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Home Energy Storage 1: Batteries are the Future

At some point in the next few years, most of us will have batteries powering our houses. But what about now? And how will we know the point at which they cross the breakeven point? This post is to quantify the costs and returns so we will know that point when it comes. And it is certainly coming.

One reason for storage is this:

SolarVersusDemand
 
Solar produces most energy during the day. We consume most of our energy in the morning and evening outside of these peak solar hours. Storage allows us to store the peak daylight energy and use it later in the day and during the night. Furthermore, day and night electricity rates are different, so a battery allows you to charge at night and consume all of your energy at that lower rate.
 
It struck me that a good way to envision the types of energy amounts that we talk about here (always kWh!) is easily articulated in batteries. They hold an amount of energy:

BatterySizeComparison
The Tesla Powerwall 2 got a lot of press when it was announced at a retail price of $8,000 for 13kWh of storage. It currently offers a cost-per-warranted-kWh of $0.21. The 6.4kWh Powerwall costs about $4,000.

TeslaPowerWall2Specs

 

The Tesla Powerwall retails for $7,000. Unpacking the Home Battery Value Proposition does a good job of presenting the other advantages of battery storage aside from just economic value:

  • Energy Security: Electricity Grids black out from time to time. In a worst case scenario, some major problem could bring the grid down for a long time or permanently. Having Solar PV + Storage would give some continuous power even in this worst case scenario.
  • Independence: Connecting to the grid means dependence on the grid infrastructure, the utilities selling you power, and the prices which the energy market commands. Price shocks happen from time to time and while connected the grid, this is a risk. PV + Storage negates this risk somewhat.
  • Environment: Using the grid in an environmentally friendly way

 

How much battery storage do I need?

The easiest way to figure this out is just to get a consumption meter (see this post) – you can find them online or in store easily. There is also a calculator here which gives you a form to fill in your major appliances, how much they consume and how long they are run for.

 

How Much do Batteries Cost?

A 13.8kWh Powerwall system costs about $7,300. A Tesla 6.4kWh Powerwall costs about $4,000. A GivEnergy 8.2kWh battery costs $3,000. Battery costs are continuing to fall over time.

 

When will batteries cross the breakeven point?

Battery prices have been falling fast, and they continue to do so. The cost of battery storage fell 14% every year on average between 2007 and 2014, according to a report by the Climate Council, and it’s expected that prices will halve again within the next five years.

LiOnBatteryCosts
The falls go hand in hand with a reduction of cost of installing Solar PV:

PVBatteryCosts

 

Where the rubber meets the road

So we know they’re falling fast in price, and that they may well make sense at some point soon, but when? The battery makes money for us in two ways:

  1. When we charge the battery with excess solar generation during the day, and use that to offset grid consumption in the morning, evening or at night
  2. When we charge the battery with cheap night rate electricity and use that to offset daytime consumption at the more expensive rate

When Charged?

When Discharged?

Charged Costing

Discharged “income”

Saving per kWh

Charge with excess Solar PV that would otherwise have been wasted

Daytime rate

$0

$0.18

$0.18

Charge with excess Solar PV that would otherwise have been wasted

Night Time rate

$0

$0.08

$0.08

Charge at night when there wasn’t enough PV to fill battery

Day

$0.08

$0.18

$0.10

 
So to understand the $ / kWh at which a battery breaks through to become a cost-positive asset, we just need to fill in the table with the number of kWhs of each type of arbitrage. I’m working on this at the minute for myself, and plan on installing a battery soon. But I wanted to publish a first post lookin showing everyone how to go about thinking whether a battery makes sense for you. I expect it if doesn’t now, it will at some point soon as prices continue to fall.

 
One other thing: once renewable energy is installed, it’s “fuel” (wind or solar energy) is free. That manifests itself in renewable energy lowering energy market prices when it’s generating. So there is a happy correlation between low energy prices and low Carbon emissions of electricity. It means that when you are charging a battery with low cost electricity, the odds are, you are also charging it with low emissions electricity too. So batteries tend to result in both a Carbon and Financial arbitrage at the same time.

Installing Solar PV

1 Comment

  1. POD POD
    29th February 2020    

    Another great article, fair play!! With feed-in tariffs on the near horizon, could you use the grid as your battery, selling your excess during the day & buying it back cheaper in the evening, thus saving the CapEx of personal batteries? I’m currently looking at installing 2kW of PV for the grant, then add to it over time to meet the household demand. The foregone grant money should (!?) be covered by the not having to buy the battery pack in the first place.

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