4 years > 20 years $2,611
Perth $25,928 7.0 years > 20 years $3,827 5.7 years 9.7 years $5,007
Sydney $25,252 10.0 years > 20 years $2,465 7.2 years >20 years $3,655

*Battery price includes the state-based rebate for South Australia, Victoria and ACT

 

Solar Battery Storage Payback Results by Australian city

The attractiveness of a battery storage system varies depending on if you reside in Adelaide, Brisbane, Canberra, Darwin, Hobart, Melbourne, Perth or Sydney. Each city has its own significant variables including sunlight patterns, energy costs and solar system prices. We have input these parameters in our model and compared the outcomes in the below graph.

Solar Batteries - payback periods by Australian capital cities

 

Important Note: These figures include the ACT battery rebate, the Solar Victoria Rebate and the South Australian Home Battery Scheme and is based on the time of use rates.

Based on our analysis Perth, Canberra and Adelaide are the best cities to install solar batteries. The rebates offered in South Australia and the ACT support the payback periods in Canberra and Adelaide, while Perth boasts some of the best sunlight hours for solar projects across Australia.  Hobart offers the worst return on investment due to unfavourable sunlight patterns and more expensive solar project costs. Brisbane also does not rank favourably compared to other state capitals due to very low electricity prices in the Energex network area in South East Queensland.

 

Conclusion: Solar Battery Storage offers low return on investment

When looking only at the revenues that the battery storage system will add to your solar project, across the 48 scenarios we compared, there were only 4 cases where the revenue from the battery paid for itself within its warrantied lifetime. In most cases that means, if your main goal is to make a financial return from your solar project, you are best off just installing a grid connected solar system and using grid-power during the evenings and nights.

The main reason behind batteries still not being worth it, is their price has remained steady over the last 2-3 years. Previously Solar Choice has estimated that residential solar battery prices would need to fall to $200-$300 per kWh of battery capacity installed to provide an attractive return, while the current market price is closer to $1,000 per kWh. Although at very large scale we are seeing batteries deployed in South Australia and Victoria, they operate under a completely different revenue profile which is progressively making more sense.

This analysis does not include any additional revenue a battery owner could earn from participating in a Virtual Power Plant (VPP). It is difficult to accurately forecast revenue from these schemes as most of them depend on unusual pricing events occuring on the wholesale electricity market. At present it appears unlikely that these schemes would materially affect our conclusion to this analysis.

 

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