Lot’s of folks are wondering if it is time to leave the grid.
Home energy storage has gained a lot of attention recently, and many people think making homes independent from the grid by using batteries to store electricity from rooftop solar is an idea whose time has finally come.
So will home energy storage soon be like rooftop solar in that it will pay for itself and be used in homes across the nation, or is it like a porn star? Always coming, but probably not something you would actually want in your house.
To gauge its prospects I decided to investigate whether or not a household that is well-suited for energy storage could save money right now by installing an off grid solar system. And entirely through good fortune and not at all because I am too lazy to bother doing real research, my parents just happen to fit into this category. If they can’t save money by going off grid then probably no one can.
Location And Climate
My parents live in subtropical Queensland in a location that is close to perfect for the purposes of solar power and going off grid. High levels of sunshine mean new rooftop solar can have an excellent capacity factor of 18%. As they are almost in the tropics they have less seasonal variation in the length of day than most Australians and the region averages about twice as many cloudy days in summer as in winter. Because of this, combined with the efficiency losses that result from summer heat, the output of solar PV through the year is surprisingly constant. For panels that are fixed at the optimum angle to maximise electricity production, the best summer month only produces an average around 20% more electricity than the worst winter month. This is one of the smallest differentials in Australia and is very useful for keeping down the cost of an off grid system.
Rooftop solar in the area also performs very well in cloudy conditions. I’ve seen systems on a completely overcast day produce a third of the electricity they do under clear skies. The reduction is not as large as might be expected because the high temperatures solar panels reach in direct sunlight reduce their efficiency.
Electricity Consumption
My parents consume an average of about 12.5 kilowatt-hours a day or around 4,560 a year, which is not unusual for a two person household. They don’t have an air conditioner, which is handy, as those things can chew through a lot of electricity on a hot evening. They do most, but not all, of their cooking using bottled LPG. They rise early and go to bed reasonably early, so most of their electricity use occurs during the day. In fact, my father is always up at the crack of dawn and if you stay there you can tell, because the first thing he always does is turn on the radio at high volume. With their diurnal habits and moderate energy usage, they average under 3 kilowatt-hours of electricity consumption per night, with around one kilowatt-hour of that being refrigeration.
Grid Electricity Costs
My parents currently pay tariff 11 for grid electricity which is 27.9 cents per kilowatt-hour with a 91.8 cent daily service fee for the honour of being connected to the grid. Their yearly bill is about $1,610 which comes to 35.3 cents for each kilowatt-hour they use. I will assume the cost of grid electricity will remain constant in real terms when determining whether or not going off grid will save money.
My Parents’ Discount Rate
To determine if going off grid can save them money, we need to know my parents’ cost of capital, which is also known as their discount rate. I think my parents have money sitting in the bank at a low rate of interest, but I don’t actually know this, as they don’t tell me these sorts of things. Just the other day I said to my mother, “Hey, Mum! How much money do you have in the bank? And by the way, Dad is still allergic to peanuts, right?” and she just gave me a dirty look for some reason. Anyway, I am going to assume they have heaps of money sitting in a term deposit earning the current interest rate of 3.5% and I will use this as their discount rate. Now it could be argued that due to inflation their discount rate is actually lower than this, but good luck trying to explain that to my father. If it is not clearly better than bank interest he is not going to go for it, so I’ll keep things simple and stick with the 3.5% discount rate.
Summary
I have summarised the above information below. Please note my parents’ names weren’t originally Joe & Flo Blow, but when they came to this country they changed them in order to fit in better. (Originally their names were Laue and Cocaine Blow.)
Subjects: Joe & Flo Blow
Location: Almost in Tropical Queensland
Average electricity use: ~12.5 kilowatt-hours per day ~4,560 kilowatt-hours per year
Average night time electricity use: under 3 kilowatt-hours
Cost of grid electricity per kilowatt-hour: marginal cost 27.9 cents Total cost 35.3 cents
Supply charges: 91.8 cents per day $335 per year
Total Electricity Bill: $4.41 per day $1,610 per year
Discount Rate: 3.5%
Estimated solar Capacity Factor: 18%
Batteries
Batteries are the heart of an off grid system. Or rather, since they store energy, I guess they’re more the fat of the system. For some time now we have been promised wonderful new battery chemistries will soon arrive and revolutionise off grid energy storage, but in reality I could only get firm prices for two types of batteries, both of which were developed over 100 years ago. And of the two, only one is suitable for my parents’ needs.
