What Kind of Payback Periods Can You Expect From a Hybrid Solar System?
The all-important question!
Before we dive into a simple analysis of hybrid solar payback periods, I want to stress two points:
1) Battery storage is currently too expensive for the average Aussie to justify adding to the home. But - battery storage prices are dropping rapidly, and in a few years their prices will not resemble today's prices at all. Think about how expensive flatscreen TV's were when they first came out, to how cheap they are now.
2) The generation numbers used below will fluctuate day-to-day based on weather conditions and the season. Obviously, generation will be much lower in winter than in summer (close to 50% lower). This is why it's important for an installer to analyse your electricity bills for each season when projecting payback numbers.
Now, let's get to it - using David as an example (numbers have been rounded into nice clean ones and we've removed fixed service charges and GST to make the breakdown easier to understand).
David's household uses 20kWh of electricity per day, and he pays a price of 30c/kWh. This means he is paying $6/day for electricity, or $2,190/year.
He wants to add a 4kW solar system and a 6.4kWh Powerwall battery to his home. At the time of writing, a 4kW solar PV system + a 7kWh Powerwall costs about $15,000.
A 4kW solar system will generate, on a good day, about 16kWh of electricity.
For every kWh of generated solar electricity that David uses, he is saving himself 30c/kWh by not needing to buy it from the grid.
About 7.5kWh of this generated 16kWh would be needed to charge the Powerwall, due to losses between the batteries, inverter and panels.
David is saving himself 30c/kWh by using the 6.4kWh of energy stored in his Powerwall at night instead of buying it from the grid, which saves him about $2.10/day, or roughly $800 per year.
This leaves 8.5kWh of generation left. David gets home from work at around 6pm, so manages to self-consume 2kWh of generation from his panels, saving him 60c/day, or $200 per year.
The rest, 6.5kWh, is fed back into the grid for a credit of 8c/kWh, or 52c/day. This works out to about $180/year in credits.
So, in total, David's total savings from a 4kW solar + Powerwall system works out to about $1,180 per year. This means it'd take him about 12-13 years for payback of his initial $15,000.
Payback numbers can vary based on a number of factors - if David worked from home and used all of the 8.5kWh/day generation that was left after charging the Powerwall (instead of feeding 6.5kWh back into the grid), he'd save significantly more, and have a payback period of around 8-9 years.
The warranty for the Powerwall is 10 years. Naturally, having a payback period that's longer than a product's warranty isn't an economically attractive option.
The bottom line
The upfront costs of battery storage mean that they're not an economically attractive option for the average Australian.
As battery costs come down and lifespans increase over the next 5 years, battery storage will become a significantly more attractive option for a homeowner looking to save money on their electricity bills.