Is battery storage worth it in your city?

March 27, 2017 12:16 pm Published by Leave your thoughts

   Article by James Martin II, Solar Choice

In terms of affordability, the Australian battery storage market is quickly moving closer to where it needs to be. While pricing itself is of course the single most important factor in battery viability, retail electricity & rooftop solar system prices are also key – as is the amount of sunlight that tends to shine down. In places where sunshine is abundant, grid electricity rates are high and solar installation prices are low, batteries are likely to make the most sense.

Which Australian capital cities currently have the best conditions for home solar battery storage? Using SunWiz’s PVSell software to plug in a few example battery products, we’ve crunched the numbers and ranked them below.

(See a full explanation of our process & assumptions here).

1. Perth

Flat rate tariff details: 27c/kWh                   TOU tariff details: Peak – 50c/kWh, Shoulder – 26c/kWh, Off-peak – 14c/kWh

Perth was the best overall city for solar battery storage, thanks to low solar system prices, high grid electricity rates and ample sunshine. Paybacks were best for the smallest battery system on a TOU tariff, coming in at an impressively short 6 years.

Perth battery payback estimates

2. Brisbane

Flat rate tariff details: 26c/kWh                    TOU tariff details: Peak – 35c/kWh, Shoulder – 25c/kWh, Off-peak – 18c/kWh

High electricity costs coupled with competitive solar installation prices also helped to make battery storage attractive in Brisbane. The average payback period for the city was 8.2 years, but this could go down as low as 7.7 for ‘small’ battery system owners on a flat rate tariff.

Brisbane battery payback estimates

3. Adelaide

Flat / block rate tariff details: 35c/kWh (first 10.96kWh of day), 39c/kWh thereafter                    TOU tariff details: Peak – 33c/kWh, Off-peak – 20c/kWh (plus summer demand charge of 47c/day and winter demand charge of 20c/day for grid demand over 1kW)

Solar & battery system paybacks were on average just over 8 years, with flat rate tariff customers having shorter paybacks than TOU customers based on our initial assessment. However, paybacks on TOU systems could be shorter if associated demand charge savings are also taken into account (our modelling assumes customers will pay the demand charge every day, but the system may help them to avoid this charge). Additionally, residents of Adelaide’s downtown area may be eligible for battery system rebate of up to $5,000 depending on their situation, which will shorten paybacks further.

Adelaide battery payback estimates

4. Sydney

Flat rate tariff details: 24c/kWh                    TOU tariff details: Peak – 45c/kWh, Shoulder – 18c/kWh, Off-peak – 11c/kWh

While 9 years appears to be the average payback period for a solar & storage system in Sydney, the shortest payback that popped up in the results was 8.1 years for a small battery bank on a TOU tariff.

Sydney battery payback estimates updated

5. Darwin

Flat rate tariff details: 26c/kWh                    TOU tariff details: Peak – 30c/kWh, Off-peak -23c/kWh

At just under 10 years, the large battery option had the shortest payback period in Darwin for both flat rate & TOU tariff customers. The average for the city was just over 10 years.

Darwin battery payback estimates

6. Hobart

Flat rate tariff details: 26c/kWh                    TOU tariff details: Peak – 31c, Off-peak – 15c

In spite of being the least sunny capital city and having some of the highest solar prices, Hobart ranked surprisingly high in the results, with an average payback period of just over 11 years for solar & storage systems. High electricity rates go a long way towards explaining why this is the case.

Hobart battery payback estimates

7. Melbourne

Flat rate tariff details: 18c/kWh                    TOU tariff details: Peak – 31c/kWh, Off-peak – 17c/kWh

Retail electricity competition is strong and wholesale electricity prices are low in Victoria, which means that Melbourne is home to some of the lowest flat retail electricity rates in the country. Meanwhile, solar system prices for Melbourne tend to be on the high side, due in part to the smaller incentive available through the federal Renewable Energy Target. While there is still a strong case for rooftop solar on its own in Melbourne, adding batteries appears to blow out payback periods to beyond the recommended 10-year benchmark for customers on a flat rate.

That being said, the average payback period for systems installed in a home with TOU billing was only 10 years, which means that it is certainly possible for Melbourne homes to break even (or better) on a battery storage system – provided that they get a good deal and maximise use of the battery to the utmost. We recommend getting a small battery bank to start off with. Furthermore, the recent announcement that the state’s mandatory minimum feed-in tariff will be upped to 11.3c/kWh from July 2017 will help to improve the overall case for getting solar & batteries.

Lastly Melbourne residents keen on batteries shouldn’t lose heart at the figures in the table below: Battery prices are coming down rapidly, and it’s likely that the outlook will change very soon!

Melbourne battery payback estimates updated

8. Canberra

Flat rate tariff details: 17c/kWh                    TOU tariff details: Peak – 25c, Shoulder – 17c, Off-peak – 13c

Like Melbourne, low electricity rates in the Australian Capital Territory mean that it’s harder to make batteries worthwhile without incentives – which is probably why the government has introduced its NextGen program for energy storage, which will subsidise battery installations (among other types of storage) for thousands of households. Our rough estimates indicate that this incentive will bring battery paybacks down to about 10 years for the Territory.

Even without added subsidies, batteries are beginning to look attractive for homes on TOU tariffs who opt for a smaller system, with paybacks already around the 10 year mark. As with Melbourne, we recommend that ACT residents watch this space.

Canberra battery payback estimates

All results by city & tariff type

Average battery storage payback times by city
A slightly different version of this article originally appeared on the Solar Choice website.