Nickel-Iron Batteries: Not At All Suitable For My Parents
You may have heard that nickel-iron batteries are the toughest and longest lasting form of energy storage around. Unfortunately this is only true if they are properly maintained and that maintenance involves not only topping up fluids, but at times completely replacing the electrolyte. My parents aren’t going to do that, nor are they going to get someone in to do that, and the electrolyte itself isn’t cheap. While suitable for some applications, they are certainly not suitable for my parents’ or most peoples’ home energy needs.
Lead Acid Batteries
To me it seems a little strange that the best option available in the year 2015 is still lead acid. This may change soon, but it hasn’t changed yet. Fortunately, the technology has improved a lot since the first rechargeable one was created in 1859. But despite improvements they still have strict performance parameters that cannot be exceeded if you don’t want them to die young and expensive. First of all, you can’t discharge them more than 80%. Not unless you’re made of money. So a battery bank that claims to be 10 kilowatt-hours is in practice only 8. Secondly, you can’t discharge them by 80% without seriously shortening their lives. Sure, you can pull it off now and then if you have to, but it’s not something you want to be doing all the time. For a typical long life lead acid battery, discharging it 80% will shorten its lifespan equal to discharging it by 30% three and a half times, or discharging it by 10% more than eight and a half times.
If you look in a brochure for long life lead acid batteries you’ll find a graph that looks something like this:
This graph shows that the harder you work a battery, the shorter its life.
Each time energy is taken from the batteries and they are charged up again that is one cycle. If they are discharged 80% once each day, then according to the graph they should last for 1,500 days or about 4 years. But if they are only discharged 10% each day then they should last for 13,000 cycles or over 35 years, which is pretty impressive. Unfortunately it’s not quite that simple in real life. Even if the batteries are never discharged more than 10% overnight, discharges will still occur during the day when the output of the solar panels is low or when electricity use is high. A 1% discharge from using an electric fry pan on a cloudy day only has a tiny effect on the life of the batteries, but it all adds up.
Another problem with these long life batteries is their warranty. While the graph suggests they can last over 35 years, their warranty is actually only for one year. In their defence, they have no idea how you are going to treat their batteries, but if you set them up so they should last for 20 or 30 years and they die after two years, you have no recourse. You will have lost your investment and there is nothing you can do about it. It is extremely unlikely that all your batteries would die early like that, but it can’t be assumed they will last as long as the graph above suggests and it is necessary to budget for them dying earlier. For a typical set up I would suggest expecting them to only last about two-thirds as long as their graph life and even that may be optimistic. I certainly won’t buy my parents the most expensive batteries available, but in the hope of getting a decent lifespan, I will source them from an established manufacturer with a good track record.
How Much Rooftop Solar Is Required?
The minimum amount of solar capacity an off grid home requires is enough to generate the average electricity consumption of the house. But in practice the more solar capacity there is the less battery storage will be required and the less strain will be put on it. This is because with enough solar panels a significant amount of electricity will still be generated even when it is cloudy or the sun is not in a good position. For my parents, installing enough to produce about twice their average electricity consumption, or 6 kilowatts, should be around the optimal amount. This means that even on a typical cloudy day their panels will still produce about two-thirds of their average daily electricity consumption and help reduce the need for storage. If cost was not a factor, enough solar panels could be installed to power the household even on overcast winter days, and provided the cost of rooftop solar continues to decline faster than battery storage this will be common in the future.
Which Direction Should The Panels Face?
Having panels facing west and east can result in a more steady output of solar electricity through the day and lower the average size of the nightly battery discharge, as the panels will be generating more electricity in the early morning and late afternoon. However, as it reduces the total amount of electricity generated, it can result in greater battery drain on cloudy days and reduce the number of consecutive overcast days the house can experience before its energy storage is depleted. Because my parents don’t use much electricity at night, and because my father doesn’t use much early in the morning, and also because it suits their roof; I will place all the panels facing north. Installing some panels facing west is an option I would keep in mind if I were to expand the number of solar panels.
