Solar Batteries 101, Part 2: Buying Battery Storage

By Finn Peacock – Chartered Electrical Engineer, Ex-CSIRO

Last Updated: 13th Sep 2021

Part 1 of my guide took you through the fundamentals of solar battery storage – what it is and how it works.

Part 2 – the page you are reading now – will show you how to buy home batteries with confidence.

Let’s get to it!

  1. Is solar battery storage right for you?
  2. What you can expect to pay for a suitable battery.
  3. What size battery system do you need?
  4. Rebates and VPP’s – making batteries more affordable, at a cost.
  5. Common techniques of dodgy battery salesmen.
  6. Battery backup – know what you should be asking for.
  7. “Thermal runaway”, aka “Why you shouldn’t buy a cheap battery”.
  8. AC versus DC coupling – trading flexibility for efficiency.
  9. Like solar panels, batteries degrade – but faster.
  10. Battery warranties – tricks, traps and caveats.
  11. What to consider for an optimal installation.

Email: [email protected]
Tel: 08 7200 0177
Snail Mail: PO Box 470, Brighton, SA 5048 Australia

1) Is solar battery storage right for you?

Home energy storage mania started in earnest in 2015 when Elon Musk announced the original Tesla Powerwall battery.

Elon Musk - Tesla Powerwall

Ahh, Elon. It was a simpler time.

Since then, people always ask: Are home batteries worth it?

When people ask me if solar is worth it, my honest answer is “hell yes” – unless they have a heavily shaded roof. But when it comes to batteries, it’s not as straightforward. It depends on why you want one.

Over the last few years, I’ve heard five distinct motivations for wanting home energy storage:

a) Blackout protection

People living in areas prone to blackouts value home energy storage backup. Plus, it feels awesome when you’re the only house on the street with the lights on and the fridge cold.

Finn's house with solar battery during blackout

My house during a blackout. No candles needed!

Generators have long been the standard choice for backup. But many people recognise batteries as a cleaner, more elegant ‘set and forget’ option.

b) Environment

Many people love the idea of storing their clean solar energy for use at night. Why rely on fossil fuel power after sundown?

I understand this sentiment – and it makes sense if your solar power system would otherwise be export limited. But if your solar exports are not limited, sending your solar energy out to the grid offsets fossil fuel-based electricity generation. Perhaps more, depending on your battery efficiency.

Other environmentally minded people are keen to put their money where their mouth is. They want to help develop the nascent home battery installation industry with their purchase. If this is you, thanks for your support!

c) Economics

Many people mistakenly believe the only way to get a $0 electricity bill is to buy solar and battery storage. But it’s not hard to get a zero dollar bill, or even a credit, with solar panels alone.

But if you use heaps of electricity at night, have a small solar power system or a low feed-in tariff, buying a battery can be the bridge to a $0 bill.

You can see why spending $12,000+ on home energy storage to drop a quarterly bill from $200 to $0 might not be the best investment.

It’s important to distinguish between ‘saving money’ and ‘getting your bills to $0’. They’re not the same.

d) Spite

Some people hate their electricity company. They are highly motivated to sever their reliance on electricity retailers by going off-grid.

I’ve found once people find out the cost of achieving this goal, their convictions tend to waver.

e) Early adopters/tech nerds

Some people like solar battery tech and want to play with it regardless of the cost. I’m in this category!

Finn Peacock and his Tesla Powerwall

My Powerwall and me.

The bottom line

Being honest about the economics of home batteries leads people to accuse me of being “anti-battery”. I love batteries – I have one on my own home! – I simply don’t like how some dishonest companies sell them.

It breaks my heart to field calls from concerned pensioners who have spent a small fortune on home energy storage. They can’t understand why they still have an electricity bill. The salesman promised them they wouldn’t!

The bottom line is – home batteries aren’t yet at a price point where the raw economics stack up.

But – money isn’t everything.

Blackout protection and having a cool piece of tech in your home are valid reasons to buy a home battery system. If either of these is your motivation, I say go for it.

2) What can you expect to pay for a battery?

As I mentioned in part 1, the size of a battery depends on how many kilowatt-hours (kWh) it can store.

As with solar panels, economies of scale kick in the larger you go with home energy storage. But, the effect is smaller.

Here are some examples of prices I’d consider reasonable:

  • 5 kWh of storage: $7,000-$9,000 installed
  • 10 kWh of storage: $11,000-$14,000 installed
  • 15 kWh of storage: $15,000-$18,000 installed.

