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Blog | June 2021

Calculating the return on investment for home batteries

Calculating the return on investment for home batteries

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Content Manager

Some years ago, homeowners were told that rooftop solar panels were expensive, and it was hard to justify the return on investment for solar. Over time, this has changed and more than two million homes in Australia now enjoy lower electricity bills and energy independence as the cost of solar panels have fallen.

To encourage more households to jump on the solar bandwagon, many state government subsidy schemes or interest-free loans are available for solar panels and home batteries.

While this creates an incentive for home battery ownership, many homeowners find it hard to determine what is the return on investment (ROI) for batteries. Quite often, they are overwhelmed with myths such as:

  • Home batteries are expensive. We can wait till they become more affordable.
  • With a rooftop solar system, we don’t need home batteries.
  • We should connect to a community battery instead.

Think about your energy needs

Rather than dealing with the myths, one of the first steps to take in researching whether a solar home battery is a good investment is to look at how you consume energy at home and what financial incentives you may receive when any excess electricity is generated from your rooftop solar system is exported back to the grid.

Here are some factors to consider when you are evaluating the ROI for home batteries.

Feed-in tariff

Feed-in tariffs (FIT) were once lucrative financial incentives to support the upfront investment for a household rooftop solar system. Depending on which state you live in and the location of your home, you may receive a FIT for your rooftop solar system.

FITs are paid by energy retailers to households for any unused electricity generated from their solar system that is sent back to the grid. Currently, FITs start from as little as $0.06/kWh and can go up to $0.29/kWh depending on your energy retailer. This rebate should be factored into a return on investment calculation as a home battery can become a better economic choice with FITs getting reduced.

Energy consumption patterns

Households have peak, off-peak, and shoulder rates for a time of use tariff. Some energy providers offer a flat energy rate throughout the day. The difference in these tariffs coincides with the demand for grid electricity from all energy users during specific periods of the day.

For example, people congregate at home during the peak periods of 2-8pm when school children and adults are home at the end of their day. During the evenings, the demand for grid electricity can skyrocket as dinner gets prepared, dishwashers are running, and home entertainment systems are switched on.

With every household pulsing the grid for electricity at the same time, it will cost energy retailers more to supply electricity during these peak hours. As part of an ROI calculation, it helps to determine what periods of the day the most energy gets consumed at your home if you do not have a flat energy rate.

Size of a household

Logically, it might seem that a home with more occupants will get a better ROI from a home battery. But this isn’t always the case. Even small households can be large energy users.

With more people now regularly working from home the amount of energy consumed increases as lights, central heating, cooling systems and computers are left running throughout the day. Having a home battery helps to ensure less grid electricity is needed when peak electricity rates apply.

Energy hungry appliances

The appliances that are not in our line of sight can sometimes consume the most energy. For example, it can cost between $800-$1,200 a year to power a swimming pool and the bill gets higher if a pool is heated.

Bill shocks after summer and winter have become a common and accepted after effect for many homeowners. Although heating and cooling systems offer maximum comfort during hot or cold spells, these seasons can unwind tightly knit household budgets quickly.

Solar home batteries can smooth out energy demands throughout the day for energy-hungry appliances. An ROI calculation should also factor in appliances that will be added to a household in the future. Electric vehicles can be huge energy consumers when they are charged so a battery can alleviate the demand for grid electricity if the EV is set to charge during an off-peak period.

Are home batteries right for you?

Evaluating the ROI for a home battery is a good starting point to determine if energy storage works for your household. In the process, this is likely to dispel many myths around the ownership of a home battery.

There are many factors that determine what the return will be, but households may be able to cut their annual energy bills by hundreds of dollars.

If you already have solar panels, installing an energy storage solution such as a sonnenBatterie can make a difference on your electricity bill year on year, and this becomes a substantial amount over a ten-year period.

How to estimate your savings

By answering a few simple questions about your household situation, you can determine your ROI for an energy storage solution. sonnen has created a handy online tool that takes all the guesswork out of determining what the ROI is for a solar home battery.

To find more about how sonnenBatterie could work for you, contact our team.