Last Updated: 11th Sep 2024 By Finn Peacock, Chartered Electrical Engineer, Fact Checked By Ronald Brakels

Are Solar Batteries Worth It?

Summary: In 2024, if you are on a flat-rate tariff anywhere except South Australia and Western Australia, battery payback will likely be over 12 years. But – in a best case situation – if you are on a time-of-use tariff anywhere except NT or TAS, a solar battery can pay for itself in under 10 years and sometimes in under 5. Read on for the details:

Table Of Contents
  1. First-Year Savings
  2. Payback
  3. Things to Watch Out For
  4. Capital Costs
  5. Electricity Price Outlook
  6. Playing The Wholesale Market
  7. Tools for Better Decision Making

Considering a solar battery but unsure if it’s worth the investment? You’re in good company. Back in 2015 when home batteries hit the Aussie market, the payback period was a hefty 20 years or more. Fast forward to today: battery costs have dropped, while electricity prices have skyrocketed. Result? More Aussies are finding solar batteries are indeed worth it. But it’s not a one-size-fits-all scenario. Your location, tariff, and energy habits will make or break the payback.

In this guide, I’ll break down typical savings and paybacks across different states, territories and tariffs in Australia so you can decide if a battery is worth it for you.

Pro-Tip: This page is all about the financial returns of solar batteries. But batteries have more value than just low electricity bills. They provide blackout protection, help integrate more renewables into the grid and provide insurance against changing electricity tariffs.

Solar Battery Payback

Let’s cut right to the chase. What are average simple payback times for a 10kWh, $10,000 battery per state/territory? We calculated these numbers using the total estimated first first-year battery savings in the table below.

State/TerritoryFlat Tariff: PaybackTOU Tariff: Payback
ACT11.8 years8.9 years
NSW9.6 years5.8 years
NT12.8 years13.5 years
QLD11.1 years8.3 years
SA7.8 years4.6 years
TAS13.9 years10.3 years
VIC12.5 years9 years
WA9.3 years6.1 years

First-Year Battery Savings

Here’s what you could save in the first year with a 10kWh battery that costs $10,000 installed. Using electricity plans suitable for solar households in each state or territory capital, I’ve considered both flat and time-of-use (ToU) tariffs. Below the table, there’s a map of how the states and territories compare on ToU tariffs.

Assumptions:

  • The battery has a round-trip efficiency of 90%.
  • Charged with rooftop solar panels.
  • 100% of the battery’s storage capacity is used each day.
State/TerritoryAnnual Savings: Flat TariffAnnual Savings: ToU Tariff
ACT$550$820
NSW $820$1,490
NT $690$650
QLD $690$1,000
SA $1,280$1,630
TAS $720$750
VIC $620$930
WA $1,070$1,830
Note: These are best-case savings

Why are Time-Of-Use tariff savings higher than Flat Tariff savings?

If you have a flat-rate tariff, you save money by charging your battery off solar and discharging it after the sun goes down. For every kWh of battery energy you use in the evening, you will save the grid cost of that kWh minus the forgone feed-in tariff (because you chose to put the solar electricity into the battery instead of selling it into the grid). So your daily savings are capped at the battery capacity times about 30 cents. For a 10 kWh solar battery, that’s $3 per day.

A time-of-use tariff charges much more for grid electricity during the evening peak (up to 65c per kWh), so using battery energy in the evening saves you more.

Pro-Tip: Increasing numbers of Australian homes are being forced onto ToU plans, but if you have a choice of flat or ToU plans, these savings assume households without a battery are either better off on a ToU plan or would pay roughly the same amount if they were on a ToU plan.

Additional Savings From Avoiding The Morning Peak

If you drain your battery in the evening, on a ToU tariff, you can often recharge it overnight to get you through the morning peak pricing period. This can add to your savings. Discharging 5kWh in the morning – half a 10kWh solar battery’s capacity – will do the following:

State/TerritoryAdditional ‘Morning Peak’ Savings
ACT $195
NSW $45
NT$95
QLD $25
SA $370
TAS $225
VICIncreases bills
WAIncreases bills

Virtual Power Plants (VPPs)

Joining a VPP can further boost your savings. You could also receive an upfront discount on the cost of a battery. However, be mindful of the potential disadvantages:

  • Your battery will restrict which VPPs you can join.
  • Normally, you’ll be restricted to a specific electricity retailer and plan
  • Loss of control over battery usage
  • Increased battery wear and tear

