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This is a question I’m asked almost every day. The reasoning goes: Instead of exporting your excess solar to the grid, why not store it in batteries to use at night (and really stick it to the power companies)?

The short answer? If your main reason for buying batteries is to save money, then my answer is “Not yet”.

You may be surprised to hear this from me, as someone who owns a business that makes more money when more people buy batteries + solar.

But the reality is that batteries simply cannot be justified from an economic perspective (for the time being).

The longer answer is below, and addresses the three main misunderstandings homeowners have about residential battery storage.

Misunderstandings about battery storage
1) Batteries pay for themselves

Batteries, in 2017, are quite expensive. A decent amount of battery storage will cost around $10,000 and take 15 years to pay off. Most are warranted for 10 years. You do the maths.

It’s not enough for a $10,000 battery system to save $10,001 on electricity bills in today’s money by the end of its life to be worthwile.  It will also have to save at least as much value as the next best use of that $10,000 would have provided.

For some people, the next best use may be a term deposit.  For others it could be paying off the house, investing in shares, or paying off credit cards.

Compare this with a standard non-battery grid connected solar system, which will typically break even after 5-7 years and then provide a further 20 years of savings.

2) Buying batteries now helps an industry in its early stages grow and become viable for the mass-market

It’s absolutely true that early adopters of new technologies provide critical revenue that allows new technologies, like residential battery storage, to take off and enter the mass market.

However, you don’t need to worry about ‘supporting the battery industry’ – because most of the growth of the industry is currently being fueled by electric cars, which (for the time being) represent a far larger market than residential battery storage.

Electric cars and residential battery storage use the same technologies – so even if no one bought residential batteries, the sheer size and potential of the electric vehicle market will keep battery manufacturers afloat for decades to come.

3) Rising energy prices make battery storage more economical.

In theory, this is true – the more expensive grid electricity is, the more valuable it is to store solar energy in batteries for use at night.

However – in practice, the more energy prices rise, the more solar feed in tariffs (what you’re paid for exporting excess solar generation to the grid) rise.

This is because the rate you’re paid for solar fed into the grid is meant to reflect the cost of generating electricity.

To use an example – the Tesla Powerwall 2 currently has a “cost per warranted kWh” of 0.23 cents/kWh. This means that it ‘costs’ you 23 cents for every kWh you store in the battery and then use at a later time.

So if it costs you 23 cents to use a stored kWh and 30 cents to buy a kWh from the grid – you’re saving 7 cents per kWh using stored energy.

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