Solar Panel Heat Tolerance
Solar panels that handle high temperatures well can cost more than those that don’t. Because my parents’ system will usually produce more electricity than is needed on cloudless days when solar panels reach their highest temperatures, it may not be worthwhile to pay more for better heat tolerance. Using the money saved to purchase one or more extra panels which will boost production during cloudy weather is likely to be a more effective option.
How Much Battery Storage Is Required?
The rule of thumb for off grid systems is that storage equal to three days average electricity use is required. Fortunately for my parents this rule is a load of fetid dingo kidneys. It may have been true in the past when solar panels were more expensive, but it is not true now in Australia and it’s certainly not true at my parents’ location. It is now cheaper to install more solar panels and let more electricity go to waste than it is to pay for three days storage.
The most important consideration is battery lifespan. The larger the battery storage, the less deep its discharges will be and the longer it will last. Looking at a brand of batteries that appear to strike a good balance between cost and quality, I see that buying 8 of them will give my parents 28.8 kilowatt-hours of storage at a cost of about $6,300. Looking at the Number of Cycles by Depth of Discharge graph I see that if my parents only discharge them by three kilowatt-hours every night the depth of discharge would be less than 11% and they would have a graph life of about 34 years. However, cloudy days and periods of high electricity use are also going to cause the batteries to discharge and a reasonable estimate might be that the average daily discharge would be at least equivalent to a once daily 25% depth of discharge, giving them a lifespan of about 22 years. But as mentioned, batteries dying before the graph suggests they will has to be accounted for, and so I will assume their lifespan will be a little over two-thirds of that time and they will last for 15 years.
Paying for more energy storage could increase its lifespan, but the longer the batteries are kept, the higher the risk they will fail before the end of their graph life. Attempting to save money by reducing the amount of storage by a quarter reduces their expected lifespan by more than a quarter, while reducing the amount of energy my parents have to draw on.
Days of Storage
If it could all be used, having 28.8 kilowatt-hours of storage would meet my parents’ average electricity use for 2.2 days. But as the batteries cannot be discharged more than 80% it would actually only be about 1.8 days. However, no matter how bad the weather, provided they still have a roof, they will be producing some solar electricity. So in practice it should be enough to meet their average consumption for over five consecutive overcast days.
And note that even if overcast conditions last for weeks and their battery storage becomes almost exhausted, their rooftop solar will still generate enough electricity and charge the batteries enough to power lights, refrigeration, laptops, the television, the clothes washer, and allow for brief hot showers. They would have to be careful with their electricity use and would not be able to use the dishwasher or clothes dryer, but they certainly wouldn’t end up living in the Stone Age. It would even be considerably more comfortable than the Bronze Age. And they wouldn’t have to change their behaviour if they didn’t want to because they have the option of running a generator.
Battery Efficiency
Lead acid batteries are only about 85% efficient over a charge/discharge cycle. This means they require about 15% more energy put into them than can be taken out. So if my parents use an average of 5 kilowatt-hours of stored electricity a day it will increase their average daily electricity use by about three-quarters of a kilowatt-hour to around 13.25 kilowatt-hours. This will not be a significant problem with 6 kilowatts of solar panels.
Battery Degradation
Battery performance decays over time. Towards the end of their life lead acid batteries might only operate at 80% of their original capacity. Fortunately this decline happens very slowly at first and only becomes pronounced as they approach death. This is accounted for in Depth of Discharge by Number of Cycles graphs and for practical purposes can mostly be ignored, although a very gradual decrease in the amount of energy the batteries can hold may be noticed after the first few years. I do not think this will be a problem for my parents because their electricity usage is likely to decrease as they replace their older appliances and make their home more energy efficient. Replacing their current refrigerators could result in a significant improvement, but even small changes such as replacing CFLs with LED lights or getting a new laptop will help. This improved efficiency will also assist with the very slow decline in solar panel efficiency that occurs over time.
It can make sense to replace old appliances with energy efficient ones before going off grid to reduce the size of the system required, but I’m not certain the expense will be worth it for my parents, so I shall leave the appliances alone for now.
Battery Maintenance
Batteries require maintenance, but fortunately the long life lead acid gel batteries I would get for my parents require very little. All they need is to have their voltage, temperature, and connections checked every six months and be kept clean.