Pro-tip: You can see approximate retail solar battery prices here on a bunch of energy storage systems – but they do not include installation costs .

Note – you may see lower prices advertised online and in the paper. See point #7 of this guide for why I’d go nowhere near a cheap solar battery storage system.

Payback period

A battery will generally take 15-20 years to pay for itself. Compare this to 3-5 years for a solar-only system.

Some installers will present quotes showing a battery payback of 6-8 years. They achieve this by ‘blending’ the fast payback of the solar panels with the slow payback of the energy storage aspect.

Pro-tip: My excellent solar and battery calculator splits out the payback of solar and batteries.

3) What size battery system do you need?

The amount of storage you need to buy, in kWh, depends on your nighttime energy use.

The typical Australian home uses 16-20 kWh of over 24 hours. For a 9-to-5 household, 60%+ of this electricity usage is between sunset and sunrise.

So to run your home off a battery system, the minimum size I’d recommend is 10 kWh. You’d also want at least 8 kW of solar panels to charge it reliably through the year.

Home battery size and capacity comparison

Compare the physical size of these batteries with the energy they can store.

For expected savings – 10 kWh worth of storage will save you approx $700 per year in a best-case scenario.

High solar battery prices have made people ask whether there are legitimate ways to pay less for one without compromising quality.

Well, there are a few ways to get a discount on a home battery system. Enter…

4) Rebates and VPP’s can make batteries cheaper.

There are two ways to pay less for a solar battery in 2021: state-level rebates, and Virtual Power Plants (VPPs)

State-level rebates

At the time of writing, unlike for solar power there is no federal battery rebate – sorry. But there are state-level rebates available:

Solar battery rebates in Australia

Pro-tip: NSW has a solar + battery zero-interest loan scheme. But as this doesn’t reduce the cost of a battery, I won’t go into detail here.

Virtual Power Plants (VPPs)

There are also Virtual Power Plant schemes available in most states.

If you sign up for a VPP, you relinquish control of your energy storage to the VPP operator. In exchange, you’ll get an upfront discount on a battery system and/or a higher feed-in tariff at certain times.

Two drawbacks to joining a VPP:

  • The more your home battery is used, the shorter its lifespan.
  • Stored energy is usually most valuable in the evening peak. VPP operators may force your battery to charge in the mid-afternoon, even if solar is available. Then they will discharge into the grid shortly after sundown, leaving you with little or no energy storage to get you through the night.

Pro-tip: I’ve written about Virtual Power Plants in detail here.

5) Common techniques of dodgy battery salesmen

Battery sales canvassing letter

Many honest companies ethically sell batteries. They take the time to run you through the pros, cons and economics.

But – as with any new bill-reducing technology – they also attract bad salespeople. They see an opportunity to cash in on consumer confusion: promise the world and bag a hefty commission.

Here are the go-to tactics of dodgy battery salespeople:

a) Promising $0 bills with small batteries

Smooth-talking battery salesman promising $0 electricity bills are all too common. With enough solar and a big enough home energy storage system, anyone’s bill can go to zero.

Often hard-selling salespeople don’t even sell a big enough battery system to get a homeowner’s bills to zero, or even care if the owner has enough solar panel capacity to charge it through the year. They sell a small (sub-6 kWh) energy storage system with a fat commission.

b) Bait & Switch

A classic tactic is to quote cheap to secure your business. Then, on installation day, they’ll demand thousands more to finish the installation.

c) False Scarcity

Another tactic is a letterbox drop inviting you to join a ‘closed-group battery test’, which offers home energy storage at a ‘substantial discount’.

And wouldn’t you know it – there are only a few places left, so you need to get in quick!

My advice here is simple – if something sounds too good to be true, it usually is.

6) Battery backup – know what you should be asking for

What type of backup do you want?

If you are buying a solar battery system – you should make the most of it. Ensure it is installed and configured so it backs up some, or all, of your home. But be careful when you ask for backup, as you may not be getting what you expect.

I’ve put together this description of the ‘levels’ of home battery backup to help you understand what to ask for:

  • Level 0 – No backup at all.
  • Level 1 – Provides backup but takes a few seconds to switch over in a blackout. This means your house will lose power for a brief moment. In backup mode, the battery has reduced capabilities, such as lower power output.
  • Level 2 – Provides seamless backup in a blackout with full battery functionality. But, it can’t charge your batteries from your solar power system when the grid is down. This can be annoying if a blackout hits during the daytime when your energy storage is running low!
  • Level 3 – “Apocalypse proof” backup. Seamless switch-over in a blackout. Full battery functionality. And you can charge your batteries from your solar panels while the grid is down.
Solar battery system in a blackout

My home operating with ‘level 3’ backup

In my opinion, if you’re going to buy an energy storage system, you want it to provide level 3 “apocalypse proof” backup.

