Brad Parmenter knew electricity costs were surging, but when his power bill came in for the year at $5900, he decided it was time to bite the bullet and install rooftop solar and batteries.
“It was a shock to see how much my electricity bills had gone up, and I knew they would keep rising, so I decided it’s time to take action to reduce that cost and not be subjected to future price increases for electricity,” he said.
Mr Parmenter spent $29,000 installing 15-kilowatt solar panels, a 10-kilowatt inverter and a 19.2-kilowatt battery last year at his home in Brisbane. Since then, he estimates he has saved $4200 from his electricity bills to about $1700. He saved another $5300 in fuel after buying an electric vehicle which costs $240 a year to charge.
“With those savings, I’d be breaking even within three to four years,” he told AFR Weekend. ”I think going solar is the right thing to do as it helps the environment. Having the batteries as back-up power means I can still run the household if we were to lose power. I don’t have to worry about the food in the fridge or freezer going off because I have the battery.
“I think the cost is worth it. I no longer have to fear massive power bills hitting me in the future.”
The number of Australian households installing solar batteries increased to more than 250,000 between 2015 and 2023, said Warwick Johnson, managing director of solar and storage market analyst SunWiz.
Separate analysis by the Clean Energy Council shows that about 30,000 batteries were installed in the first half of this year, which equates to about one in five rooftop solar installations having batteries attached to them.
Mr Johnson estimated the number of batteries installed in homes this year could hit 85,000.
“The economic value of batteries is increasing as the gap widens between what power companies charge for electricity and what they pay for Australian homeowners’ excess solar energy,” he said.
“Batteries also provide security against localised blackouts, which are increasing in frequency due to damaging extreme weather, due to climate change.”
Louisa Sumagui of solar, battery and energy specialists Nectr said sustainable features such as solar panels and batteries were becoming non-negotiable features for home buyers.
“What we’re seeing is that energy-efficient homes are attracting more buyer demand and higher premiums,” she said. “So property owners are installing these to future-proof their homes.”
Batteries soak up unused solar energy captured by panels during the day, enabling households to use it when the sun is not shining, thereby helping them avoid peak electricity prices.
‘Still too expensive’
But the uptake of batteries compared with solar panels is low because the former can be more expensive than the latter and take longer to pay for themselves in terms of savings.
Of the 314,507 rooftop solar installations made last year, only 18 per cent have batteries, according to Commonwealth Bank analysis.
“Batteries are still too expensive. The return on investments is not attractive to gain mass appeal of customers who would purchase batteries incentivised by ROI alone,” CBA economists wrote. “However, with further battery price decrease and higher electricity prices, the ROI is likely to improve in the future.”
CBA calculated that a 13.8kWh battery that costs $17,250 would save a customer $1562 in the first year, with the payback period over 10 years, which is longer than the typical warranty period.
Assuming electricity inflation of 3 per cent a year, battery prices would need to fall by 20 per cent to deliver an acceptable target of 12 per cent internal rate of return. At the current prices, CBA estimates that return sits at 1 per cent.
Jeff Sykes, chief executive of solar comparison website Solar Choice, said prices for home batteries have been flat for three years – unlike batteries for EVs which have dropped sharply. It is big increases in electricity prices that are closing the value gap.
Solar Choice estimates the cost of a 3kWh battery at $4050, $9120 for 8kWh, $13,780 for 13kWh and $18,360 for 18kWh.
“There’s no hard and fast rule, but if the customer is paying less than 20¢ per kilowatt-hour, then it’s going to be tough for a battery to add a lot of value for them,” Mr Sykes said.
“But it depends on where they live and their household situation. There are many cases where a battery makes a lot of financial sense purely on the savings on the electricity bill.”
The payback period has also improved significantly in recent years. Five years ago, it would take more than 20 years for a battery to pay for itself, whereas that has dropped to about seven years on average, Mr Sykes said.
