Noel Whittaker is the author of Wills, Death & Taxes Made Simple and numerous other books on personal finance. Email: [email protected]
A major election promise by Labor was a $2.3 billion Cheaper Home Batteries Program to cut battery costs by about one-third. It is to be done by way of a rebate is based on a battery’s usable storage capacity and excludes installation costs.
It offers roughly $370 per kilowatt-hour (kWh), equating to about 30% off the battery’s base price. For example, a 13.5 kWh Tesla Powerwall 2, priced at around $11,900 (plus installation), would attract a rebate of nearly $5,000.
When COVID hit, cancelled trips left us with spare cash, so we installed a Tesla Powerwall. It’s been reliable — even sent a text before a cyclone saying it was charging from the grid in case of a blackout.
Sadly, the numbers don’t stack up.
Consider a typical day in a household with solar and a battery. It starts with the battery at minimum and no solar power. At this point, all electricity comes from the grid. As the sun rises—if it does—solar begins to offset grid use. If conditions are good, solar output exceeds usage and the battery charges. But by afternoon, solar drops. When it can’t meet demand, the house draws from both the battery and the grid. Often, the battery ends the day nearly empty, especially in winter when the sun sets early.
To see how the numbers work, let’s pretend it’s been a perfect day.
And note that solar batteries are required to hold back around 15% of their capacity as a reserve in case of blackout, to keep essential systems like gates and lighting running during a power failure. That reserve isn’t available for day-to-day household use, reducing the battery’s effective capacity even further.
The sun is shining brightly, and by sunset your battery is full — charged entirely from your own solar panels at zero cost. Keep in mind this is also the time most people return from work, just as power generation fades and demand surges. We’re currently paying around 30 cents per kilowatt-hour, which means a fully charged battery holds just $3.60 worth of electricity. It’s great to be using free power from your battery, but in reality, that full battery is only saving $3.60.
And solar generation varies greatly depending on where you live, how many panels you have, and even the direction of your roof. Still, let’s assume you manage to fully charge and use your battery on 200 days of the year. That means the total annual saving amounts to just $720 — not nothing, but hardly the game-changer it’s claimed to be.
Given Labor’s proposal offers a $5,000 discount on a battery like a Tesla Powerwall, the homeowner is still left with the balance, around $12,000, once installation is included and the total cost climbs to about $17,000. At annual savings of just $720, it would take 16 years to recover the cost — which, by coincidence, is also the estimated lifespan of the Tesla Powerwall battery. In other words, just as you’ve broken even, the battery may be ready for replacement.
Another major drawback is its basic unfairness. The people most likely to be cash-strapped are renters, and they cannot install solar and batteries on a rental property because they’ll never get their money back. There’s an argument that savvy landlords might install the wiring, solar panels and battery to increase rents, but we’re heading for an unholy alliance of Labor and the Greens. It is Greens policy to freeze all rents — so what landlord would go to the expense of installing a solar system when there’s every chance their rents would be frozen?
About the author: Noel Whittaker, AM, is the author of Wills, death & taxes made simple and numerous other books on personal finance. An international bestselling author, finance and investment expert, radio broadcaster, newspaper columnist and public speaker, Noel Whittaker is one of the world’s foremost authorities on personal finance. Connect via Twitter or email ([email protected]). You can shop his personal finance books here.
Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. Always seek professional advice that takes into account your personal circumstances before making any financial decisions. The views expressed in this publication are those of the author.
