July 13, 2017
Recently I have noticed a large rise in the number of solar companies offering battery storage with hugely over-inflated claims of the returns with some claiming they will pay for themselves in 6 years and in some cases even less. This, quite simply, is total and utter rubbish, here at Sunworks Solar we pride ourselves on being ethical and the mantra I drum into all our staff is sell on the products merits and above all under-promise and over deliver.
We have installed many battery storage systems and we will continue to install them going forward as they do offer a number of benefits to homeowners however you will not hear us tell you they will pay for themselves in 6 years unless that is a true statement.
If you already have a solar power system you will already be enjoying significant savings on your electricity bill and the next step toward energy independence is to install a battery but how long will it actually take to pay for itself?
Lets consider a 10kW battery which has just over 9kWh of usable storage (I'll use 9kWhs in this example for simplicity) which may cost $10,000 to install (again I generalize here for the sake of simplicity). One thing I hear all the time is that your saving is the price of electricity multiplied by the usable storage which in this instance would be 9 x $0.286 or $2.574 per day which equates to an annual saving of $939.51 - simple maths would tell you that the payback period is going to be slightly more than 10 years (a long way from 6!)
You could therefore argue that future power price rises will reduce the payback period which is true and you may also be able to cycle the battery more than once per day which is also true but it is very, very hard to cycle a 10kW battery more than once a day and the calculation conveniently leaves out 2 very important things;
- The discount you can get from your energy retailer which is around 10%, and
- The loss of the feed in tariff - if you are charging a battery you are not exporting power therefore you are not being paid for that exported power. AGL currently offer 10.6 cents per kWh
So what is the real saving? 9 x ($0.26 - $0.106) = $1.386 per day or $505.89 per year. All of a sudden the payback is looking a lot less healthy at 19.76 years! But we haven't taken into account price rises so lets do that now (I will assume the feed in tariff stays constant at 10.6 cents but power rises at 7% every year)
- Year 1 = 9 x ($0.2600 - $0.106) = $1.386 x 365 - $505.89
- Year 2 = 9 x ($0.2782 - $0.106) = $1.5498 x 365 - $565.67
- Year 3 = 9 x ($0.2977 - $0.106) = $1.724 x 365 - $629.65
- Year 4 = 9 x ($0.3185 - $0.106) = $1.908 x 365 - $698.09
- Year 5 = 9 x ($0.3408 - $0.106) = $2.106 x 365 - $771.34
- Year 6 = 9 x ($0.3647 - $0.106) = $2.322 x 365 - $849.71
- Year 7 = 9 x ($0.3902 - $0.106) = $2.5524 x 365 - $933.56
- Year 8 = 9 x ($0.4175 - $0.106) = $2.804 x 365 - $1,023.28
- Year 9 = 9 x ($0.4467 - $0.106) = $3.067 x 365 - $1,119.29
- Year 10 = 9 x ($0.4780 - $0.106) = $3.348 x 365 - $1,222.02
If, and it is a big if, the assumptions are correct the savings over a 10 year period would total $8,318 - under this scenario payback would be around 11 years.
Battery storage can be a worthwhile investment, particularly if you install a quality battery with an expected lifespan of around 20 years but do your homework first and ignore the sales rhetoric.
For genuine information and advice contact SunWorks Solar today