SA Home Battery Scheme’s New Calculator Gives Dismal Results (If You Can Find It) – Solar Quotes

SA Home Battery Scheme calculator

The SA Government commissioned a calculator for their home battery scheme. It shows that, for most homes, even subsidised solar batteries don’t add up yet. So they buried it on their website.

Finally, after one and a half years, the South Australian Home Battery scheme has added a battery calculator to their site.  It’s a tool that’s so useful in helping people understand battery savings, I consider it a vital addition to their website.

Why is it that, after spending vast amounts of money promoting their battery subsidy, the South Australian government has only gotten around to adding a battery calculator to their site now?  Did someone forget?  Did the dog eat their battery calculator budget?  Or did they simply not realise that when it comes to new technology, people need some helpful guidance?

I suspect the reason why the battery calculator took so long is that it did not give the answers the state government wanted.  Instead of giving subsidised home batteries a glowing recommendation by showing they would soon pay for themselves, the calculator instead shows they are a marginal investment at best for a typical household.

When bought outright a subsidised solar battery’s payback time can be much longer than the warranty period. And if the batteries are financed, they never pay for themselves.  This is despite South Australia having the nation’s highest electricity prices and most generous battery subsidy.

I can offer some good news if you’re hoping to get a battery that can pay for itself.  The calculator doesn’t include the benefits of joining a Virtual Power Plant (VPP) or any “special offers” you may be able to get.  So there is still hope that VPPs and/or price decreases will make batteries pay.  Unfortunately, VPPs aren’t yet a proven quantity, and we’ll have to wait and see how beneficial they turn out to be.   Fortunately, we can be confident battery prices will fall in the future.  (I’m willing to bet 50 cents a major battery maker announces a price decrease1 within the next two months.)

Calculator Made By Renew

The battery calculator was made for the South Australian Government by Renew, and I am confident the one they’ve made does its job well, although I probably wouldn’t say it’s as good as ours.  For a start, the SolarQuotes Solar & Battery Calculator is a lot more colourful and didn’t cost the taxpayer a single cent.  But there is room in this world for more than one battery calculator, and there’s no need to make them fight to see which one comes out on top.  (But I’m still going to ask Finn to put laser claws on ours, just in case.)

The Calculator Makes Assumptions

In addition to not taking into account VPPs or “special offers” (whatever they may be), the SA Home Battery Scheme Calculator makes several assumptions.  These include:

  • Battery prices are based on their median cost after subsidy and include GST and installation.
  • The battery is only used to store solar electricity and reduce grid consumption.
  • The battery will degrade to 70% capacity in year 11 and then will fall to 0% in year 21.
  • All solar panels are north facing.  This means they’ll generate a little more than the average system as many have panels facing east, west, or even south — but hopefully, none facing down.
  • The electricity price used is the average of all standard electricity tariffs available.
  • The solar feed-in tariff is assumed to be 10 cents.

I’d say the final assumption I’ve listed is the most controversial.  According to our Retail Electricity Plan Comparison page it’s possible to get a 22 cent solar feed-in tariff in South Australia right now.  This significant difference is important because the higher the solar feed-in tariff, the lower the return from the battery.

While I expect feed-in tariffs to fall in the future, improving the return from batteries, I expect electricity prices to fall too, decreasing the return from batteries.  Maybe the 10 cent feed-in tariff figure will be reasonable in the future, but it’s not reasonable now.  After all, if you are willing to take the effort to install a battery system, you can bloody well make an effort to change your electricity plan.  So while their 10 cents may make sense over 10 years, keep in mind this causes the calculator to overestimate the current return from batteries by a lot.

If your goal is to save money by getting a battery, then the correct time to get one is when it starts saving you money, not before.

The Calculator Is A Little Hard To Find

There is no link to the battery calculator on the front page of the Home Battery Scheme site.  That’s where I think it should go.  After all, the State Government paid for it with the people’s money, so they should make sure it doesn’t get missed to ensure the people get their money’s worth out of it.  But what do I know about web design?  Maybe people value things more if they have to search for them?

At the top of the homepage, it’s necessary to click on “Is a battery right for me?” to get to it.  I’ve circled (ovaled?) it in red in the screenshot below.  I’ve also underlined the word “affordable” and put a big question mark next to it because I’m a frustrated graffiti artist.  I only put a small question mark next to the word “reliable” because, despite the depressing reliability of battery systems, the SA Government may know something about the future reliability of the grid we don’t:

South Australia Home Battery Scheme

After clicking, you then have to scroll down the page that comes up.  A little past the halfway mark you’ll find this:

Home Battery Scheme Calculator

It says it’s free independent advice.  That’s something I’m certainly in favour of.  I can even remember giving some to the SA Minister for Energy and Mining, Dan van Holst Pellekaan, on batteries.  I’m sure he put twice as much effort into acting on it as it cost him.

