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) Solar battery storage is currently too expensive for the average Australian household 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 flat-screen TV’s were when they first came out (or even solar panels), compared to how cheap they are now.

As more solar battery manufacturers appear on the scene, competition on pricing and features will only increase.

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, GST, and battery degradation 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 5kW solar system and a 13.5kWh Tesla Powerwall 2 battery to his home. At the time of writing, a 5kW solar PV system + a Powerwall 2 costs roughly $17,000 fully installed.

A 5kW solar system will generate, on a good day, about 20kWh 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 15kWh of this generated 20kWh would be needed to fully charge the Powerwall 2, due to losses between the batteries, inverter and panels.

David is saving himself 30c/kWh by using the 13.5 kWh of energy stored in his Powerwall 2 at night instead of buying it from the grid, which saves him about $4/day, or roughly $1500 per year.

This leaves 5 kWh of generation left. David gets home from work at around 6pm, so manages to self-consume 2kWh of generation from his solar panels, saving him 60c/day, or $200 per year.

The rest, 3kWh, is fed back into the grid for a credit of 11c/kWh, or 33c/day. This works out to about $120/year in credits.

So, in total, David’s total savings from a 5kW solar + Powerwall 2 system works out to about $1,800 per year. This means it’d take him about 9-10 years for him to break even.

Payback numbers can vary based on a number of factors – if David worked from home and used all of the 5 kWh/day generation that was left after charging the Powerwall 2 (instead of feeding 3kWh back into the grid), he’d save significantly more, and have a payback period of around 7 years.

The warranty for the Powerwall 2 is 10 years, and no one expects a lithium ion battery pack to last much longer than 10 years (especially considering that the capacity of the battery degrades over time, to around 60% of the original 13.5kWh capacity after 10 years).

The bottom line

The upfront costs of solar battery storage mean that it’s 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.

To find out what the payback in your situation might, try our new solar and battery calculator – it will also show you how savings are affected by a battery and solar panels separately.

>> Next: Solar Battery Storage Comparison Table >>

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