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When should I discharge my battery to maximise my return on investment?

Part of our series “What is the best strategy to maximise the Return on Investment for your battery?”

In which we also answer the question “Should I Discharge during peak only, or peak and shoulder“ and “Is it worth discharging during off-peak periods in order to maximise solar soak-up?”

Now if you’ve taken the early adopter step of adding battery storage to your PV system, you might be wondering how to make the most of your battery in minimising your electricity bill. In other articles we’ve examined the best strategies for maximising Return on Investment in your battery. We’ve seen:

  • You can’t make enough money from a battery alone to justify its cost – you need to couple it with a PV system which does most of the heavy lifting in terms of ROI.
  • Smaller is better when it comes to ROI – as the battery acts to drag down the ROI of a PV system, so a smaller battery drags down the ROI less

One common idea put forward as a way of improving battery ROI is to double the amount of work the battery does each day, by pre-charging it from off-peak grid power to service your morning loads, before charging it again (this time from excess solar energy) so it can service your evening loads. By working it twice as hard, the theory is you will generate extra revenue (in the form of bill reduction) each year, so the battery should pay for itself sooner. But how does the theory stack up in reality? Let’s use PVsell to find out.

 

We’ll use the Ausgrid network in Sydney as the location for our study, as the electricity prices are well suited to solar and batteries. Origin charges 52.8c/kWh for Peak electricity (2-8pm weekdays), 21.5c/kWh for shoulder (7am-2pm; 8pm-10pm weekdays and 7am-10pm weekends) and 13.2c/kWh off-peak. We’ll use a north-facing 5kW PV system costing $5986, and interval meter data for a home-office with an above-average consumption of 20kWh/day, as illustrated below.

First let’s look at the results without a battery. PVsell reveals that the payback for this system is 4 years and 7 months, it cuts the bill in half with a $1259 saving in year 1, and it delivers investment returns exceeding 20%. This 5 k system also produces more energy each year than is consumed, though 57% of its production is export to the grid.

We can see from the sample day’s energy balance that there is a lot of power export to the grid during the day for 6c/kWh that is imported at 52c/kWh later that night. Sounds like an ideal candidate for a battery.

Now lets add a 6.4kWh Tesla PowerWall battery to the mix, and bump the total system price up to $14000. We will start by only allowing the battery to discharge during peak pricing periods, in doing so we will maximise the value of the battery cycling. PVsell’s battery results dashboard reveals the annual electricity bill is now reduced by $1679 (69%), and the now payback stretches out to 8 years 4 months – still highly respectable. My battery has soaked up 21% of my excess solar energy and the system has reduced my peak charges by 91%! However, only discharging during peak periods has a few flow on effects:

  1. The battery doesn’t get the chance to fully discharge each night before the shoulder tariff kicks in.
  2. Because the battery is partially charged in the morning, it can’t absorb as much excess daytime solar energy.
  3. On the weekends there is no ‘peak’ tariff so the battery sits idle, only performing 286 cycles per year.

The ROI is quite reasonable, but I wonder if I can make it even better? What if we allow discharging during shoulder periods too? With one mouse click, PVsell updates its results and reveals:

  1. Payback drops down under 8 years!
  2. An extra $100 of revenue each year from my system
  3. 38% of my excess solar energy is soaked up (nearly double the 21% if I only discharge during peak periods).
  4. I’m now 69% independent of the grid for my power needs
  5. But I still have leftover capacity in my battery on 31% of days, because my evening power needs are less than 6.4kWh between sundown and the time when the shoulder tariff ends.

As an early adopter I don’t want to waste any of my investment by leaving my battery under-utilized. Any charge left over at the day’s end will reduce the amount of solar energy I can absorb the next day, leading to me exporting power at 6c/kWh feed-in tariff. Might it not be better to completely discharge my battery even at off-peak rates (13.2c/kWh)? Again with a single mouse click PVsell updates its results to reveal:

  1. 43% of my excess solar energy is soaked up (up from 38% for Peak and Shoulder discharge only), and there are my battery invariably discharges completely
  2. I’m now 72% independent of the grid
  3. Unfortunately my annual revenue only increased by $10

You’ve got to question whether its worth causing the extra “wear and tear” on the batteries all for an extra $10 per year. By more deeply cycling your batteries, you may accelerate their degradation, meaning they can’t absorb as much high-value energy in years to come. Of course, results will vary significantly depending upon your tariff structure and timing, your consumption profile and array orientation…

But as a general rule of thumb I’d recommend to not discharge in off-peak periods. Though you will be able to maximise your battery utilisation, soaking up more excess solar and achieving higher levels of grid-independence, you’ll likely do so at the detriment of future revenue because of accelerated battery degradation. Better to constrain discharge to peak and shoulder periods.