Batteries are the talk of the town, and so they should be. They are the final step in becoming self sufficient on clean, renewable energy. It's a really nice thought and something most people want. But just because it's highly sought after doesn't mean that it stacks up economically.
We'll take a look all that here through our fictitious battery customer Fred. We'll also introduce some methods of connecting batteries to your home. Hopefully this will help you make the right decision on batteries for your circumstance.
How to Add Batteries
Adding batteries is relatively simple. Let's take a look at the three main methods.
AC coupling is where you connect a battery inverter and a battery to your home. Products like the Tesla Powerwall 2 and the Enphase AC Battery, actually come as the inverter and battery in one. You'll also need a metering device, which tells the battery when to charge and discharge. It's tried and tested and great for retrofitting to solar.
DC coupling is a similar concept, except you connect the battery between the solar panels and the existing solar inverter via a battery controller. The battery controller is connected to a metering device which tells it when when power is being exported to the grid. When power is being exported, it redirects the power from the panels into a battery. Later when the house needs more power, it releases the power from the battery into the solar inverter. Again relatively simple, but our guess is that this won't be as popular as AC coupling or our next solution, hybrid.
This is the newest of the three methods. It all centres around one inverter, a hybrid inverter, that replaces both the battery and solar inverter. There's also a metering device to tell the hybrid inverter when to direct solar power into the battery. We really like the ease and functionality of this solution, but it's still relatively untested and costly to retrofit.
When you add a battery system to your home, you'll likely be adding another inverter. So just like when you added a solar inverter, you'll need network approval. Some networks will flat out refuse anything over 5 kW on a single phase. Some will allow up to 15 kW per phase without any issues. Others may allow it, but with restrictions. As there's so many different rules and networks, best speak to your solar retailer if you want to know more about this.
Most retailers offer you a credit for sending power back to the grid. If you increase your inverter capacity or add a battery, you might not be eligible for those credits anymore.
How Batteries Can save you money
Storing Excess Energy
This is the primary way you'll save money with a battery system. If you've got a solar system, you're likely selling your excess energy back to your retailer cheaply. By cheaply, it's usually between 6c and 12c, while you're paying them around 25c when you purchase a kWh of energy. If you can store your excess energy yourself and you use it, you save the difference between these two costs.
Note: Some people are on an older feed-in tariff where they get in excess of 40c per kWh they send back to the retailer. If this is you, financially you're best off forgetting the battery idea until this expires.
Lets create a fictitious battery customer called Fred. Fred installs a 12 kWh battery onto his 5 kW system, which he charges and discharges 100% each day from his solar. Fred normally receives 8c for each kWh he exports, but thanks to his battery, he's saving the full 25c he would normally be paying. This means he's saving an additional 17c per kWh he stores and uses himself. So each day, Fred saves $2.04 which equates to $744.60 per year. While this is pretty simple maths, it's not actually that accurate. By assuming we would charge and discharge the battery 100% each day, we've overestimated our battery utilisation percentage, a mistake we explain further down.
Energy Arbitrage is purchasing and storing energy during cheap times, to offset usage during peak periods. To do this, you're going to need to be on a Time of Use (TOU) tariff. A TOU tariff is when you pay different rates for energy based on when you use it. With a lot of TOU tariffs, if you purchase energy between 9pm and 7am, you're going to be paying a reduced rate per kWh. However, if you use energy from 3pm to 9pm on weekdays, you'll be paying more. With a well designed solar and battery system, you shouldn't need to purchase any extra energy. If you do though, having a battery can ensure you purchase only cheaper off peak power. Let's look at Fred again.
Fred doesn't cover all of his usage from his solar, particularly in the morning after a heavy usage evening, as his battery is depleted and the solar hasn't yet started. He discovers that if he switches to a TOU tariff and stores 5 kWh before 7am at the off peak rate, he'll get cheaper energy and won't have a shortfall in the morning. For each of these 5 kWh, he saves the difference between the off peak rate and his standard rate before he made the switch. It's only about 5c to 15c per kWh, depending on the tariffs. Fred however now has to be careful not to consume power during the peak times.