Space Required For Batteries
My parents’ house is not quite an old Queenslander. It’s more a middle-aged one. But it does have a useful characteristic in there is plenty of room on the veranda for energy storage. Technically the space taken up is still a cost, but I’m not going to bother to try and put a price on it. We can put it where the dog normally sleeps and let him pay the cost.
The electronics required for an off grid solar installation take up more room than an on grid one and this needs to be allowed for, but it is the batteries that take up the most space. My parents’ 8 batteries totalling 28.8 kilowatt-hours will take up an area 172cm by 24cm and will be 71cm high. That’s close to the length of a single bed and a little less than the width of a dinner plate. Their total weight will be 677 kilograms.
Battery Disposal
Batteries eventually die and the good news is when they do they are worth money. My parents may only get $100 for theirs or they might get less, but what they won’t have to do is pay someone for disposal. A recycler will be more than happy to take them off their hands.
The Generator
Generators are a standard piece of equipment for off grid homes. However, they are no longer necessary. As mentioned above, provided a home has enough solar panels people can get through periods of prolonged bad weather through being careful with their electricity use. But having a generator can avoid the need to do that, while having the drawbacks of being noisy, smelly, expensive to run, and expensive to buy and repair. They also require maintenance and refuelling.
My parents would only need a very small generator. This is because they could let it run when their battery storage started to get low and since my parents’ average power use is only about half a kilowatt, even a one kilowatt generator would be enough to gradually recharge their batteries.
Fortunately, my parents already own a small portable generator, so there is no need to decide whether or not they should buy one. Despite being small and cheap and quite possibly nasty, I presume it could still be connected to the off grid system to provide electricity if required. But what the system wouldn’t be able to do is start it automatically when the storage levels get low, because the charge controller lacks a robot arm with which to pull the start cord. A generator with an electric starter would be required for automatic operation.
If, for some reason, the portable generator could not be connected to the off grid system, it could still be used to conserve battery storage by powering appliances directly.
Hot Water
Electric hot water systems draw a lot of power and if they switch on when there isn’t sufficient solar electricity being generated they will put strain on the batteries and reduce their lifespan. To minimise this problem I will put a timer on my parents’ hot water system so it will only switch on from 11:00am to 3:00pm. On most days the hot water system would switch off in under two hours meaning it would only draw power during the sunniest part of the day. But if my parents had somehow managed to use all their hot water, having it cut off after a maximum of four hours will help preserve the charge in the batteries while giving lukewarm water to shower with that should be at a minimum of 40 degrees even in winter.
Only having lukewarm water would also provide a signal to my parents that they should check the charge level of the batteries and probably either start being careful with electricity use or turn on the generator. If their battery storage is low and the next day is cloudy it could be a good idea to turn on the generator just before 11:00am and run it for four hours to help ensure the hot water system won’t drain the batteries.
A more efficient solution is to use a solar diverter that will only send electricity to the hot water system when there is excess solar power. Unfortunately this might cost over $1,000 which is kind of nuts as a timer may only cost $100. It would make more sense to instead use the money to install extra solar panels.
Heating
It doesn’t get very cold where my parents live. But because they’re not used to it, they don’t behave very sensibly when it does get cold. Should the temperature actually drop down to 10 degrees they start panicking and scanning the horizon with binoculars in an attempt to see which direction the glaciers are approaching from. When it is cold my father will run a small portable electric heater and if it is unusually cold he might run it for much of the day. As very cold weather is associated with clouds and shorter winter days, this could cause a large drain on the batteries. Fortunately, it is not too difficult to work around.
One solution would be to run the generator to deal with the extra electrical demand. But this would be stupid because the generator would create about 5 times more heat outside than the electricity sent to the heater would inside. And it would be noisy and expensive and polluting.
A simpler and cheaper solution, which is also less damaging to the environment, would be for my father to turn on the stove and use LPG to heat the house. LPG heaters for indoor use are also available but they can be quite expensive. LPG heaters for outside use are cheap, but indoors they are a fire hazard and so I can’t recommend them.
Hardware Required
An off grid home energy system sends electricity from solar panels on the roof to a charge controller that regulates the batteries. The batteries are connected to the rest of the system by some expensive cables, and everything is connected to an off grid inverter, which is attached to a house. Fortunately, my parents already have one of them, so that cost is covered.
