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Solar Power and Batteries – The Financial Dynamics Have Changed

By 14/06/2024June 17th, 2024No Comments
Solar Power and Batteries

Solar Power and Batteries

– the Financial Dynamics have Changed

By Bob Hitchens

Solar Power and Batteries – As with solar power, consumers will have various reasons for purchasing a solar battery, such as energy independence, environmental considerations, and financial benefits, with the latter being the most difficult to assess.

One of the main concerns for homeowners when considering solar batteries is whether they are worth the investment.

The Influencing Factors

The financial return (payback period/return on investment) for the installation of solar power is influenced by several factors:

Energy consumption patterns: high-level consumers tend to have a shorter payback period, especially when there is considerable daytime energy usage.

Retail price of electricity: as energy prices rise, the savings generated by reduced electricity imports during daylight hours increase.

Feed-in tariffs: Higher feed-in tariffs naturally generate more income, helping provide bill credit to offset some nighttime usage.

System size: larger systems will of course generate more solar energy. When determining the system size, energy consumption patterns should be taken into consideration to avoid issues arising from lost production potential due to grid export limits.

The cost: High-end systems cost more, but have superior efficiency & performance, therefore can provide better long-term benefits. Ensuring the optimum system size will also have an impact.

Payback calculations are generally made using current pricing data and often don’t take future increases in energy prices into account.

The weather: regional climate patterns have an impact on solar power system output, especially during the winter months.

System Payback Time

Previously:
Around five years ago, the assessment of payback periods for solar power on residential properties generally ranged from 6-10 years for a quality system. All the factors mentioned above contribute to the result. The addition of a battery at that time had a payback period in the range of 12-20 years, and as a result, uptake was limited.

Now:
Notwithstanding all the influencing factors, payback periods for solar power are now expected in the range of 3-7 years. In part, this is because solar system performance has improved, and the cost of installation per kW has reduced.

Retail energy purchase prices have increased dramatically in recent times, and are probably the most significant contributor to shorter payback periods, despite grid feed-in tariffs having dropped over the same period.

In my case, the analysis of energy production & consumption data, tariff price data, and actual power bills received, has shown an actual achieved payback period of 5 years. Down from an initial estimated payback period of 7-8 years.

Battery Addition

One of the main objectives of solar batteries is to store energy produced during the day for later nighttime consumption, thereby reducing the need to import electricity from the grid.
From the consumer perspective, the focus will be on finding a retail energy plan with the lowest supply charges and/or highest grid feed-in tariff.

Another dimension that has begun to have an impact is the ability to sell stored energy from a battery to the grid during high-demand (and financially lucrative) periods.
Reducing the need to import at night and selling back to the grid, along with recent battery price reductions (and considering all the influencing factors) has resulted in the payback period for solar batteries being reduced considerably, now in the range of 8-10 years.

Solar Power and Batteries - Payback Times

Solar and Battery Together

Solar Power and Batteries

Installation of a solar & battery system can now be a serious consideration.

The combined payback period is currently in the range of 8-10 years (again, considering all the influencing factors) – which is close to the viable consideration of installing a solar-only system five years ago, and the payback can be expected to improve as energy prices continue to rise.

Conclusion:

While the upfront cost of installing a solar power and battery system is substantial, the potential savings can make it a worthwhile investment.

Whichever approach you prefer (solar only or solar & battery), at the end of the day, funds will be required for purchase. With shorter payback periods and better return on investment, the use of finance provider options has become more viable.

“At SolarWise Wagga our philosophy is simple, we aim to provide relevant and reliable information, quality service, and the highest grade of products at a competitive price.”

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