Battery storage pricing is moving continually closer to where it needs to be for mass uptake in Australia. The signs are fairly clear that Australia is almost there: 2016 saw nearly 7,000 battery storage systems installed, and 2017 could treble that number, according to SunWiz. We imagine it’s only going to get better from there.
To be ‘worth it’ or to ‘break even’ – that is the question (at the moment)
Solar Choice has previously investigated how low battery prices need go go for them to become a ‘no-brainer’ investment – that is, the point at which batteries shorten the payback period of a solar PV system as opposed to lengthening it. We worked out that prices probably need to come down to somewhere between $250-$500 per kWh of stored energy capacity in order to reach this benchmark, depending on the circumstances. Currently, the most affordable batteries (with a 10-year warranty, that is) are coming in at just under $800/kWh.
It may still be a few years before battery prices sink below $500/kWh, so for the time being we’re mainly interested in whether a battery will pay for itself before its warranty expires – breaking even. Lithium batteries are shaping up to be the most popular battery chemistry for residential applications, with about 80% of the emerging products on the market using some lithium variation. Most of the (good quality) lithium battery banks have a 10-year warranty, and when we talk about batteries here that’s generally what we’re referring to: a lithium battery with a 10-year warranty.
While the batteries will almost definitely continue to perform after the warranty has expired, you’ve got no concrete assurances that they will. Also keep in mind that a battery’s performance may be diminished at the end of the warranty term (read about battery ‘end of life’). We therefore suggest that anyone intent on getting batteries should at least aim for a system that will break even over its 10-year warranty period.
Whether simply breaking even within the warranty term is ‘worth it’ is a subjective question, but the tremendous interest in battery storage that we’ve seen over the last few years would indicate that many people are ready to move as soon as they know they’ll at least break even.
Battery payback periods in 2017: 3 battery sizes, city by city
Every city has a different set of circumstances when it comes to the amount of sunlight, grid electricity rates and the price of solar PV systems. This variability means that – like solar – battery storage will hit viability at different times in different places. We tried to take as many of these factors into account as possible. Here’s what we did:
- Using SunWiz’s PVSell software, we created scenarios for all of Australia’s capital cities, assuming that the home in question uses 30kWh of energy per day on the ‘day focus’ usage pattern – common amongst families with young children and/or a home office.
- Using EnergyMadeEasy.gov.au, we found some of the most competitive retail electricity plans on offer in each city (both flat/block rate and TOU) and plugged them into our scenarios in PVSell. The figures we ended up using are detailed in the table below. (Important to note that electricity retailer discounts (pay on time, etc) are not incorporated in this modelling.)
Electricity rates by capital city, based on most competitive plans available on EnergyMadeEasy.gov.au. **Daily usage charges for Adelaide TOU include demand charges of 47c/day (summer) and 20c/day (winter) for electricity usage in excess of 1kW. We were unable to model these in PVSell, which means battery payback periods may in fact be shorter for TOU customers in Adelaide.
- We then plugged in average solar system prices from our February 2017 Solar PV Price Index for each capital city, using 7kW for the ‘large’ scenario, and 5kW for the ‘medium’ and ‘small’ scenarios.
- We chose three lithium battery products with 10-year warranties, each of a different size category. (Please note that we are not aiming to pit battery manufacturers or products against one another in this analysis – battery products here were chosen for their size and relative price-competitiveness.)
- For the ‘large’ battery system, we used Tesla’s Powerwall 2, which has a usable energy storage capacity of 13.2kWh;
- For the ‘medium’ battery system, we used Alpha ESS’s Storion Eco, which has a usable energy storage capacity of 8.64kWh; and
- For the ‘small’ battery system, we used LG Chem’s RESU3.3, which has a usable storage capacity of 2.97kWh.
- We chose to ignore battery degradation, which happens naturally over time to lithium batteries. This could lead to longer payback periods than those detailed below but is not currently modelled in PVSell. Battery degradation is an important factor to keep in mind for anyone shopping for a battery storage system.
- We’ve also ignored most of the auxiliary benefits that batteries promise: Tariff arbitrage (for TOU customers) and compensation for exporting stored energy with systems like Reposit Power’s GridCredits. These benefits will have a positive impact on battery payback times where they are available.
- We haven’t taken into account incentives for battery storage available in Adelaide and Canberra.
- We assumed that each battery system would have the same price tag regardless of the city where it was installed.
Results by size
We’ve created the the following tables so anyone can quickly work out whether battery storage may be worthwhile for them – and if so, what size battery bank will offer the best returns.
The first table below (click to enlarge) sums up the results in one place, while the following sections show the results in more detail.
Battery storage payback periods by battery system size, city and tariff type. Image credit: Warwick Johnston/SunWiz. (Click to enlarge.)
Large: Tesla Powerwall 2 (with a 7kW solar system)
Tesla’s Powerwall 2 is one of the most in-demand home battery solutions available in Australia. It has 13.2kWh of usable energy storage capacity, with an end of life retained capacity of 70%. Installations will commence this year and are expected to cost between $10,500-$11,000. Because of Powerwall 2’s large capacity, we’ve coupled it with a 7kW solar system in our modelling.
Medium: Alpha-ESS Storion Eco (with a 5kW solar system)
Alpha-ESS’s Storion Eco has a maximum storage capacity of 8.64kWh (usable), making it a great ‘middle of the road’ battery option in terms of size. It has an end of life retained capacity of 60% and retails for about $8,000 installed.
Small: LG Chem RESU3.3 (with a 5kW solar system)
LG Chem’s RESU3.3 has a usable storage capacity of 2.97kWh, making it one of the smallest units on the market. While the battery is modular and can be ‘stacked’ with other LG Chem units for added capacity, we wanted to see how it performed as a entry-level battery bank with a smaller price tag than the ‘medium’ & ‘large’ options above. The battery has an end of life retained capacity of 60%. We estimate that it retails for about $5,000 installed.
Battery payback times by capital city
If you’re interested, a more detailed assessment of these results on a city-by-city basis was recently published here.
Source: Solar Quotes. Reproduced with permission.