Say to your installer “I want my batteries to charge from my solar panels when the grid is down”.

In rare cases, if you have a tricky install, ‘level 3’ backup might not be possible. Your installer will talk you through your options.

What circuits do you want to back up?

Although some manufacturers (hello Tesla!) market their batteries as ‘whole house backup’, I recommend only backing up your essential circuits.

If your battery is simply wired to backup your whole home, this can happen:

  1. You don’t even notice the power has been cut
  2. You carry on using your heating/cooling/hot water/oven/pool pump as per usual.
  3. Your battery either overloads on power demand or runs out of energy within a few hours.
  4. You are as blacked out as the rest of the street.

In my house, my battery backs up my lights, kitchen (except oven) and air conditioner. If I have a power cut it’s obvious, and I know to use my electricity carefully, especially the air conditioner.

So talk you your installer about what circuits you consider essential – and only back those circuits up. Also, take the time to learn how much power those essential appliances use and how long they can run without draining your battery.

7) “Thermal runaway”, aka “Why you shouldn’t buy a cheap battery”.

Because solar battery storage is expensive, people always want to find a cheaper option. After all, they are all the same, right?

Wrong.

Lithium-ion batteries can store large amounts of energy. When they charge and discharge, they generate heat. If charging and discharging is not managed correctly, “thermal runaway” can occur. Thermal runaway is a fancy way of saying “a big-ass fire”. With the amount of energy stored in lithium batteries, they can burn for hours.

Different manufacturers have different ways of avoiding thermal runaway. Properly configured battery management software requires properly funded research and development teams.

Many big names have also invested in hardware safety features as a final line of defence.

For me, this is deadly serious. Cheap batteries installed for peanuts worry me.

Don’t gamble with your safety to save money on a solar battery storage system. If you can’t afford a decent brand, don’t buy one at all.

8) AC versus DC coupling

See part 1 of my guide for a more in-depth explanation of AC/DC coupling.

When it comes to buying a battery system, there are some key differences between AC and DC coupling:

AC Coupling

  • Solar inverter agnostic – technically, you can retrofit any battery to any existing solar system.
  • Requires a ‘battery inverter’ alongside your solar inverter, which adds to costs. (Some, like the Powerwall, come with an inbuilt battery inverter).
  • It can be expensive or impossible to get level 3 backup if you’re on 3 phase power.
  • Due to DC > AC > DC conversion losses, most AC coupled batteries have a round-trip efficiency of ~88%.
  • DNSP limits on single-phase houses may mean you’re not permitted to add an AC coupled solar battery. It depends on whether the DNSP counts the battery inverter towards your total phase limit.

DC Coupling

  • Requires a hybrid inverter.
  • Limits your choice of energy storage systems to the battery models your inverter supports.
  • Some inverters cannot provide level 3 backup.
  • A risky option if you’re planning on adding energy storage at a later date. New batteries may not be compatible with your inverter.
  • Marginally higher efficiency compared to AC coupling – up to 95%.

DC coupling is preferable if you have your heart set on a specific inverter/battery combo and want to buy now. AC coupling is the way to go if you want flexibility in your choice of solar battery storage.

But – make sure your local network doesn’t count the battery inverter toward your inverter limit.

DC coupled battery - hybrid inverter

An LG Chem battery DC coupled to a SolarEdge hybrid inverter

9) Batteries degrade faster than solar panels.

Solar panels have 25-year ‘performance warranties’. This warranty states they won’t degrade more than a certain amount per year.

Most batteries have 10-year warranties. Only a few (expensive) home energy storage systems have warranties longer than this.

The typical budget-end solar panel will degrade by about 0.55% per year over a 25 year period. The typical battery will degrade by 3% per year (or more!).

The more you use a battery, the more it degrades in terms of energy storage capacity. Anyone with a mobile phone will have experienced this degradation.

Once a solar battery reaches the end of its warranty, degradation is not linear. Sharp declines are likely.

Let’s use the Tesla Powerwall’s warranty as an example. It says the battery will provide 70% of its initial 13.5 kWh capacity after 10 years. This works out to 3% annual degradation.

