Battery storage systems have the ability to store not just energy, but cheaper energy. The source of this energy can come from the excess electricity generated by solar panels or cheap off-peak electricity from the grid.
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Either way, battery storage offers a promising solution for those looking to lower their energy bills. Just how much you can save with battery storage depends on various factors, such as the battery size and performance, energy use, energy rates and whether you have solar panels or not.
With lots of potential scenarios it&#;s a complex scene, but this article will talk you through how batteries can save you money and give you an understanding of the potential savings.
As hinted, there are a number of important factors influencing the potential savings you can achieve with battery storage systems.
The size of your battery determines how much energy it can store. The larger the capacity, the more energy it can hold. If this is gathered at cheaper prices or for &#;free&#; with solar, the potential savings are much greater.
You also have to take into account Depth of Discharge (DoD). This refers to the amount of battery capacity you can safely use without damaging the battery. For example, a 10kWh battery with an 80% DoD means you can use 10kWh safely. It&#;s crucial to choose a battery with a high DoD (minimum 80%) to maximise its usable capacity and lifespan.
Your daily energy usage and the times when you consume the most electricity significantly impact the potential savings from battery storage.
On average, homes use between 6-10kWh of electricity per day, but households with higher energy consumption during peak hours can benefit more from storing and using energy from their battery during these times.
The type of electricity tariff you have affects how much money you can save. In short, you have flat rate tariffs or variable, time of use tariffs. To reduce your electricity bill with battery storage (and without considering solar panel set up), you need to have a time-of-use tariff to access cheaper energy to fill your battery up.
If you have solar panels, the size of your solar array and the amount of energy it produces directly influences how much excess energy you can store in your battery for later use. The more solar energy stored, the more savings you can make.
The expected lifespan of your battery storage system determines the long-term savings potential. Most batteries have a lifespan of 10-15 years, which should be considered when calculating the return on investment. Essentially, you want to know how much money you save a year with a battery, which gets deducted from your initial investment. Once you&#;ve broken even, you should have a number of years of pure savings.
A battery storage system can help you save money on your energy bills in a few related, but different, ways. Let&#;s take a look.
1. Maximising the use of your solar energy
The best way batteries can help you save money is by working hand-in-hand with solar panels.
Not counting the initial set up costs, the solar energy you produce from your PV panels is free! So, you want to use as much of this as possible.
However, with most people out of the house during the day (when solar panels are producing the most electricity), a lot of the energy is being sent straight to the grid &#; good for the grid, but not for your own finances.
Installing a battery means you can save this previously unused solar energy and power your home in the evenings when you&#;re in. This use of stored solar energy helps you to maximise your self-consumption and make cost-effective use of your panels.
2. Reducing reliance on the grid during peak hours
Following on from the above, by using more of your own solar energy during peak times, you&#;ll save on the energy that you would have otherwise had to buy.
Peak use time or peak hours refer to the times when electricity demand is highest across the country. This is usually in the morning and in the evening around the core working hours. During these times, electricity companies raise their prices. It&#;s these high prices you want to avoid. Battery storage can help you with that.
By storing energy in your battery during off-peak hours when electricity is cheaper (or from solar panels during the day), you can use this stored energy during peak hours, saving money on your energy bills.
3. Benefit from time-of-use tariffs
At the time of writing, the average unit rate of electricity in the UK is 24.5p per kWh. It&#;s around this mark what you&#;ll pay during peak times.
If you have a battery though, you&#;ll want to make use of a time-of-use tariff, which offers cheaper electricity rates during off-peak hours, usually in the early hours of the morning.
Off-peak rates vary from supplier to supplier, but you&#;ll be paying significantly less than peak times. A ballpark figure for off-peak rates is around 9p per kWh &#; around three times less than peak prices. By charging your battery during off-peak hours, and using it during peak times, you&#;ll significantly reduce your energy costs.
For example, filling a 8kWh battery during off-peak hours (at 9p/kWh) would cost 72p. Using the same amount of energy during peak times (at 24.5p kWh) would cost you £1.96. Over the course of a year, that difference mounts up.
Using battery storage can help you save a substantial amount of money across the year &#; typically hundreds of pounds.
Estimates suggest that combining solar panels with battery storage can reduce your annual electricity bill by 70-80%. Without a battery, these savings will be a little less at around 50%.
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Battery manufacturer GivEnergy &#; check out our GivEnergy review here &#; goes further and says an energy storage system can reduce your bill by 85%. Either way, there are big savings to be made. The exact amount you save depends on the range of factors as discussed above.
The following examples provide a more detailed look at the potential savings in a range of different scenarios.
As you can see, the bigger the battery the larger the savings. But this also comes with a larger upfront investment. For true savings, any initial investment needs to be taken into account too.
Eco Affect&#;s owner Matt has made big savings by combining battery storage with solar panels. He went for a Huawei Luna Battery with a 10kWh capacity, which cost £6,000 for the battery and installation in the summer of . He combined this with Octopus Energy&#;s Go tariff, which provides 4 hours of cheap electricity at 8.5p/kWh between 12:30am and 4:30am.
By charging the battery during the off-peak hours and using the stored energy during the day, he saved £2.25 per day. Over the year, this equates to £821.25. However, because of the presence of solar panels, the battery doesn&#;t have to be charged at night during the high summer months, meaning these savings are even higher at around £1,000 per year.
