As most people have worked out, solar batteries currently make little financial sense. However, since the announcement of a $3000 rebate through the QLD Government Solar Battery rebate, the interest has skyrocketed. A lot of people are under the impression that, with the help of the solar battery rebate, now is the time to install Solar batteries in QLD – this post aims to show it is not.
The QLD Government Solar Battery Rebate
To be eligible to receive the QLD Government Battery rebate, you need to utilise an Approved Solar Retailer who is participating in the scheme. Those in the industry knew the interest would be large, so many jumped on board and applied to become Approved Solar Retailers. This allowed them to take advantage of this heightened interest. From 2013 to December 2017 there were 48 signatories around the country – a very select bunch. From January 2018 alone, there have been an additional 84 signatories. So, that means it took five years to get 48 signatories, but just one year to get 84. This exponential growth in approved retailers has been great for raising the bar in the industry.
We were the 24th company to sign the code, falling somewhere in the middle of early interest. However, we’ve chosen not to participate in the solar battery rebate because it’s still not in the best financial interest of the average Joe. Although the idea of promoting batteries is good for the grid, the payback period, unfortunately, is not.
The Value of Battery Storage
The concept of batteries is simple. Any power you generate in the day and don’t use (excess power), is stored in a solar battery. At night, when solar generation has stopped, the battery kicks in to provide the household with that “free” excess power. Most people mistakenly value this excess power as the rate they pay their electricity retailer. However, we need to remember that this excess power could have been sent back to the grid for a feed-in credit. Therefore, the actual value of this excess power stored in a battery is the electricity rate (or T11) minus the feed-in tariff.
The table to the left shows five of QLD’s more common electricity retailers. The first column is their T11 rate; the second is their feed-in tariff. The third column calculates the difference between these figures, which ends up equaling the value of this “excess power.” This figure helps us determine the value of solar batteries. When we average out these rates, we see that every kWh used from the battery is worth $0.128, not $0.273.
Payback Periods
Now we have the average savings per kW a battery can provide. Let’s see how that stacks up for payback periods. We’ll use two common examples of solar batteries in today’s marketplace. The 13.5kW Tesla Powerwall, and the 4.8kW Samsung.
Tesla Powerwall
Let’s assume the best case scenario – no rainy days for the entire year, the Tesla Powerwall can charge its full 13.5kW storage capacity, AND the household uses every ounce of it each night. We, therefore, multiply 13.5 by $0.128 to get our savings per day, then project this to a year. Now we divide it from its conservative $12 500 price tag to get the payback period. As you can see from the table, our best case scenario for full price is a 19.82-year payback. Even accounting for the $3000 solar battery rebate, we’re still at 15 years, five years past the Powerwall’s ten year warranty period.
Samsung Solar Battery
Let’s apply the same best case scenario to the smaller Samsung Battery. Multiply its 4.8kW capacity by $0.128 to get our savings per day. Project to a year, and divide this from its $6000 price tag. The results are a bit funny. Without the solar battery rebate we get an excessive 26-year time frame, but with the rebate, the time frame is just over 13 years. Although better results than the Tesla Powerwall, we’re still three years past the Samsung’s ten year warranty period. The Samsung has the additional disadvantage of only offering a 3kW continuous discharge, so heavy night usage may not be covered.
We also have to remember these are the best case scenarios. Rain is going to affect these calculations, as are holidays, heavy daytime usage and periods of system downtime. Solar Batteries also degrade over time, so both the Powerwall and Samsung will not be storing their full capacity five years down the track. For these reasons, we would need to see payback periods significantly under their ten year warranty periods before we would consider them as a financial investment.
Blended Payback Trickery
But if we have all these new approved retailers, surely the right battery can make financial sense, right? I’d suggest whoever is pushing batteries as a financial saving, is most likely using a “Blended Payback Period.” Ronald from SolarQuotes explains it better than I could in his blog below:
To summarise Ronald, solar pays for itself; batteries do not. Although the Solar + Battery combination pays for itself within eight years, the solar will be contributing heavily to this payback. The battery may be sitting at 15 years to pay off, while the solar is at 3.
For this reason, it makes far more sense to forgo the battery and proceed with just the solar installation. If you see these combined payback period tactics, I would always recommend asking your consultant to separate the battery from the solar. This way, you can perform your own calculations to see where the true savings lie.
When Do Solar Batteries Make Sense?
A cheeky answer I was tempted to write was “in the future”. But there honestly are some cases that exist in the present.
- Consistent grid outages can make solar batteries a viable solution. As the solar was unable to be exported anyway, the savings value is actually the retailer T11 rate. This means every kWh used by the solar battery is worth $0.273 as opposed to $0.128. However, even substituting $0.27 as the figure for whole value, we’re still around 10 years for payback.
- It’s nice being able to maintain normal power usage while the rest of the street may be in darkness. This is something solar batteries offer. I would argue this is the main if not the only reason to install a battery. Financials aside, the price of keeping your household powered up might be more valuable to you than payback periods.
- While Solar Batteries lessen your dependence on fossil fuels, switching to solar has a far better impact on the environment than batteries.
Closing Thoughts
The concept of the solar battery rebate is good for the grid, but they pose little financial advantages for the customer. We have elected to stay out of the QLD Government Solar Battery Rebate Scheme. Although the idea and selection criteria set by the QLD Government is robust, unfortunately, the battery payback period doesn’t align for the customer. There may be others pushing for batteries as having high returns, but they could be using blended payback periods. Because solar panels are the superior financial incentive, it makes sense to first consider more solar panels over a solar battery. Remember – you can always add a battery later when the numbers do stack up. There’s no need to rush into it now just because there’s a solar battery rebate.
Ben Neville
MC Electrical
Technical Sales Manager