Tesla Powerwall warranty degradation

A screenshot from the Powerwall’s warranty.

I’ll guess from year 11 onwards, the annual drop will be higher. As it’ll be another 6 years or so before any Powerwall reaches 10 years of age, we’ll have to wait and see if I’m right.

Pro-tip: Many models of solar battery financial payback assume no degradation. This can make the economics of home energy storage look better than they are.

Take the time to understand your solar battery’s warranted performance and degradation. Make sure your expectations of what your home battery system will be able to do near the end of its warranty is realistic.

10) Battery warranties – what to look for

Reading battery warranties can be tedious. I know because I’ve read a bunch. Here are the key points to understand about any energy storage system you’re thinking of buying.

Battery degradation

What capacity does the battery have at the end of its warranty? 60% after 10 years is a typical amount. Look favourably on any company warranting more than 60% after 10 years.

Also, ask: Is your warranty the same if you’re a part of a VPP? Tesla, for example, warrants their batteries for “unlimited” cycles in residential use. But, if you’re part of a VPP, they only warrant 2,740 cycles – which can be used quickly!

“Gotchas”

  • Are there any clauses in the warranty reducing what’s covered or which void it entirely?

    Some warranties don’t allow you to cycle a battery more than once per day. Others void the warranty if the ambient temperature goes outside a narrow range. Some mandate the battery must always have an internet connection. Some require online warranty registration shortly after installation.

  • Does the warranty cover the entire battery or only parts of it?

    A classic example is a 10-year warranty for the battery, but only 5 years for the supporting electronics. If something important breaks in year 6 – you’ve got a hefty repair bill coming up.

  • What does the manufacturer cover for a warranty replacement?

    Some manufacturers cover labour costs involved with diagnosing and repairing a solar battery. Others don’t. Some have a clause stating if they deem the battery ‘beyond repair’, they’ll compensate you financially based on the age of the unit. This compensation can be stingy.

  • Do extended warranties also increase the number of cycles allowed?

    I saw a solar battery manufacturer trumpet their batteries’ industry-leading 20 year extended warranty. But, purchasing this extended warranty didn’t increase the amount of energy you could use. All it did was give you an extra 10 years to use it.

Who’s backing the warranty?

This is a big one. Ideally, a battery brand would have an established Australian office. Meaning they can’t pack up and slink home to wherever to shirk their responsibilities.

Many companies have started to import and sell batteries from overseas. There’s nothing wrong with this. Ask yourself – how likely is it a small importer will be operating in 10 years?

Pro-tip: My solar battery comparison table has links to the warranty documents for all listed batteries.

11) What to consider for an optimal installation

Where is the battery going to go?

If you want to have the battery system installed in a compliant location away from the meter box, be aware the cost of cabling can add up quickly. The difference in price between installing it next to the meter box and somewhere else in your house can be a grand or more.

Battery standards are strict on where you’re allowed to place one.

For example, you’re not allowed to install a battery under stairs or access walkways, in roof or wall cavities, or in a ‘habitable room’.

You’re also not allowed to install a battery within 600mm beside or 900mm below:

  • An external exit (a door going out of a building)
  • A window
  • Building ventilation for a habitable room
  • A non-associated appliance, like a hot water tank or air conditioner unit

Also consider:

  • Will your switchboard need an upgrade to accommodate the extra battery equipment? Depending on the size of the upgrade, this can add thousands to a quote.
  • Is your solar array big enough to charge the battery, even in winter? The bigger a battery, the more solar panels you’ll need to charge it and power your home.
  • What circuits in your house do you want to back up?

    As already explained, it is often better to only back up select circuits instead of your whole house. The less you back up, the longer you can run them in a blackout. If your batteries are charging from your solar panels (‘level 3’), you can run these circuits for quite some time!

    Also, will it be installed in a garage? Then you’ll need bollards installed for safety reasons:

    Tesla Powerwall and protection bollards

    Tesla battery installed on a fire-proof backing, with bollards.

    The next step

    I hope you found this guide to buying solar batteries useful. In Part 3 of this series, I look at owning a storage system – how to make the most of it. If you have any questions about home energy storage, my contact details are:

    Email: [email protected]

    Tel: 08 7200 0177

    Snail mail: 3/39 Grenfell St, Adelaide, SA 5000 Australia

    If you’re ready to buy a home battery, I can help you get quotes from high-quality, trusted installers quickly and easily:

    Finn Peacock

    Finn Peacock, founder of SolarQuotes.com.au

     To get your quotes, please enter your postcode: