Economics of using battery storage on a time of use tariff without solar

Battery Storage No Solar

Economics of using battery storage on a time of use tariff without solar

Households on a time of use tariff can use battery storage systems to reduce the amount of electricity they purchase during peak periods. Purchasing less electricity at peak times lowers their annual electricity costs. Importantly this option is available to households who have not installed a solar system.

The analysis calculates the Return on Investment (ROI) using current published prices for battery storage systems with usable capacities of 6.5kWh and 16.5kWh. The analysis is based on household consumption data measured at 8000 Sydney households with a current time of use tariff.

The average household makes a loss of 7.2% p.a. by installing a battery storage system

ROI No Solar ArbitrageResults of the Analysis

The analysis concludes

• The average ROI is an annual loss of 7.2% (6.5kWh) and 8.1% (16.5kWh)

• None of the households recover the cost of installing either battery storage system

• The best ROI for the 6.5kWh battery is an annual loss of 5.5%

• The best ROI for households with above average daily consumption is a loss of 4.3% (16.5kWh)

• The long term cost of electricity shows households lose 34.8 cents/kWh


Arbitrage LCoE No SolarFurther insight into the result

The Long Term cost of Energy is calculated for the two battery storage systems. When using total available capacity every day the long term cost of energy is 73.1 cents/kWh (for the 6.5kWh system). This is 34.8 cents higher than the cost of electricity during the peak period.

Each kWh obtained from the battery system costs the household 34.8 cents more than paying the peak rate.

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Copyright of this article remains with Dr Martin Gill. All references to this article should include the author’s name and website

Comments or Questions?

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