This is what the calculator looks like:

Calculator input screen

No Solar-Only Option

If you start to play around with the battery calculator, you’ll find it has a severe flaw.  There’s no option for solar-only.  This is unfortunate because it prevents people from discovering they will always be better off investing in a more extensive solar power system than a home battery system2.  Going big on solar panels is also much better for the environment than buying batteries.  But I’m not exactly surprised the calculator doesn’t have this feature.

Using The Calculator — “I’m Just A Typical Home!”

To use the calculator, all you need to do is fill in the fields.  They’re pretty straightforward.  I did get confused when I tried to enter my location, and it gave me the option of clicking on “Greater Adelaide”.  It made me wonder what’s this Adelaide that’s even greater than normal Adelaide I’m used to?  But it turns out it just means Adelaide and all its inner and outer suburbs, including nice places like Onkaparinga and the mini-dystopia of Brighton.

To start I entered information to represent a typical household without solar panels.  I decided their electricity consumption was average, with no one at home during the day to make them a better candidate for batteries.  I also gave their budget for solar and batteries as $15,000-$20,000:

Calculator screen example

Then I clicked on “Download PDF” to get the report.  It gave me the results in two tables.  First one was for buying outright and the second one for using finance.

First Table — Solar & Batteries, No Finance

Here are the results it gave for buying solar and batteries without finance:

Results - Solar and batteries, no finance

The first column gives the solar power system size.  The two capacities given are 8 and 10 kilowatts and larger than the typical Adelaide system.  Larger solar systems improve the return from batteries because they’re better at providing enough energy to charge the battery on cloudy days and/or in winter.

Battery Cost:  DC Coupled Vs. AC Coupled

After battery capacity, the next column on the table above is system cost.  In the table above it’s the combined cost for solar and batteries.  I was able to get the cost for just batteries in the table below by telling the calculator I already had a 10 kilowatt solar system, but this adds in a complication.

If you buy solar and a battery at the same time it’s easy to get a DC-coupled system, which can be cheaper than a retrofittable AC-coupled system.  While costs vary considerably between systems, on average DC-coupled will be cheaper.  But, while it’s worth keeping it in the back of your head, I wouldn’t worry about it too much because while the difference in cost might help, it’s not likely to be enough to make batteries pay.

The prices in the table below are close to what you’ll need to pay for a battery system, even if you get it at the same time as solar panels.Battery cost - DC coupled vs. AC coupled

To make comparisons easier, I’ve added the cost per kilowatt-hour in red.  The smallest battery has the highest cost per kilowatt-hour, while the largest has the lowest.  But this progression is not smooth.  The 10 kilowatt-hour battery jumps up in price and costs almost as much per kilowatt-hour as the 6 kilowatt-hour one.  While this seems strange, there are one or two particularly expensive 10 kilowatt-hour batteries on the market that I assume are causing this effect.  The low cost per kilowatt-hour of the largest battery is particularly noteworthy because the battery subsidy tops out at $4,000 for 10 kilowatt-hours, so it’s receiving less subsidy per kilowatt-hour than the others.

Blended Payback:  It’s A Thing To Avoid

The large table above has a Payback column that gives how many years the solar and battery systems will need to pay for themselves.  For all of them, it’s 6 or 7 years.  Those aren’t bad payback times and makes batteries seem like a reasonable investment — but only if you’re not aware of the blended payback trap.

Blended payback warning

Combining the payback of solar and batteries, or blending them, hides how much worse the payback periods of battery systems are.  While the table above gives a payback time of 6 or 7 years, let me show you what our calculator gives as the payback time for 8 kilowatt and 10 kilowatt solar systems without batteries in South Australia:

Solar-only payback

Very short payback for solar-only

While our calculator doesn’t use the same assumptions, it’s clear that adding batteries drags out the payback period.  (If you want to play around with our calculator and see what adding various battery systems does to the payback time, feel free.)

Payback Time For Batteries Only

If instead of telling the SA Home Battery Calculator that I want solar panels and a battery, I tell it that I already have a 10 kilowatt solar system, then we see the battery payback time ranges from 10 years to 26 years:Payback time for batteries only

Even with Australia’s highest electricity prices and heftiest battery subsidy, only two of the battery sizes have simple payback periods equal the typical 10 year warranty period for battery systems.  While I hope the average battery will last a few years beyond its warranty, it is not reasonable to expect them to last for the 18 and 26 year payback periods given for the 6 and 10 kilowatt-hour systems.

Finance Means Batteries Never Pay For Themselves

In addition to giving information on batteries that are bought outright, the battery calculator also gives information on what happens if you finance a system.  Below are the results the calculator generates if you already have a 10 kilowatt solar system and you borrow money to pay for it.  For battery systems at these prices, it assumes the interest rate will be 7.28%:

Payback time for batteries with finance

This table doesn’t have payback periods because the batteries will never pay for themselves when financed at this rate.   If your goal is to save money, then borrowing to buy batteries is an economic disaster.

