Storage Batteries in the Home

What are the benefits? What are the disadvantages? Udny Climate Action’s Steve Baguley reflects on the data he has collected on his home batteries and its wider implications.

In February 2021 we shelled out £16,000 on two Tesla Powerwall batteries. That’s a lot of money – has it been worth it? It’s a simple question to ask but it’s not easy to give a simple answer; hopefully this article will help you work out if a house battery is right for your home or small business.

What is a house battery?
It’s a battery which can entirely, or at least to a significant extent, power your house. They take in electricity from the grid or from local generation, such as photovoltaic (PV) cells or a wind turbine. They’re typically quite large heavy things, about the volume of a washing machine, and can sit in your house, garage, or outside.
A range of models are available which use a variety of battery chemistries and offer different customisation and control options. And there is the emerging trend of powering your house from the battery in your car. This article can’t go into the pros and cons of all the various permutations but will cover a few common principles.
I don’t have all the answers but I can hopefully help you ask better questions.

What are the arguments for getting a house battery?

1. It could significantly reduce the amount you spend on electricity; enabling you to use cheap off-peak electricity at “peak” times, or letting you use your PV-generated electricity at night.
2. It could lower the carbon intensity of the electricity you use, ie the amount of CO₂ released to generate each kWh of electricity. For grid electricity this constantly varies through the day but is typically lowest in the wee small hours and in the early afternoon. With a house battery you could store this low carbon intensity electricity and then use it at typically more carbon intensive times – such as early evening.
3. Depending on the model of battery, your house can keep using electricity even during a power cut – a 21^st century outpost in a community temporarily shoved back to the 1800s. This requires the battery installation to include technology that can “island” the house from the grid.
4. Local storage can help “smooth” electricity flows on the grid – reducing the risk of turbines being turned off on windy nights due to surplus capacity and reducing the intensity of surges when a million people simultaneously turn on their kettles. If enough people can time-shift their load then this could avoid the need to start up coal-fired power stations at these times of high demand. This winter is the first time that grid-smoothing payments have been made to households able to shift, or reduce, their usage.

What are the arguments against getting a house battery?

1. They cost lot of money. The price varies depending on their sophistication and capacity but even a fairly basic one could set you back £5000. A Home Energy Scotland interest free loan can cover £6000 of the cost of a battery system but many can cost a lot more than this. So you have to be reasonably sure that any benefits – financial or otherwise, make this investment worthwhile. What is the opportunity cost of spending money on a battery? Could that money be spent on something better, eg something that would reduce your energy demand such as more insulation?
2. Batteries contain a lot of “stuff” that have been mined and made a long way from Aberdeenshire – lithium, other metals and microelectronics, and therefore there is a lot of embodied energy/carbon in their production and transportation. Although batteries are recyclable, you still need to be fairly sure that the carbon intensity of the electricity you use will be significantly lowered through the use of the battery, otherwise you’re just increasing consumption of stuff and potentially exacerbating the climate emergency.
3. Part of the “business case” for getting one hinges on uncertain factors such as future electricity prices and the continued availability of time-of-use, ie off-peak, tariffs. The higher the price of grid electricity the better value a battery becomes, but tariffs are hard to predict more than a year ahead and a lot could change in the approximately 10 year lifespan of your expensive asset.
4. Whenever you charge/discharge a battery there is a conversion loss. For every 10kWh you put in you may only get 9kWh, or less, out. The amount of loss depends to an extent on the rate of charge/discharge. However, the “loss” is mainly heat so if the battery is in your house and it’s a cold day, then, in practice there hasn’t actually been a loss as the battery has produced usable heat. However, if your battery is outside, then this factor needs to be taken into account.
   It’s worth noting here that there are also losses when home-generated electricity is exported to the grid. And there are transmission losses when electricity is brought to your house from a distant power station. These transmission losses are proportionately less than the charge-discharge losses when working with a battery but the heating of the air around those distribution lines is of less use than if that heat was coming from an object in your house.
   Another factor to consider is the balance between export payments and import costs. Once you factor in losses, in some circumstances it might make more financial sense to export your PV/wind-generated electricity directly to the grid when you’re producing excess and just reimport it when you need it.
   The significance of losses can be hard to work out and requires an assessment of individual circumstances.

That all sounds a bit complicated. So, when does it make sense to get a house battery?
Based on the pros and cons noted above, a battery can start to make sense in a home which both:

1. Uses a lot of electricity, and therefore could get greater benefits from reducing costs. This could be a house that has switched from oil/gas central heating to a heat pump.

And

2. For at least some of the year generates significantly more electricity than it can use at the time it’s being produced.
   The Home Energy Scotland loans are only available for properties which have on-site electricity generation. However, a small PV installation – eg less than 4kW peak production, is unlikely to produce enough of an excess in a high consumption house (see 1) to make battery storage cost-effective. In this scenario it probably makes more sense to direct excess PV electricity to an immersion heater – effectively creating a Heat Battery.