If you buy the system as a kit, it will come with a pre-wired board on which to attach the electronics. This is very useful, but not quite as wonderful as their brochures suggest. It is very handy to have, but even I could eventually work out what plugs into what through trial and error. That’s how I’ve managed to have three children.
Now unfortunately, all this doesn’t come for free, which is a terrible shame. There are over four thousand economics PhDs in this country and things still cost money. Sometimes I wonder what we’re paying them for. A charge controller might cost $750 or more. People are happy to sell you the cables and fuses required for over $500. You may be able to get a 4.6 kilowatt off grid inverter for only a couple thousand dollars, but they are usually more. And the installation requires more labour than an on grid system. So before the cost of batteries are included, an off grid system is likely to cost at least $2,500 more than a comparable on grid system, but it would probably actually be an extra $3,000 or more.
It is possible you may be able to find hardware at a considerably lower price than what I’ve mentioned. I wish you well in that endeavour. I recommend checking companies that put out brochures in broken English because if they don’t waste time checking to see if their English makes sense they have more time to devote to improving the quality of their product.
Will It Save My Parents Money To Go Off Grid?
Now it is time to work out how much my parents’ off grid system will cost them. And while I have tried to keep the figures reasonable, I will be straight with you and tell you this is not a worst case scenario.
First of all, I have decided that my parents are crazy, sorry, I mean dedicated, and won’t mind spending several days a year carefully watching their electricity consumption and changing their behaviour to make sure they don’t end up draining their batteries. Also, I’m going to assume they don’t mind telling guests they need to be careful with their electricity use. In fact, let’s just say they hate guests and so have no problem enforcing draconian conditions on them.
Secondly, I’m going to assume the life of their rooftop solar system will be 30 years, which is not unreasonable. I will give them a 4.6 kilowatt off grid inverter and 6 kilowatts of solar panels. With an expected capacity factor of 18% the panels will produce twice as much electricity as my parents use, but this will reduce the strain on their batteries and allow them to produce around two-thirds of their average daily electricity consumption on overcast days. I will assume the cost of the system without batteries will be the same as the average cost of a 5 kilowatt on grid installation in Queensland, plus $2,500 to cover the extra cost of an off grid system, plus $100 for a timer for their hot water system, giving a total of $10,500. Because replacement parts should rarely be required and because they should continue to decline in price and improve in reliability, I will use a figure of 2% of the cost of the original system, which is $210, for the average yearly cost of repairs and maintenance.
I am going to give them 28.8 kilowatt-hours of long life lead acid gel batteries which will cost about $6,300 and I will assume they will last 15 years.
As they already maintain a generator for other uses I won’t include the cost of that, but I will include $50 a year to cover any increase in the use of generator fuel or LPG.
I’m not including a battery enclosure because one should not be necessary.
Using my parents’ discount rate of 3.5% and running a simple levelised cost of energy calculation for the rooftop solar system and its equivalent for the batteries, I find the average cost of producing each kilowatt-hour of electricity they use is about 17.0 cents and the daily cost of batteries comes to $1.50. This means the average cost to my parents of producing electricity for their off grid home comes to about 29.0 cents a kilowatt-hour, or 29.1 cents including generator fuel and LPG. This is 18% less than the 35.3 cents a kilowatt-hour my parents were paying all up for grid electricity and so, provided my assumptions are correct, with their low discount rate my parents can save approximately $280 a year by going off grid.
The final step is to compare the savings from going off grid to the savings from having on grid solar.
On-Grid Solar Is A Much Better Deal
If my parents installed 3 kilowatts of on grid rooftop solar at the current average Queensland price of $5,500 and used half the electricity it generated themselves and exported the rest to the grid for the 6.53 cents a kilowatt-hour feed-in tariff they are entitled to for living in regional Queensland, then using the same assumptions as for going off grid, they would save $610 a year for less than a third the cost of an off grid system. Even if they received no feed-in tariff, they would still save over $450 a year.
As my parents would save much more money with a much smaller investment by installing on grid solar rather than going off grid, it makes absolutely no sense at all for them to go off grid at this time. And this should hold true for all on grid households in Australia. It is difficult to think of any circumstances where going off grid would currently be the better option.