This depends on a few factors. We've provided pricing for AC coupled solutions in our AC coupling blog post. With hybrid systems, you can expect a hybrid inverter to add $500 - $2,000 to the cost of a standard solar inverter. There's also a metering or gateway component that you'll need to add. From this point, it's just the cost of the batteries which vary depending on size, but a popular one like the LG Chem RESU10 would add approximately $10,000 to the hybrid system cost. There are some cheaper hybrid inverters and batteries emerging onto the market, but given the complexities of hybrid inverter technology and the safety issues surrounding batteries, we wouldn't recommend them at this stage.
Some Common Mistakes
Not Factoring in Battery Utilisation
Battery utilisation is a measure of how much you'll actually use the battery. This is critical for ROI calculations, yet time and time again it is overlooked. You might think, "that's silly, I'll use it every day", but unfortunately it's hard to control once your system is installed. Lets revisit our fictitious battery owner Fred and see three examples of things that can occur:
- Not enough charge - On overcast days, Fred's 5 kW system struggles to produce 8 kWh. Of this 8 kWh, his house uses 2 of them, meaning he'll only produce enough energy to charge his battery to 50%. So on these days, Fred can only utilise 50% of his battery.
Not enough surplus - Fred's enjoying a few days at home on the weekend or over his holidays. It's hot, so to cope with the heat, he turns on the air-conditioner during the day. All the power from his solar system is consumed by the AC unit and a few other devices. This means there's no, or very little, excess power to charge with and utilisation is less than 20%.
You don't always need all your stored energy - Fred occasionally has dinner with some friends. On these nights he doesn't cook and only uses 4 kWh at night from his battery, even though it's full. On these occasions his utilisation is 33%. Plus there's the odd weekend trip away, where he barely uses a few kWh at night for his devices on standby.
The scenarios above are not that uncommon, so don't make the mistake of ignoring them in your ROI calculations.
Assuming They Will Provide Power in an Outage
We're not saying battery backup isn't possible, just that it's not a given. If you're retrofitting a battery system to your solar, not only will you need a battery system that supports backup power, your existing inverter needs to be able to communicate with it. If there's no grid, the battery is full and solar production exceeds demand in the house, the solar system must reduce it's output. If your inverter is more than a few years old, chances are it won't be able to communicate with the battery inverter when it tells it to do this, meaning you won't be able to do backup power without changing your solar inverter.
Forgetting an Important Issue, Power
"I just want a battery to cover my air-conditioner usage at night" is one that we get a bit. First of all, that's no easy task! When a good sized reverse cycle air conditioner is running, you're looking at around 5000 W, or 5 kW of consumption. Each hour, that's 5 kWh of energy. Fred suggests that his 12 kWh battery will give him just over 2 hours of use with the air-conditioner, but if his battery can only discharge at 2.5 kW, he can only cover 50% of it's consumption from the battery - no matter how full the battery is. This is particularly important when you're looking at backup power, because you can't "half cover" the loads in your house - it's either all or nothing with the exception of a few devices.
Buying a Hybrid and Assuming you can add any batterY Later
This is discussed more in our hybrid inverter blog post. Not all batteries are compatible with all hybrid inverters. We also expect that there will be changes in battery system installation standards over the next few years. So while your hybrid inverter and/or the installation might be fine today, it may not be in the future. This could mean having to change your hybrid inverter or pay additional costs to bring the system up to new standards. This sadly happened to many solar customers who bought a bigger solar inverter so they could add more panels later.
Summary, Should I or Shouldn't I?
We'll just be honest and say, if you want to do batteries for economic gain, we strongly recommend waiting. The ROI simply isn't there, however that will change shortly. Battery technology has improved drastically over the last 18 months and we're expecting this to continue. An example of this is the Powerwall 1 and 2. Released a year apart, the Powerwall 2 had around double the capacity and more power, and it wasn't much extra. We hoping to see more of this over the next few years.
That being said, there's something very appealing about being self sufficient and completing the journey towards energy independence! If you're a leader or a trend setter with new technology, and you like the idea of energy independence, then batteries are for you. Just ensure you have a sufficiently sized solar system and you consistently use energy outside your solar systems production hours. Provided you've ticked these boxes or you're going to, install one of the many new and emerging battery products that are on the market - you'll be the most talked about house on the street and your battery will still generate more income than most of your other toys!