Estimated Annual VPP Savings:

State/TerritoryVPP Savings
ACT$100
NSW$180
NTNo VPPs available
QLD$180
SA$180
TASTrials only
VIC$180
WATrials only

Pro-Tip: Compare Australian VPPs with my VPP Comparison Table

Total Estimated 1st Year Battery Savings

Combining all these factors, here are the estimated total first-year savings combining:

  • A 100% discharge in the evening
  • Where it makes sense, a 50% discharge in the morning
  • Estimated VPP savings
State/TerritoryFlat Tariff Total Savings TOU Tariff Total Savings
ACT $850$1,120
NSW $1,040$1,720
NT $780$740
QLD $900$1,200
SA $1,280$2,180
TAS$720$970
VIC $800$1,110
WA $1,070$1,630
Note: These are best-case savings

Things to Watch Out For

  • TOU vs flat tariffs
  • Capacity loss over time
  • Changing electricity prices, feed-in tariffs and VPP payments
  • You may not fully utilise the battery every day

Time-of-Use (TOU) Peak Times by State

Understanding TOU peak times is crucial when considering if solar batteries are worth it. The longer and more frequent the peak pricing periods are, the more likely you are to use all your battery capacity every day to avoid them.

State/TerritoryUsual Peak PeriodsWeekends
ACT3 to 4-hr Evening, 2-hr MorningYes
NSW6-hr EveningVaries
NT12-hr DaytimeNo
QLD4 to 5-hr EveningVaries
SA10-hr Evening, 4-hr MorningYes
TAS5-hr Evening, 3-hr MorningNo
VIC5-hr EveningYes
WA5-hr EveningYes
Note evening peaks often begin around mid-afternoon when solar still supplies some power.

Key Takeaways:

  • SA has the longest evening and morning peak periods, giving batteries there an advantage.
  • NT has a peak during the day from 6am to 6pm which reduces the return from batteries, but this is likely to change with the next couple of years.

Capital Costs

The paybacks above do not include the cost of money, AKA ‘Capital costs’. These are often overlooked but are vital in the total cost equation of owning a home battery.

Here’s why:

Interest Rates vs Inflation

If you’re not spending money on a solar battery, there’s a good chance you’re using that cash to pay off your home loan instead. Right now, the average home loan interest rate is over 6%. But if inflation is around 4%, the ‘real cost’ of using your money for something else—like a solar battery—is actually closer to 2%.

Future Outlook on Capital Costs

Current interest rates are the highest they’ve been for the past 12 years. They are likely to fall and could make a 1% cost of capital a reasonable figure to use in the not-too-distant future. Over a 10-year period, a $10,000 investment at a 1% cost of capital would amount to $11,050—adding roughly $1,000 to the cost of your initial investment.

Electricity Price Outlook

The savings above assume a constant electricity price, but electricity prices may rise or fall in the future.

Playing The Wholesale Market With Your Battery

One way to get outsized financial returns from your battery is to enrol in an electricity plan that exposes you to the wholesale electricity spot price – a price that can go as low as negative $1 to as high as $15 or more per kWh. Energy retailer Amber Electric offers such a service. The theory is that you can make loads of money if your battery charges when prices are low and discharges when they’re crazy high. Certainly, some people with large solar batteries and flexible loads report making thousands of dollars over 12 months doing this. But be careful, as with most high-reward activities, there is a risk of getting it wrong and getting giant electricity bills (capped at the Default Market Offer) instead. For advanced players only.

Tools for Better Decision Making

Add A Battery Calculator: Quickly see your payback if you add a battery to an existing solar system. Uses your smart meter data to calculate how much spare solar you’ve got for charging and how much energy you use overnight. The result is a no-BS payback figure for your unique situation.

Solar & Battery Calculator: Quickly see estimated savings and payback when you combine a battery with solar power. Crucially, my calculator will split the solar and battery payback so you can decide if a solar battery is worth it.

Energy Tariff Comparison Tool: Your retail tariff affects your battery payback. Quickly see what’s offered in your area, and sort them easily.

VPP Comparison Tool: See what VPPs are available in your area.

Solar Batteries compared: Compare solar batteries available in Australia.

If you’ve decided that solar batteries are worth it for you and are ready to buy, I can help arrange quotes from installers I trust – quickly and easily:

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