Posted on 2 March, 2020

Battery storage has become a hot topic and the next big thing as homeowners and businesses seek to reign in their energy costs. Wherever we go the conversation ultimately ends in the same question: What about batteries?

In theory, battery storage sounds like the next logical step from a grid connect solar power system.  You make electricity, put it in a battery, and then use it at night time when your panels stop generating.

From a technical viewpoint this certainly does make perfect sense.  But, electricity cost savings don’t just come from technical solutions.  There are also financial considerations such as how much you pay for grid supplied electricity compared to that stored in your battery, and how much you will be paid for exporting excess generation from your solar system to the grid (called the Feed in Tariff or FiT).

When you purchase a battery you are effectively buying a certain amount of electricity that will be delivered over a defined time.  If we know the total amount of electricity that will be delivered and the up-front cost of the battery, we can calculate the cost per kilowatt hour (kWh).  The following example shows how:

Battery capacity = 13kWh

13kWh x 365 days = 4,745 kwh/year

4,745 x 10 years (battery warranty or cycles in years) = 47,450 kWh (total kWh to be delivered by battery)

$ 10,200 (Battery Cost, difference between solar only and solar with battery storage, both fully installed) ÷ 47,450 kWh = $0.21 /kWh

Which is cheaper than most general supply tariffs, but:

Ergon Tariff 11 cost (2019/20) = $0.26027 /kWh

Savings from battery = $0.05

Queensland Feed in Tariff for 2019/20 = $0.07842

So, you are actually better off generating a kWh with your solar system and selling it to the grid rather than storing it in a battery and using it later on.

Getting back to the technical side of things just for a moment, there are a couple of things you should consider that you may not be told when being sold a battery:

  • The above example shows all of the battery capacity being used. This is not usually the case.  Most Lithium batteries should only be discharged to 80%-90% of their capacity (called Depth of Discharge).  Discharging more will damage them. You will be delivered less electricity than rated, or nominal, capacity.
  • When you charge and discharge a battery there are energy losses. If you send excess generated power to the grid, there will be more than if you put it in a battery and then take it out again.

This all changes if you can lower the cost of a battery or increase its life. Go cheap though, and you risk buying a low quality battery that is unlikely to reach the defined life expectancy, putting you straight back to square one.  Changing electricity prices and Feed in Tariff rates also affect the calculations.

I’m not poo-pooing batteries.  I firmly believe that battery storage will play a part in all of our lives, and probably in the near future.  What I am saying is that you need to get the sums right.

Right now the best way forward for many people is to install a good quality solar power system.  You can install extra capacity now to allow for charging batteries, or ensure that it is expandable later on.  Additional cost aside, going bigger straight up may be easier and less expensive, as future regulations may not allow system expansion.  Battery storage can’t be added to all solar systems.  Make sure you use an inverter that will be able to communicate with a battery management system later on.  Monitoring battery and electricity prices will then allow you to add battery storage when the time is right.

Earlier, we discussed that all of this depends on what tariff you are operating.  Some tariffs, particularly those that are demand based, do present opportunities for batteries when discharged at peak energy usage times.  I’m not going to go into this here, demand management is topic all of its own.  The message though, is that different solutions suit different customers and you need to look at your own circumstances to find out what is good for you.

I would like to finish off with what we have seen with customers who have installed batteries and are very happy with their reduced electricity bills. What we have noticed on some occasions is that their battery is charging/discharging multiple times throughout the day.  Battery life is measured by manufacturers in “cycles” not years.  When you are given a battery life in years it assumes one cycle (one recharge, one discharge) per day.  If you charge/discharge a battery twice a day, you halve its life in years.  It’s a bit like a carton of beer. You get 24 stubbies in a carton and if you drink one per day it will last 24 days.  If you drink two a day it will last 12 days.  You have still received the same value: 24 stubbies, you have just consumed them differently.  The disappointment comes on day 13 though, when you have been drinking two stubbies a day but expecting the carton to last 24 days.