We get asked this a lot, and have written a few posts on the topic (see here)
It’s a tricky question. Rooftop solar pays itself back through straight bill savings from 3-7 years. Whereas batteries are a little more complicated. There are multiple benefits for having a battery, some economic and others based on other metrics.
A typical home battery costs $10,000, give or take. We estimate that typically a 10kWh battery will save around solar household $600 per annum. This is highly dependent on many factors, so we are using round numbers.
So over 10 years, you may spend $10,000 on a battery and save around $6,000.
There are other financial benefits. More and more ‘Virtual Power Plants’ (VPP) are being offered by electricity retailers (eg. AGL, Powershop) and electricity network companies. VPPs see households get paid for their batteries providing support during peak demands. Luckily for shire households, our local electricity network (poles and wires) company, Ausgrid has such a program. And it is looking to extend it.
This means households could get $80 to $400 a year for joining a VPP with their network and retailer (combined), $800-$4,000 over 10 years.
In addition to these direct economic benefits, you can also get backup power. Now, power reliability is not a huge issue in most areas of the shire. But for some households it is important, and for others there is a very nice (or smug!) feeling having the lights and TV on, when the rest of the neighbourhood is dark. Would you pay $100 or $200 per year for this benefit? Some would.
So let’s summarise the costs and benefits over 10 years so far:
For a $10,000 cost, you get $6,000 of bill savings, $2,000-$4,000 of VPP credits and the benefit of back up power, however you value it.
You can see for most people, this is a marginal investment. But this is not the end of the story.
Other factors
Electricity prices change. Currently feed in tariffs for solar are high, meaning we get well rewarded for sending excess solar to the grid. But in the future, this may change. This will make solar (only) less financially attractive, but make the payback for batteries better. If peak evening tariffs also increase, this will help batteries. You may choose to get a battery now, for protection from these increases in the future. (of course, you could just add a battery when this happens).
For new solar buyers, if you are getting quotes and then a solar company to you house, there are some efficiencies in getting a battery at the same time. There are cost savings, and also by choosing your solar and battery at the same time, it can be designed optimally.
As per our post 2 years ago, you may have other drivers and reasons to get a battery now.
Are batteries good for the environment?
The short answer: overall, yes.
For years we have lamented how slowly Australia is adopting renewable energy. But in the past 3 years we have seen a solar and wind boom. Rooftop solar is booming, and over 8 Gigawatts of wind and solar farms have been financed, with half now in operations and the others under construction and to be connected this and next year.
But we are soon reaching a point where renewables alone is not enough. We need to store this energy when it is abundant and provide it to meet peak demand.
Coal and gas power stations are seeing reduced revenues during sunny and windy times, but very high revenues at other times. If we just build renewables, without storage, the revenues at peak times will offset lower revenues during daylight and windy times, and the coal and gas power stations remain viable and stick around as long as possible.
By using battery storage to store renewables and meet peak demands, we reduce those peak demand costs and enable the retirement of fossil fuel plants and allowfull transition to renewable energy. A benefit of VPPs is they don’t just operate to store your own solar and meet your nighttime demand, they help meet peak demand.
Electric Vehicles – A very important consideration
In our view, electric vehicles (EVs)are even better than home batteries. A Tesla Model 3, for example, has a 50 kWh battery, 5 times the size of a typical home battery. EVs can equally soak up solar during daytime hours, from your home or from the grid, and support solar, but at a greater scale.
It is also an investment in the transition not only to renewable energy, but to carbon free driving. Some people will get a battery and an EV. And for others who don’t drive much and can’t contemplate spending $50,000 on a car just yet, but are keen on a battery, they should consider a battery.
EVs are not cheap just yet. Particularly ones that can do the necessary m range, over 300km, that most people want. There aren’t many second hand models that can do over 300km range just yet. So if the $10,000 cost of a home battery may be a determining factor in whether your next car is an EV or not, we think the money is best saved towards getting an EV.
This table summarises the decision between battery and EV
| Person | Get a home battery? |
| No plans for an EV for a long time | Should get a battery if they want one |
| Tempted to get an EV, but budget conscious | Should prioritise EV over battery |
| Keen to get an EV and battery | Get a battery! |
We hope the above helps you get through this challenging question!
If you have any questions or comments, email us at info@sunnyshire.org.au
And if you are keen on a battery in the Sutherland Shire, stay tuned for the VPP we are working on