The electricity export arrangement can also be a significant factor. For people on the old Feed-in Tariff scheme, remuneration isn’t affected by whether a unit is exported or stored, and a battery can make sense. For those on the Smart Export Guarantee scheme or similar arrangements then the calculation about whether to store or export those units makes for a more complicated calculation.

And

3. Has a Smart Meter and use a Time of Use tariff, where there are predictable cheap rate periods. If you can’t charge your battery with cheap-rate electricity then you’re reliant on charging it with excess home-generated electricity, which for most people with PV means that they won’t be using their battery much in the winter.

A day in the life of a house battery
There is no such thing as a typical day – the amount of electricity generated by the PV panels and used by the house varies significantly through the seasons. However, if we take a spring day as an example it gives an idea of what tends to happen through the daily cycle.

At midnight the battery is flat and the house is running on standard rate grid electricity.
Cheap rate on Octopus Go is from 00:30 to 04:30 and during this time the battery automatically charges itself to about 90% capacity. From 04:30 to sunrise the house is running on electricity stored in the battery. As the sun rises, the PV panels start to make some electricity – partially meeting the house demand. By 11am the battery level is down to 40% but the panels are now producing more than the house is using. This excess electricity now goes into the battery; this continues until 3pm when the lowering sun is now no longer able to meet the full needs of the house, and the battery starts to pick up some of the slack. At this point the battery is 75% charged.
By 6pm the sun has set and the battery alone is powering the house. Charge level is 40%. By 10.30pm the battery is fully drained and the house is now pulling electricity from the grid. Midnight arrives and the cycle starts again.

On a typical day in June, lots of PV electricity is being generated and demand is low. So there’s more than enough electricity stored in the battery to make it through the night. On a day like this, no electricity is drawn from the grid at all.
On an overcast day in January, little PV electricity is being generated and demand is high. On a day like this, the cheap rate electricity stored at night could run out by lunchtime.

The key question – does it make financial sense to have a battery? What’s the payback time?

The challenge here is that it’s very hard to disentangle the energy flows between the PV, grid, house, cars and battery. In addition, determining the contribution of a time-of-use tariff alone is difficult.
And of course every home is different in terms of its electricity production and consumption, and multiple other factors.

Our house’s electricity generation and usage is unusually large. We have a ground-source heat pump and two plug-in hybrid electric cars. Our PV panels have a peak production of 9.2kW

With those caveats in mind, here’s a comparison of the costs based on data from our house from August 2021 to July 2022. This is modelled using two time-of-use tariffs; based on Octopus Go. One tariff is based on typical prices from 2019 and the other uses prices that seem likely for 2023. (There is a lot of uncertainty about prices in late 2023).

“2019” tariff – 15p/unit for standard rate and 5p/unit for off-peak.

“2023” tariff – 50p/unit for standard rate and 7.5p/unit for off-peak

I’ve also factored in a 10% loss for electricity flowing through the battery.

	Electricity from grid kWh	“2019”Cost	“2023” cost
With battery and PV	15575	£1,152	£2,820
No battery or PV	20939 (estimate)	£3,141	£10,470
Saving with battery + PV		£1,989	£7,650

*Cars drew ~4500kWh from a mix of sources – PV, grid and battery

It’s clear from this brief and sketchy analysis that the cost of grid electricity is, unsurprisingly, a very significant factor when it comes to working out whether a battery + PV makes financial sense.
At 2019 electricity prices the battery payback time would be about eight years – only a very rough estimate as the impact of PV alone is hard to disentangle; this is roughly what we’d estimated before going shopping for one in late 2020. However, based on 2023 electricity prices the payback time would be less than three years.

Conclusions

Whether a house battery makes financial sense to invest in depends on a lot of factors. For homes that use a lot of electricity, and which generate some, it may be worth considering getting one, especially as energy costs are likely to remain exceptionally high for the next few years. This is particularly the case if you don’t get any particular benefits from exporting electricity to the grid.

Batteries are however very expensive and there’s a cost of living crisis. For the diminishing number of people who have any spare money to spend, it may make more sense to invest in other areas, such as insulation; which, in our house, we had already maxed out on a few years ago.
Whether batteries make sense from a CO₂ emissions perspective is even harder to determine. As offshore wind generation capacity increases, the carbon intensity of night-time generated electricity pulled into your battery will probably reduce further. And the possibility of carbon-sensitive tariffs could see the price fluctuating through the day as the emissions intensity changes. The ability to time-shift grid usage in such a scenario would be very useful. This winter’s experiments with load-shifting incentives is perhaps a glimpse of how things might be in the late 2020s.