Is Solar Battery Storage Worth It?

By Finn Peacock – Chartered Electrical Engineer, Ex-CSIRO, Founder of SolarQuotes.com.au

Last Updated: 15th Oct 2024

This is a question I’m asked almost every day. The reasoning goes: Instead of exporting your excess solar to the grid, why not store it in batteries to use at night (and really stick it to the power companies)?

The short answer? If your main reason for buying batteries is to save money, then my answer is not yet in many cases. But electricity bill reduction is only one benefit of batteries. They can also offer blackout protection and hedge against increase in energy prices and changing tariff structures.

The longer answer is below, and addresses the three main misunderstandings homeowners have about residential battery storage.

Misunderstandings about battery storage

1) Batteries pay for themselves

As of late 2024, batteries are still quite expensive. A decent amount of battery storage (around 10 kWh) will cost around $10,000 and could take ~15 years to pay for itself. Most are warranted for 10 years. 

It’s not enough for a $10,000 battery system to save $10,001 on electricity bills in today’s money by the end of its life to be worthwhile.  It will also have to save at least as much value as the next best use of that $10,000 would have provided.

For some people, the next best use may be a term deposit.  For others it could be paying off the house, investing in shares, or paying off credit cards.

Compare this with a standard non-battery grid connected solar system, which will typically break even after 4-7 years and then provide a further 20 years of savings.

2) Buying batteries now helps an industry in its early stages grow and become viable for the mass-market

It’s absolutely true that early adopters of new technologies provide critical revenue that allows new technologies, like residential battery storage, to take off and enter the mass market.

However, you don’t need to worry about ‘supporting the battery industry’ – because most of the growth of the industry is currently being fuelled by electric cars, which (for the time being) represent a far larger market than residential battery storage.

Electric cars and residential battery storage use the same technologies – so even if no one bought residential batteries, the sheer size and potential of the electric vehicle market will keep battery manufacturers afloat for decades to come.

3) Rising energy prices make battery storage more economical.

This can be true – the more expensive grid electricity is, the more valuable it is to store solar energy in batteries for use at night.

But as energy prices rise, solar feed in tariffs (what you’re paid for exporting excess solar generation to the grid) may increase. This is because the rate you’re paid for solar fed into the grid is meant to reflect the cost of generating electricity.

However, in many cases, given the huge amounts of solar energy being exported into the grid at certain times of the day, this is putting downwards pressure on wholesale electricity prices during these times – and being reflected in feed-in tariffs.

On a related note, “solar sponge” electricity plans can provide dirt-cheap mains grid electricity in the middle of the day. This can improve the economics of batteries if you charge during these windows while also self-consuming your solar electricity. But watch out for peak rates on these plans as they are often sky-high.

Also take into account the real cost of a battery. For example, the Tesla Powerwall 2 currently has a “cost per warranted kWh” of 33 cents/kWh. This means that it ‘costs’ you 33 cents for every kWh you store in the battery and then use at a later time. 

So if it costs you 33 cents to use a stored kWh and 33 cents to buy a kWh from the grid, you’re not really saving anything based on this example. If you’re paying more for grid electricity – and many Australia are these days – there are some savings.

Balance all these points with whatever other benefits a battery may bring you before making a purchase decision.

Don’t wait for batteries – go solar now and add batteries later

Unfortunately, all the hype in the mainstream media about batteries has made people question the viability of solar without batteries – to the extent that people are waiting for ‘affordable batteries’ before they invest in solar.

Even though the cost of battery storage is projected to decline year-over-year, it simply makes no sense to wait to get solar.

But every day you don’t have solar panels is another day you do have to pay high electricity bills. A well designed solar system without batteries can give you tiny bills.

Waiting 2, 3 or 4 years for batteries to become affordable means another 2, 3 or 4 years of high bills.

When the day comes that batteries make sense in your situation, they can easily be added to any existing solar system using a method called AC coupling. 

So don’t lose years of savings from solar by waiting for cheap batteries to arrive. Consider going solar now – with the knowledge that you can easily retrofit batteries later when they will pay for themselves.

If you’ve had a gutful of electricity price hikes and would like to harness the power of the sun to help control your energy costs, you can get solar quotes from three pre-vetted installers by clicking the button below: