Cost of solar + battery storage: AEMO’s state-by-state payback predictions

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Which states offer quickest payback for homes adding solar + storage? AEMO crunched the numbers to get some interesting findings.

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As we have reported here and here, the Australian Energy Market Operator on Friday released its first ever big study of the impact on the National Electricity Market, over the next two decades, of technology like battery storage and electric cars.

Among its predictions were that NSW and Victoria would lead the country in the adoption of battery storage. But what does the report say about the cost – to the average Australian household – of this shift to integrated solar plus battery storage systems (IPSS)?

As you can see in the tables below, according to AEMO’s modelling – which AEMO itself describes as conservative, taken with the view that the battery cost curve will decline at a much slower rate than that predicted by the likes of BNEF – the payback for new IPSS for houses on the NEM averages at around 10 years. It should be noted, however, that this is for large households. The forecasts include 15 years for medium, and 20-30 years for small houses at the start of the forecast period, predicted to fall to around 4-5 years by the end of the 20 years.

South Australia is estimated to have the shortest payback period at the beginning of the forecast for all three household sizes (small, medium and large), due to a combination of high electricity prices, high solar resource and favourable tariff structure.

South Australian medium and small residential solar + storage customers are also expected to be the first to see a payback period of less than 10 years, in 2017–18 and 2019–20 respectively, according to the report (see graph below).

Screen Shot 2015-06-29 at 12.33.00 pm

For large households, the payback period is estimated at just under nine years in 2015-16, falling by half over the subsequent 10 years.

NSW is projected to have the next shortest payback period for new installations of IPSS, starting at around nine years for large households, and reducing to around five years in 2024–25.

Screen Shot 2015-06-29 at 12.32.36 pm

As predicted elsewhere in the report, the annual savings for small and medium customers in NSW are much smaller than in other states, so longer paybacks are forecast. According to AEMO, the payback period for small to medium houses in the state are not projected to fall below 10 years until 2020-21 and 2030-31 respectively.

In Queensland, the payback period for new installations of IPSS for large consumers is estimated to start at around 10 years, and reduce to around 5.5 years in 2024-25. These consumers are on a TOU tariff and have a higher daily demand, according to the report.

Screen Shot 2015-06-29 at 12.31.27 pm

Payback periods are longer for medium and small customers, and are not projected to fall below 10 years until 2019-20 and 2022-23 respectively. They are assumed to remain on a flat tariff after installing IPSS.

In Victoria, AEMO predicts the payback period for new IPSS will start at around 11 years, and reduce to around six years in 2024-25. For medium and small customers, they are not projected to fall below 10 years until 2020-21 and 2025-26 respectively.

Screen Shot 2015-06-29 at 12.33.45 pm

Finally, Tasmania is estimated to have the longest payback period of all the NEM states, due to a poor solar resource. But the percentage of total installed rooftop PV that is integrated with a battery storage system is the third highest of the NEM regions across the forecast period.

At the beginning of the forecast, the payback period for the smallest customers is forecast at 29 years. For large households, payback is expected to be about 15.6 years, and will drop by half over the subsequent 10 years. Payback periods are not projected to fall below ten years for medium and small customers until 2030-31 and 2034-35, respectively.

Screen Shot 2015-06-29 at 12.34.16 pm

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10 Comments
  1. SolarBusiness_ 4 years ago

    How exciting. Storage costs are already at 10 years or better and I’m putting $100 on the table now that we will be under ten year paybacks for small customers within 2 years

    • Elisabeth Meehan 4 years ago

      Yes, great news. And if this takes off, can people going for electric cars – in a BIG way – be far behind?

  2. Steve M 4 years ago

    On current modelling taking people off grid is a 7.4 year payback. 6.5KW solar and a 10.8kwh lithium battery pack generating 30Kwh per day. The question is for utilities whether to encourage battery storage to lower peak demand or whether they will discourage it as they are with high fixed charges pushing people off grid and causing their death spiral.

    • Mike Dill 4 years ago

      I feel that a few utilities will figure it out, and the remainder will flounder. I expect the payback will be under 5 years everywhere but TAZ by 2020.

  3. Humanitarian Solar 4 years ago

    A renewable grid is a high evolutionary imperative for the survival of the environment. Rooftop solar and battery storage implemented behind the meter-box are a high evolutionary imperative for social justice. Everyone deserves to power their cooking and heating without companies extracting a profit from humanities basic human needs. The sun shines for all of us equally.

  4. Terry J Wall 4 years ago

    I have just installed a hybrid system (Green Collar Man) where the house demand looks first to the PV panels, then the batteries, and if needed, it will suck off the grid.

    KInd of feel this is my way of saving the planet – may not be the quickest return (small system) but just love it to death!!

    • Humanitarian Solar 4 years ago

      Sounds fantastic to me Terry. In practice do you have enough batteries to transition you to off peak electricity rates? Do you know vaguely how many hours your house can keep running if the grid goes down? Do you have an audible alarm for low batteries or does it have a meter forecasting how long you can get by on your current electricity usage if the grid goes down?
      If you wish you could switch off the grid and wait for the system to give a low voltage alarm on the batteries, then this tells you how many hours you can get by. Since its winter and the sun’s harvest is lower, then this figure should increase if you do the same exercise in summer.

  5. Geoff James 4 years ago

    I think these payback estimates don’t include additional revenue from aggregated market and network services. That is, allowing third-party control by some advanced software that manages the combined capacity of many storage systems, and offers this capacity outside the customer when profitable to do so. It’s not easy to organise but, once done, this makes storage an attractive investment already in many locations.

    • Terry J Wall 4 years ago

      That makes a lot of sense Geoff. Will look into it.

      • Geoff James 4 years ago

        Look at http://www.repositpower.com who are closer to making this work in Australia than anyone else. Disclaimer – I used to work for them!

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