In theory, a solar panel and battery system can power a house, but in practice, a standard residential battery won&#;t have enough capacity to meet all your energy needs for an extended period.
In the UK, the average household consumes between 6-10 kWh of electricity per day. A well-sized 10kWh battery can provide enough electricity for a standard day in a three-bedroom home, powering essentials like lights, TV and appliances. However, high energy appliances like electric heating systems, electric vehicle chargers and even driers can quickly drain the battery.
The battery&#;s performance also varies seasonally. In summer, a 3-bedroom house with an average solar panel system and good sized battery can often meet its energy needs throughout the day, with the battery charging from the panels and providing power during peak evening hours. However, in winter, the battery may only power the home for a few hours overnight due to reduced solar generation and higher energy consumption.
Whilst a battery can significantly reduce your reliance on the grid, it may not be able to completely cover your energy needs all year-round.
When considering the long-term savings potential of a battery storage system, you need to take into account the battery&#;s lifespan. Most modern lithium-ion batteries have a lifespan of 10-15 years. To calculate the long-term savings, you need to consider the cumulative savings over the battery&#;s lifetime and compare them to the initial investment cost.
In our own example, the upfront cost of the battery storage system was £6,000. However, with the annual savings calculated, the payback time was just 6 years.
Generally speaking, payback times are a little longer, ranging between 8-12 years. The exact time depends on:
For example, a typical UK household with a 3.5kW solar panel system and a 6kWh battery could save around £336 per year compared to having only solar panels. With a battery cost of £4,000, the simple payback period would be approximately 12 years.
Over a battery&#;s 10-15 year lifespan, cumulative savings can hit several thousands of pounds, ranging from £3,000 to around £10,000. These long-term savings often make battery storage systems an attractive investment for homeowners looking to reduce their energy costs and increase their energy independence.
With battery prices continuing to fall and grid electricity costs expected to go up, the savings you can make is expected to increase.
All solar batteries have the same basic function, but each type is suited for different applications. Your solar battery will offer higher reliability and return on investment when its chemistry is suitable for the application at hand.
For example, some electricity consumers are subject to higher kWh prices at certain times of the day, or additional charges for sudden peaks in consumption. In this case, you need a battery bank capable of delivering large amounts of electricity in a short time. Lithium-ion batteries are suitable for this task, but not redox flow batteries.
Regardless of the battery type, you also need to consider the depth of discharge (DoD), which indicates a battery&#;s usable capacity. The service life of a battery can be drastically shortened if you exceed the DoD, or you can even cause permanent damage. For example, using 70% of the stored energy is acceptable with a solar battery rated for 80% DoD, but not a 50% DoD battery.
Lead-acid batteries are an established technology, commonly used by off-grid solar energy systems in remote locations. Lead-acid batteries are affordable and have a well-established supply chain due to their popularity, so you can easily find vendors and technical support.
In spite of their low cost, lead-acid batteries have some technical limitations you should consider:
An absorbed glass mat or AGM battery is an improved version of the traditional lead-acid battery. They can charge faster while having a spill-proof design and more durability. You can also find AGM deep cycle batteries that are designed for 80% DoD.
Using lead-acid batteries along with solar panels requires charge controllers to sustain a suitable charging current. These batteries should not be wired directly to your solar array, or your system may be damaged by excessive current.
Lithium-ion batteries have become very popular in recent years since they can achieve synergy with solar panels and wind turbines. For example, the Tesla Powerwall and Enphase IQ are two types of lithium-ion batteries commonly used in home solar applications. You can also find smaller lithium batteries from brands like Renogy and WindyNation, which are portable and better suited for DIY solar projects.
Lithium iron phosphate or LFP batteries are a subtype of lithium batteries, characterized by a superior service life. The best LFP batteries offer a service life of over 4,000 cycles at 80% DoD, which means they can last for over 10 years on a daily charging cycle. This makes LFP batteries the ideal complement to solar installations. Unlike lead-acid batteries, which need separate charge controllers, many of the lithium battery models that are commercially available come with built-in chargers and controls.
The main drawback of lithium-ion batteries is the high price, but this could change in the near future &#; the U.S. Department of Energy is targeting a 90% energy storage cost reduction by . Lithium batteries can also suffer a phenomenon called thermal runaway when used at high temperatures, which causes them to catch fire. You can prevent thermal runaway by making sure your batteries are high-quality and installed by qualified electricians.
Nickel-cadmium batteries are characterized by their durability, tolerance to high temperatures and simple maintenance needs. Thanks to these performance features, nickel-cadmium batteries are popular in industrial and utility applications. Unfortunately, cadmium is highly toxic to humans, so nickel-cadmium batteries are not recommended in homes.
Flow batteries store energy by separating positive and negative electrical charges in chemical solutions, which are stored in separate tanks. When these two solutions interact, they undergo a reduction-oxidation reaction (redox) and the battery releases energy. This battery technology is also referred to as &#;redox flow&#; for this reason.
The main disadvantage of redox flow batteries is their space requirement, and they are not cost-effective for small-scale projects. Even a small redox flow battery system can be the size of a shipping container, so using flow batteries in home solar systems is not viable.
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