What About High Consumption Homes?

The results above are for a home with reasonably typical electricity consumption of around 6,400 kilowatt-hours a year.  But what happens if I turn things up to 11 and enter the maximum energy consumption the calculator will allow?  Well, that’s precisely what I did, I told it the household has electricity consumption of 60-70 kilowatt-hours a day — an annual consumption of around 24,000 kilowatt-hours, and the results were still bloody awful.  Admittedly they were less bloody awful than before, but I was surprised by how little the bloody awfulness had diminished.  As you can see here, the best payback time went from 10 years to 9:

High electricity consumption calculator results

If financed is used then, once again, no battery will ever pay for itself.  However, you’ll lose a little less money.

Getting solar panels and a battery at the same time could slightly improve things, but I can’t tell by how much since the results are blended.  I’m confident it won’t result in any radical change.

No Environmental Benefit From Batteries

The battery calculator gives the reduction in CO2 emissions from installing a solar and battery system, presented as “Equivalent cars off the road”.  However, all the CO2 reductions come from the solar energy side of things.  To demonstrate this, here is the very first table I showed you, but I’ve removed everything except solar system size, battery capacity, and equivalent cars off the road:

Solar battery environmental benefit

You can see the largest reduction in CO2 emissions occurs when the solar power system size increases from 8 kilowatts to 10 kilowatts.  A 25% increase in solar capacity results in around a 25% decrease in CO2 emissions.  This indicates the CO2 reductions are due to solar panels alone and not batteries.  If you look at the 10 kilowatt solar systems, you’ll see the emissions reductions don’t improve as the size of the battery increases.  But, on the bright side, at least they don’t get worse.  This isn’t the case with the 8 kilowatt solar systems, as there the larger battery results in slightly more emissions.

Some energy is always lost when charging and discharging batteries, and if surplus energy is directly sent into the grid, it reduces emissions more than using a battery.  In the future, home batteries may reduce emissions by storing clean energy that would otherwise go to waste, but this typically doesn’t happen at the moment.  The battery calculator clearly doesn’t think it will happen any time soon.

VPPs Will Help (I Hope)

To forestall anyone getting too depressed by these results, I’ll remind everyone they don’t take into account joining a Virtual Power Plant.  Becoming a VPP member should improve a battery’s return.  But by how much is not clear at the moment.  There is also the risk that future reductions in solar export limits will limit VPPs.

Reducing Solar Export Limits Could Kill VPPs

The South Australian grid is having difficulty adapting to the presence of increasing amounts of rooftop solar power.  Introducing home batteries, particularly ones connected to VPPs, are one way to help.  But if SA Power Networks decides to reduce the amount of power new rooftop solar power systems can export to the grid, it will reduce the return from joining a VPP.  If new solar is required to be zero export limited then it makes VPPs useless.  If solar exports were to be throttled back, it would make sense to at least exempt homes that purchase batteries and join VPPs, but I’ve found that not everything in life makes sense.

How The SA Government Can Unscrew Their Home Battery Subsidy

I’m quite confident the only reason why it has taken so long for a battery calculator to appear on the SA Home Battery Scheme site is that it tells the truth.  That is, batteries can be a terrible investment for a typical household, even with the SA subsidy.  This is not what the state government wants people to hear because they believed the hype about batteries and didn’t bother to do the maths first to see if it was true.  Unfortunately for them, maths beats hype 99 times out of 98.

But it’s the state government’s lucky day.  I have some free and independent advice for them that will make their Home Battery Scheme subsidy look brilliant.  It will improve the return from batteries, encourage energy efficiency, increase rooftop solar power uptake, and help pensioners and other low-income earners.  Best of all, it won’t cost the state government a cent.

My solution is to eliminate the daily supply charge for electricity while increasing the per-kilowatt-hour charge to make up for it.3  This will make batteries a much better investment while having all the other advantages I mentioned.  An additional benefit is, by making electricity bills more transparent and less confusing, it will increase competition in the retail electricity market which should, overall, reduce the cost of electricity in South Australia.

Because this is such a good idea, I’m sure it will be adopted pretty much immediately.

Footnote: After every post of this nature, SQHQ inevitably gets bombarded with messages accusing us of being anti-battery, anti-environment, anti-progress etc. We are not. We love batteries. We know that they are an important part of the 21st Century grid. But telling porky pies about their payback to homeowners is not helping the cause. Especially by the government. 

Footnotes

  1. per kWh
  2. provided they have suitable roof space
  3. Some people think the daily supply charge pays for the fixed costs of the grid, but this isn’t how it works.  All the money from electricity bills, fixed charges and per kilowatt-hour charges, goes into the same bucket and then gets divided up in a moderately complex way.

Source: https://www.solarquotes.com.au/blog/sa-home-battery-scheme-calculator/

« »
Malcare WordPress Security