On-Grid Solar Is Better For The Environment Than Off Grid
With 6 kilowatts of solar panels in their off grid system, about half the electricity my parents generate would be wasted and benefit no one. If they had the same number of panels on grid they would eliminate twice as much fossil fuel use while getting a better return on their investment. On grid solar is the far superior environmental option.
On-Grid Solar Hurts Fossil Fuel Generators More
This sentence exists only for the purpose of emphasising that on grid solar hurts fossil fuel generators more than off grid solar.
You Will Be Deincentivised
As I hope I’ve demonstrated, going off grid is not yet a good investment for Australians. But costs will continue to fall and so this may soon change. However, once a significant number of people start to go off grid, powerful vested interests will act to remove the incentive to do so. And the method they are most likely to employ will be painfully retroactive. It is a certainty that changes will be made to discourage people from getting an off grid solar system and the potential consequences should be carefully considered before making the decision to do so.
In the future I will write about how people are likely to be persuaded to not go off grid.
Provided I am free to do so…
About Ronald Brakels
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Excellent article on the economics of off-grid versus grid-tied solar… funny too!
I often have people ask me about this exact question and it will be great to be able to point them to your in-depth analysis.
Do you mind if I put a link to the article in my next newsletter from greenyflat.com.au?
Thanks, Andy
Thanks for the kind words. Ronald has written a cracking analysis. Please do link to it 🙂
Thank you, Andy! As Finn says, link away.
Any thoughts on battery storage and on-grid systems. I seem to have my greatest power consumption during the twilight hours so would a smaller battery storage system that can supply a couple of hours power in the morning & again in the evening and maybe even during cloud drop-offs be a viable proposition.
R Marc
Hi Marc. On grid storage won’t pay for itself just yet, but as we’re seeing now in New South Wales with power cuts that might last for weeks, having a few hours storage and a solar inverter that can safely operate when the grid is down can be very useful. And we may not have to wait too long for it to pay for itself. I am not as optimistic as some people about the announcement Tesla is going to make about home energy storage, because even if the price is wonderful I’m sure we’ll have to wait a while before we can get our hands on their systems, but fingers crossed that it will be a big step forwards.
Hi Ronald,
Great article and very well articulated. I have learned a lot from you and Finn on this web site. I would like to make a couple of comments to your research which has been very well presented and understood. I see in the article that the 8 batteries are 12V and 300 Ah. I would like to know where you purchased them and the brand.
In 2007 the service fee with Ergon was $17 per quarter, now it is as you rightfully has calculated $83.50 and is said to increase to $250 per quarter soon. Also it is expected that the kW price is to double in the next 4 to 5 years. It has doubled in the last 7 years. In the article you state that your parents have a 6 kW system. 6 kW is no longer permitted when you are grid connected. As far as I know the limit is now 3 kW and the waiting time for connection approval is about 2 months. So considering the potential increase in the kW/h, the service fee rise, only 3 kW installations, the resistance of Utility grid suppliers, the audacity of Ergon to call the 6 cents kW/h they pay you A BONUS, the waiting time for grid application etc. No wonder people are considering going off grid. But why not make it a hybrid system? Use only the grid when your small battery bank voltage runs below say 11.5V then automatically switch over to the grid. I have approval from Ergon that I can have as much solar as I like as long as I don’t export to the grid and who would want to do that for 6 c kW/h?
To set up a hybrid system you will need batteries, relays, relay driver, and a 5kV hybrid bi-directional inverter. The cost of all the gear is about $1200 + the batteries to your choice. You can set it up fully automatically, no manual switching, the sun and the battery voltage decides whether you are on or off the grid. No export. Automatically change over switched.
John Nielsen, Silkwood.
Hello John. Just to be clear, I didn’t take my parents off grid because the economics of it didn’t work out and there is a better pay off from not having energy storage and just having grid connected solar. If it did pay for itself, then I would be working on article about taking my parents off grid with details about the exact batteries and equipment used.
I hesitate to recommend a particular brand of battery, because while I did have one brand in mind, I don’t know enough about its performance to say that it is actually better than other brands out there. Generally speaking, German brands have good reputations, but keep in mind that, like my high school geography teacher, not everything that comes out of Germany is wonderful.
