Can a home battery system help you save on energy bills?
By Tom Watson
A record number of Australians installed battery systems last year. So what are the costs involved and how are governments making them more affordable for households?
Erin Hilton is no stranger to household solar. She's worked in the renewable energy industry for eight years and has had solar systems installed at two former properties.
So when she and her family decided to make the move to the New South Wales north coast a few years ago, finding a home that was optimised for solar was a major consideration.
"We moved to Coffs Harbour during the pandemic and when we were looking at houses to buy my husband would be looking at the shed space and I'd be looking at the roof orientation," Hilton says.
Unlike her previous homes though, Erin crunched the numbers and worked out that, this time, it made sense to install a home battery system along with rooftop solar.
"I had watched the financials evolve over the last few years. Energy prices have increased and solar feed-in tariffs have fallen, so for us it made sense to do it in one hit from day dot and go down the self-consumption path rather than exporting energy [back to the grid]."
Ultimately, the family opted for 8.8 kilowatts worth of solar on the roof of their home and a 12.6 kilowatt-hour battery system to store that energy.
Looking back, Erin thinks that the move was a no-brainer - especially given that it's allowed the family of four to generate, store and consume a relatively large amount of energy for a significantly lower cost than they would be paying otherwise.
"We pay about $60 a month now. If we didn't have the system, we'd probably be looking at $1200 to $1500 a quarter easily with our usage, because we've got an EV [electric vehicle], a pool, a spa, electric hot water and two air conditioners - we're not shy about using energy.
"The way I've always looked at it is that you can't do anything about interest rates or council rates and costs like that, but you can do something about your energy. Energy is something you can actually take control of and it's a recurring bill, so it sort of pays for itself."
Growing demand for batteries
Erin and her family are just one of a growing number of Australian households investing in battery storage systems for their homes.
Between 2015 and 2023, research from solar consultancy firm SunWiz found that over 250,000 residential battery storage systems were installed in Australia. And 2023 was the busiest year of all, with a record 57,000 systems installed.
So what's drawing households to complement their existing solar systems with battery storage?
"The really big deal right now is to save money. Electricity bills have gone up, so the big motivator for people is the potential cost savings and the fact that those can be almost immediate," says David Sedighi, chief operating officer at battery storage system provider, VoltX Energy.
"So cost savings is the main one, but there are also a lot of sub-factors to installing a battery: the energy independence you can get, the environmental impact and potential increases to property value."
Sedighi says that falling feed-in tariffs and the introduction of a so-called 'sun tax' have also helped pique interest in batteries among households with existing solar systems.
In years gone by, homeowners with solar have been able to provide the excess power generated by their panels back to the grid in exchange for a credit on their electricity bills from their provider. These payments are known as feed-in tariffs, but they've become less lucrative over time.
"There's been such an uptake of solar that the grid doesn't really want that electricity from households anymore. There's too much of an oversupply when the sun is providing peak power for solar, which is why tariff rates have kept dropping," Sedighi explains.
"Now it's reached a stage where Ausgrid and some others are going to apply their own tariff to customers who provide electricity back into the grid."
Battery costs and government incentives
The reality is that installing solar and battery systems isn't cheap. Hilton, for instance, says that she paid around $22,000 for the setup at her home.
Looking at the cost of battery systems alone, an analysis conducted by SolarQuotes at the start of the year found that households can expect to pay anywhere between $8750 and $15,500 for some of the most popular batteries on the market.
Sedighi says that the price of some of these existing products was one of the reasons behind VoltX Energy's decision to expand its own product range - which had largely been focused on recreational batteries - to also include household battery systems.
"At a time when some other home batteries are around $15,000, we've launched an equivalent product for $7500," he says.
There are a number of government-led initiatives across the country aimed at helping households manage the costs of installing a battery though.
In New South Wales, for instance, the state government is rolling out a new scheme from November 1 which will give eligible households the opportunity to save between $1600 and $2400 on the up-front cost of a installing a battery.
From interest-free loans to one-off grants, here's a rundown of the support that state and territory governments are currently offering.
Will a battery make financial sense for every household?
Even with some of the government incentives available, households are still going to be looking at a price tag in the thousands or low tens of thousands to install a battery. So from a purely financial perspective, how can they work out if the investment is worthwhile?
This is when the question of payback periods comes into the equation. In essence, this is the time it will take a household to cover the upfront costs of a battery through the amount of money they're able to save on their regular power bills with the help of the battery.
Hilton, for one, has worked out that her entire system has a payback period of around 4.5 years, while Sedighi says that some people may be able to recoup their initial costs in just two or three years.
It may take some households over a decade to cover their upfront investment though, according to the Department of Energy, at which point the battery may be outside of its warranty period (which is generally 10 years).
Sedighi says that this doesn't necessarily mean the battery won't be functional though.
"A 10-year warranty does not mean the battery stops working after 10 years - it just means that it will have potentially degraded. Most of the capacity of the battery is still usable after 10 years though, so you don't throw it away, you continue using it."
For those with existing solar systems who are curious to find out how much they could potentially benefit from installing a battery system, the federal government and the University of New South Wales have partnered to create a solar and battery calculator.
Otherwise for more inspiration on improving your home's efficiency, check out our article on affordable renovations for an energy efficient home.
Correction: An earlier version of the story stated that Hilton would be paying $1200 to $1500 a month without her solar and battery system. The correct timeframe is per quarter.
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