Are Solar Batteries Worth the Investment?

Installing solar batteries for homes can reduce energy bills and provide blackout protection, but they often don’t offer a quick financial return. Learn about costs, benefits, and if they’re worth the investment.

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Are Solar Batteries Worth the Investment?

Many of us in the solar industry and PV system owners have long awaited the day when the cost of home solar batteries drops enough to offer a reasonable financial return. 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 solar & battery calculators, assumptions, and methodology to reflect the changes in the solar battery storage market.

This article explores solar batteries for residential homes, examining if they’re worth the investment through scientific analysis and real-life examples. It breaks down how these batteries function, their advantages such as lower energy bills and reliability during blackouts, battery prices, and available government rebates.

What is a Solar Battery & How Do They Work?

Before we dive into the cost analysis, let’s understand how a solar battery works. Solar panels generate power during the day when the sun is shining. This power is used first to supply energy to the home, and any surplus energy is typically exported back into the grid. Some energy retailers offer a solar ‘feed-in tariff’ to buy energy back from the customer.

Instead of exporting energy back into the grid, the surplus power can be used to charge a battery. The home battery storage system can then be discharged in the evening to reduce the amount of power the homeowner needs to buy from the grid.

Solar power batteries store energy in DC. They can be connected via DC cables to a hybrid solar inverter. Some come with their own inverter built in, like the Tesla Powerwall 3, and can be connected to the main switchboard like any other AC appliance.

How Do You Benefit from a Solar Battery?

1. Saving on Energy Bills

A typical residential solar system without a battery will cover about 30%-50% of household power consumption. With a solar battery, this can increase to 80%, 90%, or potentially even 100% of household power consumption. However, to charge a battery, you have to forgo some solar feed-in tariff revenue. For example, if you charge a 10kWh battery during the day, that’s 10kWh less feed-in tariff that you will see on your bill.

2. Reliability During Blackouts

Blackouts can be highly frustrating and, in some cases, a risk to health. Most solar batteries on the market can keep the lights on during a power outage. With some battery models, additional hardware is required to enable the battery to continue providing power during a blackout.

3. Reducing Your Carbon Footprint

Although we’ve made huge progress on the rollout of renewable energy infrastructure in Australia, the majority of the power generated on the grid is still from carbon-intensive, fossil fuel sources. Installing solar panels is a great start to reducing your carbon footprint, but adding a solar battery will often more than double the reduction in your carbon footprint.

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Solar Battery Costs

Solar Choice has been tracking the average price of solar batteries in Australia across our database of over 200 solar installers. Residential solar batteries usually cost between $1,000 to $1,300 per kWh of capacity installed, depending on brand, size, and location.

Battery SizeBattery Only Price*Battery + Inverter/Charger**
3kWh$3,930$4,650
8kWh$9,600$10,800
13kWh$16,120$18,070
18kWh$23,760$26,280
  • Battery-only price is applicable if you are installing solar and batteries at the same time or have an existing solar system with a hybrid solar inverter.

** This price is for retrofitting batteries to a solar system that has not allowed for battery integration in the future, which requires an additional inverter/charger to be installed along with the battery.

State Rebates for Solar Batteries

While there is no federal rebate for solar batteries like the STC rebate for solar panels, some state governments have introduced rebate programs aimed at accelerating the uptake of residential batteries.

New South Wales (NSW)

NSW has announced a battery rebate which will become available in November 2024. This will offer between $1,600 to $2,400 for eligible homes depending on the size of the battery. Read more here.

Victoria

Solar Victoria offers an interest-free battery loan of up to $8,800. Eligibility criteria include a means test, houses with at least 5kW of solar installed, and for owner-occupiers only. Find more details here.

Australian Capital Territory (ACT)

In the ACT, you can get an interest-free loan up to $15,000 to cover the cost of solar and battery systems. The eligibility criteria are quite broad and support the uptake of a range of climate-friendly products. Learn more here.

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Solar Battery ROI, Savings, and Payback Period

To demonstrate the potential returns of a solar battery, we’ve put together a common scenario for a homeowner in Australia. We used up-to-date prices for electricity and solar feed-in tariffs and our proprietary model which simulates the outcome of the project on an hourly basis for the next two decades.

Energy Usage Scenario

We have taken a typical scenario with peak energy usage in the morning and evening with a total energy usage per day of 30kWh. Energy rates were assumed to be a flat rate of 30 cents per kWh and a feed-in tariff of 5 cents per kWh.

SystemCostAnnual SavingsIRRPayback Period
6.6kW Solar & 10kWh battery$17,340 (total) Breakdown: $4,940 (solar) $12,400 (battery)$2,742 (total) Breakdown: $1,566 (solar) $1,082 (battery) $94 (feed-in)16.5% (total) Breakdown: 31% (solar) 2% (battery)7 years (total) Breakdown: 3 years (solar) 12 years (battery)

Most solar batteries on the market are only warrantied for 5 to 10 years, so in this scenario, it is likely that the solar battery will not be able to pay for itself during its lifetime.

Conclusion

Based on numerous analyses of scenarios over the years, installing a residential battery rarely provides an attractive financial return. The payback period for a solar battery is usually longer than the warrantied life of the battery, even after factoring in additional benefits from participating in a Virtual Power Plant scheme.

So, installing a solar battery is generally only worth it if homeowners place high value on blackout protection and reducing carbon emissions. Previously, Solar Choice 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.

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