Queenslanders can still get 5 kilowatt inverters, unless they’ve just changed the rules again, but they will now have to pay more for a less efficient inverter that performs ancillary services for the grid. ( http://www.solarquotes.com.au/blog/want-5kw-solar-system-qld-consider-getting-march-1-2015/ ) With a five kilowatt inverter one can install over 6.665 kilowatts of solar panels and still get Small-scale Technology Certificates (STCs) for those watts. Of course, if one is off-grid than an off-grid inverter is what’s required.
I doubt the cost of grid electricity will double. Rather, what they are about to do in Queensland is increase the daily supply charge and reduce the cost per kilowatt-hour in a very deliberate attempt to discourage rooftop solar and support coal generation. This is most unfortunate on account of how coal power kills people.
Hopefully, on grid storage will soon pay for itself. And things might get interesting when it does.
My parents-in-law live in a Less-Developed-Country which can mean that, sometimes, the power can go off for a few hours a time, a few times a month. They’re already off-grid for water/plumbing purposes (the water’s not reliable either).
Apart from the general convenience of not having the power go off, I imagine that having a off-grid system would work from a financial consideration too as, every time the power does go off, they lose a refrigerator and a freezer’s worth of goods too (it’s a hot country).
Perhaps it would work on an on-grid system too but I’m certainly not expert enough to work out whether it is sensible to have an on-grid solar system if the grid-supplied-power itself is frequently turned off.
Personally, I’m looking forward to the revolution in battery technology so we can ALL go off-grid and be done with utility companies and stupid geo-politics based on decayed mineral sludge that we pump out of the sand.
Just my $0.02.
Cheers
J
I have gone off grid in Sydney,, I find it crazy that most people have no problems spending 30k plus on a new car and are not wllling to spend that money on a power system that will make them energy independent and when everyone else has a blackout, you still have cold beer! And when did finances become more important that. The environment?
Great article, thanks Ronald.
“provided my assumptions are correct, with their low discount rate my parents can save approximately $280 a year by going off grid.”
It’s not clear if you took into account the fact that the principle of a term deposit is still there at the end of life, but for a solar power system, it’s principle is at $0…
Hello Greg. While I could have made it clearer, the calculations do account for the principle. My parents won’t lose out. Looking at it very simply and ignoring inflation, going off grid might cost my parents $16,800 and will save them their yearly electricity bill of $1,610. So after 25 years my parents will have saved $40,250 through not paying for electricity while if they had left the money in the bank at 3.5% interest they would only have $39,703. So if my parents went off-grid and put the money they saved on electricity bills aside, then after 25 years their pile of money from doing that would be larger than what they would have if they had left the original sum in a term deposit, so they will be ahead. And the situation would be better than this, because they would also have been earning interest on the money they were saving by not paying electricity bills, and this more than makes up for the fact they would almost certainly have had to replace their batteries by this point.
And if my parents were to install grid connected solar without storage they would be much better off than this.
Hi Ronald,
I have just read the blog about Tesla. Very interesting and can’t wait for the news.
About the example: Grid or off grid. There is some uncertain data, but it would seem to me that the only way to go is Off Grid. Your investment in the bank of $16,800 will grow to $40,290 in 25 years at 3.5% interest accumulated monthly.
Your $1610 yearly power bill, $402.50 quarterly over 25 years will accumulate to $125,674 The kW/h rate at 17/07/07 was $0.1667 as of 16/04/15 it is now $0.2791 which computes to about a 2% increase per quarter. I will predict that as an increasing number of people install solar, and consequently, the Grid will lose revenue, the kW/h will double in the next 5 years. The tariff 11 service fee where I live has increased from $16.67 to $83.50 in the period listed above and that is a five doubling for just being connected to the grid. Added to all the above, there is a talk about the service fee shall increase to $1000 per year, as well as the talk that no more than a 3 kW solar will be allowed on your home, add to that the Utility grid’s hostility. In 1988 a new type of mobile phone came on the market costing $4,000 with little cell coverage. Today’s mobile phone with 18 MB camera and all the rest costs less than $200. Why wouldn’t there be a revolution in battery capacity and cost? In my calculations I have ignored the possible 3 time replacements of batteries over a 25 year period which could account for $18,000
My conclusion: Why wouldn’t anyone ask the Utility Grid to come and pick up their meters and wires?
