Over the last few weeks solar power with battery storage has been in the media.
I often asked if battery storage is competitive yet. Today I’m going to look at the costs and the savings offered by solar and battery storage to perhaps shed a bit of light on what is often a complicated and confusing technology.
New battery technologies such as Tesla and LG have been on the market for a few years now. These are Lithium-ion based batteries and have a high energy density. This means you can pack a lot of electricity into quite a small sized battery, smaller than a washing machine.
The technology has been around for a while now and so far things seem to be working well.
Battery sizes range from 6kWh to 11kWh. In this exercise I will look at a 10kWh battery as these seem to be where the manufacturers are heading in terms of standard battery sizes.
Link here: http://www.sma-australia.com.au/
Around 10 years and, although your solar system and battery will last longer than that, I will look at the figures over this amount of time.
Normal households in Queensland use around 20kWh of electricity every day, more if you have a pool or air conditioner.
An average bill for this amount of electricity alone would be around $474.50 per quarter ($580 with network charges), that’s $1,898 every year.
If we assume that electricity prices increase at 3% per year the cost of electricity purchased over 10 years would be $24,327.00.
So – If I could install a solar system with a battery, that can supply the same amount of electricity over that period for less then I’m ahead, right?
This system would generate about 24kWh/day on average. So that’s the electricity I need. However I need to add a battery to that cost, so that I can use my electricity at night, or when the sun isn’t shining.
Prices for battery systems vary from between $8,000 for a well-known Chinese brand to around $11,700 for a top of the range German inverter and Korean LG battery.
In this exercise I will look at the cost for the more expensive systems. That way we will have a battery system with little or no risk attached.
A 10kWh LG battery, with all the components need to complete the install would cost around $11,500.
Total costs for both the battery and the solar would be $17,700.
Already I have saved $6,227.
Unfortunately it isn’t that simple otherwise batteries would be flying out the door.
We have to consider that the battery will reduce in its output over time. After 10 years it would be guaranteed to still provide 60% of its capacity, so let’s say it loses 5% capacity every year.
That works out to be a loss of 0.4kWh every day. In financial terms that’s $1,870 over ten years.
Link here: http://www.lgchem.com
Another consideration would be the interest you could make on your investment if you didn’t install a battery.
At 4% per annum, over 10 years this works out at $5,552.
Adding the two together works out at $7,442.
Is battery storage here?
Not quite yet, but is pretty close. If the battery cost comes down by $1,200, which we expect will happen in a few years then battery storage is a cheaper option.