Deep-dive guide
Solar Battery Storage ROI: Does Shifting Energy to the Evening Really Pay Back?
Executive industry analysis
A home battery is often sold as energy independence, but financially it does one narrow thing: it moves energy from a cheap moment to an expensive one. Its entire income is the gap between the price you avoid paying in the evening and the value of the energy you put in. If that gap is small, no amount of capacity will rescue it. If the gap is wide, the battery can pay for itself, but only while it keeps working through enough cycles at enough remaining capacity.
The problem has the same shape as any expensive asset with a slow decline. The price is paid on day one, the savings arrive in small daily amounts, and every year the battery can shift a little less. Round-trip losses take some energy each cycle, and the evening load of the household caps how much stored energy can ever be used. Oversizing is the classic error, because extra kilowatt-hours cost real money and displace nothing.
The domino model follows the money. A wider tariff spread raises the value of each delivered kilowatt-hour. More cycles at healthy capacity raise the energy shifted over a year. That turns into a monthly bill saving, which sets the payback time, and finally the net return after the cost of the battery is spread over its life. A small fall in spread or cycles early in the chain can push the last box below zero.
The iceberg shows what the sales sheet leaves out. Above the waterline sit the battery cost and its repair reserve. Below it sit the saving lost to capacity fade, the energy burned in round-trip losses and the fixed installation work that does not shrink with a smaller battery. Use the simulator to find the tariff spread where your battery breaks even, then decide whether to resize it, schedule it better or wait for a lower price.
Formula and methodology blueprint
The model returns an average month over a fifteen-year battery life. Usable energy per cycle is capacity times a depth of discharge of 90%, capped by a twelve kWh daily evening load, and reduced by a 90% round-trip efficiency. Energy delivered each year falls with degradation, so the model averages the health of the battery over its life. Cost is the battery price plus a fixed installation amount, spread over the life, plus a yearly repair reserve of 1% of the battery price.
- Delivered energy per cycle
- E = min(kWh × 0.9, 12) × 0.9
- Usable energy that actually reaches your home, after depth of discharge, the evening load cap and round-trip loss.
- Spread per delivered kWh
- S = peak price − charge price ÷ 0.9
- Value of one kWh shifted, after paying for the energy lost on the way in and out.
- Average yearly energy
- Y = E × cycles × mean((1 − d)^t)
- Energy shifted in a typical year, averaging capacity fade over fifteen years.
- Monthly saving
- Saving = Y × S ÷ 12
- Bill reduction per month on average over the battery life.
- Net return
- Net = saving − cost ÷ 180 − reserve
- What is left each month after the battery cost and the repair reserve. The breaking spread is where this reaches zero.
Cascading elasticity
The tariff spread is the most elastic input because it multiplies every shifted kilowatt-hour: a few cents of spread move the monthly saving by a large share. Cycles and degradation act on the volume side and are nearly linear. Capacity behaves in two stages, adding savings while the battery is smaller than the evening load and only adding cost beyond it, which is why oversizing hurts.
Three real-world case studies
Bootstrapped starter
A small battery on a modest tariff
A household adds a five kWh battery at a fair price to cover the evening peak. The spread is decent, the cycles are regular and the cost is small, so the return is positive but thin. Load it to see how little room a small system has when the spread narrows.
Scaling mid-market
A larger battery on a wide spread
A family with high evening use chooses a fourteen kWh battery on a tariff with a wide peak gap and cheap charging. Almost every kilowatt-hour is used, so savings grow with size. Load it to see where extra capacity still pays.
Black-swan crisis
An oversized battery on a flat tariff
An owner buys twenty kWh at a high price per kWh, but the tariff is flat, charging energy is not cheap, cycles are few and the cells fade quickly. Load it to see how a battery can lose money every month even when it works.
Industry benchmark matrix
| Metric | Danger zone | Industry average | Top 10% elite |
|---|---|---|---|
| Tariff spread per delivered kWh | Below 0.10 | 0.15–0.25 | Above 0.30 |
| Useful cycles per year | Below 150 | 250–320 | Above 340 |
| Capacity loss per year | Above 3.5% | 1.5–2.5% | Below 1.2% |
| Payback time | Above 15 years | 9–12 years | Below 7 years |
| Battery size vs evening use | Above 2× the evening load | About 1× | 0.7–1× the evening load |
Variables and levers
Battery capacity
Nameplate storage size. Only about 90% is usable, and savings are capped by how much evening energy your home really uses.
Lever: Size the battery to the evening energy you actually use, because capacity beyond that earns nothing and still has to be paid for.
Installed cost per kWh
Battery price per kWh of capacity, before the fixed installation work that is added on top.
Lever: Collect several installer quotes and compare the price per kWh including the inverter, since the headline battery price often leaves parts out.
Peak or evening tariff
What you pay per kWh when the battery would discharge, usually evening or peak hours.
Lever: Move to a tariff with a wide peak and off-peak gap, because the spread is the entire revenue of a battery.
Value of charging energy
What each stored kWh costs you: the off-peak price, or the export price you give up when charging from solar.
Lever: Charge from surplus solar or the cheapest night window, and avoid charging at mid-price hours that shrink the spread.
Full cycles per year
How many days a year the battery is charged and discharged in a useful way. Fewer sunny or tariff-driven days means fewer cycles.
Lever: Use a smart schedule so the battery works most days, because unused days produce no saving but the cost keeps running.
Capacity loss per year
Share of capacity the battery loses each year. A faster fade shrinks the energy it can shift in later years.
Lever: Check the warranty for guaranteed capacity after ten years and avoid constant full discharges and high temperatures.
How to use this simulator
- 1Enter the battery size and the installed cost per kWh from a real quote.
- 2Set your evening and charging prices from your tariff or your export rate.
- 3Adjust cycles and degradation to match your sunshine and the warranty.
- 4Press Find my breaking point to see which price or spread makes the battery lose money.
- 5Compare with the right-sized plan in the Parallel universe tab and share the link.
Mistakes to avoid
- Buying capacity for backup but judging it as savings. Only energy you use in the evening earns money, so extra size is cost.
- Ignoring that charging energy has a price. Solar that you could have exported is not free to the battery.
- Assuming a full cycle every day. Cloudy weeks, holidays and flat tariff days all reduce the real count.
- Using the first-year figure for the whole life. Capacity fades, and the average year is worse than the first.
Frequently asked questions
Is a home battery worth it?
It depends mainly on your tariff spread and cycle count. With a narrow spread it rarely pays back within its life, while a wide spread and regular cycling can make it worthwhile.
Why does the model cap savings at the evening load?
Stored energy only earns money when you use it. A battery larger than your evening demand ends the day with unused charge, so extra capacity adds cost but no saving.
What about backup power during outages?
Backup has real value but is not priced here. Add your own estimate, and treat any figure with caution, because outages differ widely by place.
Does the model include incentives or subsidies?
No. Incentives change often, so reduce the cost per kWh by your expected support and check current rules locally.
How do I find the breaking spread?
Press Find my breaking point. The tool pushes each input towards its worse end in a thousand steps and reports where the monthly return reaches zero.
How accurate is this?
It is an educational model with stated assumptions, not financial advice. Use installer quotes and your own tariff for real decisions.
This is an educational planning model with stated assumptions. It is not financial, tax or legal advice. Replace the inputs with your own figures and verify important decisions with a qualified professional.