“Today’s mobile phone with 18 MB camera and all the rest costs less than $200. Why wouldn’t there be a revolution in battery capacity and cost?”
Because miniaturising electronics represents very different challenges than storing energy.
Have you noticed that in that same “miracle decades” for electronics, there has not been nearly the same improvement in energy harvesting, efficiency, storage, etc.?
That said, I’m optimistic that the amazing advances in materials and nanotechnology will be a boon for batteries. No 2x improvement every 18 months, but we should have better energy density, better lifespan, quicker charging, better efficiency, lower cost and fewer toxic chemicals.
Elon Musk would beg to differ 😉
With which part? He can’t change history. Peoples’ optimism based on the progression of electronics in the last 30 years is misplaced when it comes to energy storage. The energy situation hasn’t improved much in the same 30. Elon Musk can’t change that.
That doesn’t mean breakthroughs won’t happen.
John, I’m working on a piece about the Tesla Powerwall announcement, and hopefully I’ll be able to get it up for you soon.
Obviously your breakdown has a few assumptions. For example, your parents’ cost of capital. However, as you said, as they won’t tell you exactly what this is, you have to take your best conservative guess. It is interesting to know that even a home in the most ideal conditions cannot save money with an off-grid solar energy system.
Hi Ronald,
great article, thanks very much for all the info. This is surprisingly similar to what we are looking at installing in our (new) house. Originally we got quotes for Li-Ion batteries (LiFePO4), but after considering their cost, and being advised that this is still new and untested technology, we’ve decided to go with a sealed gel lead acid battery array. However, we’ve allowed for a shorter lifespan on the array through less efficient usage and greater redundancy, so that we can revisit battery technology in a few years time. (Even with this, we’re still advised we can get 10 years + out of our batteries). The Tesla Powerwall sounds very exciting, but it doesn’t look like it will be available in Australia in the next couple of years, so we’d be looking at something like that as our array nears the end of its life.
The main reason we’ve decided to go off-grid was the cost of connection – we’re in a rural location with only high-voltage power available. To install the transformer alone was going to cost $24k, then we had to add in the cost of 170 m of trenches and copper wire. The $37k we’ve been quoted for a stand-alone system seems very reasonable by comparison.
I don’t intend to stay permanently off-grid, however: if the capital cost of connection became more reasonable (or less ridiculous), then we would look at connecting, using our excess generation to offset this cost, using something like RepositPower’s software app. I think this should be the future of the grid in Australia – more and more households connected as consumers and suppliers. (They seem to manage it in other countries). But we need a serious re-think on government subsidies to make this viable.
And that’s my 2c.
Matt.
Glad to hear we’re in close agreement, Matt. (Every now and then I like independent confirmation that I haven’t lost the plot and aren’t living in La-la land.) I’m pretty confident that the tech will have improved so much by the time you get around to replacing you’re batteries that you won’t even consider going on grid, but we will see what goodies the future will bring.
We seem to be so invested in high tech! Learned a trick from working in developing countries and from remote campground franchisees in Australia. Acquire or built a heavy duty charger (simple transformer and rectifier), acquire discarded sealed used 12V car batteries (I have 30 each produce about 9-10V when acquired as can no longer start a car). Rig in parallel banks of serially connected to inverter (in same way as solar panels), install Level Control Monitoring Relay – DPDT. Batteries – free from tip. Charger and relay – $500. Sundry 5mm copper cable – $100. Good sparky – latter hard to find in Qld so will probably have to find one that will take direction but be happy to learn.
Good luck to you, Troppo, although I really have to admit that sort of system isn’t my cup of tea. I’m not a huge fan of systems I have to maintain. I prefer to fire and forget. And that’s why I can’t remember the names of my children. However, I told my good friend, Joe Immorten, about your setup and he said he might look you up when he gets around to building his survivalist desert fortress.
Hello Ronald,
I just stumbled over this article from 4 years ago. It was an interesting read, as I am going that way at the moment. For me it is a bit different though, as I am not connected to the grid, so won’t have the FIT and if I would connect it would be awfully expensive. My question is thought as the panel and battery prices have gone down in the last four years, would that still be the same outcome now?
Regina