Why a home battery is a good idea to buy this year if you have rooftop solar

In recent years, Australia has witnessed a remarkable surge in rooftop solar installations, with over a third of Australian roofs now sporting a solar array. That’s around 3.7 million rooftop solar systems.

Currently though, only a fraction of these solar systems, about 180,000, are equipped with batteries. As a result, an increasing amount of solar energy produced on rooftops is now exported back into the grid, for which solar owners have been paid a feed-in tariff.

But this is now causing problems for electricity networks – too much power is going into the grid when the solar is pumping during the day, and not in the evening when many of us are at home and need to plug in or turn on our electric appliances.

Electricity networks are responding to this by trying to get solar owners to ‘load shift’. They’ve been decreasing the feed-in tariffs rooftop solar owners are paid for their unused solar that feeds into the grid.

“Three years ago we were looking at 20 to 21 cents a kilowatt hour to export solar,” independent sustainable energy advisor, Norman Koslowski, told the SwitchedOn podcast. “We're now looking at 5 to 7 cents, so there's been a drop in the reward for exporting to the grid.”

At the same time energy prices have spiked by up to 20% over the last year.

Koslowski says that next year electricity providers in NSW and the ACT will be “ratcheting up the pain point for solar households.” That’s about 1.25 million solar homes.

Koslowski says network operators plan to introduce a two-way charging model. Rather than being paid a small amount for exporting excess to the grid during the day, as solar owners are now, “they're going to start charging solar households to export to the grid during the day [between 10 am and 3 pm], and at the same time, they're moving the feed-in credits that you can get to 3pm to 8pm.”

Koslowski says this will incentivise householders with solar to put on a battery so they can charge up during the day when the sun is shining, and they’re not paid for exporting to the grid, and export from their battery in the evening, when they will.

“People are putting bigger solar systems on because they're planning for an electric car, they're planning to get off gas, and they were planning to get feed-in credits by exporting [excess solar],” says Koslowski.

“So anyone now putting these big systems on without a battery is effectively losing half of the value of their system and being charged for it.”

The rise in the cost of electricity and falling feed-in tariffs has already seen an increase in battery installations. In 2023 there was a massive spike in battery uptake with around 50,000 batteries installed.

“If you look over the past 10 years that was about 28% of all batteries installed,” says Koslowski. “And that was because of the 20% spike in power rates. So already that stimulus has sparked a tripling or quadrupling of the amount of batteries being installed.”

Koslowski believes that whatever pressures already exist to install a battery will only increase, which means, we have to massively increase the supply of batteries.

“The question mark is, is there the battery supply and is there the install base to handle that kind of load?”

Koslowski says the 20 gigawatts of solar power already on people's roofs, which the grid isn’t fully accessing, is “equivalent to the two largest solar farms in the country, or twice the size of the largest solar farm in the country.”

“What we've got is a solar market where solar companies are disincentivized to talk about batteries, because it's really going to scare off their customer base by doubling the system cost.”

“The mantra from the solar industry has been, ‘don't get a battery now, they're too expensive, wait for the price to drop.’”

At the same time, Koslowski says that in 2021-2022 there was a massive spike in the cost of batteries because of the shortage of lithium in the market.

“So while they were telling people not to buy batteries, battery prices were increasing.”

But Koslowski says that the price of a battery has recently dropped by a couple of thousand dollars as a result of lithium prices dropping.

“My response to customers is, this is the perfect window. If you jump in now, you'll get a battery straightaway… if you wait till the bulk of people are stimulated by pain and carrots to install a battery, we're going to see multi-waitlists to install a battery.”

Koslowksi has been advising his own clients to install batteries for several years and estimates they’ve been looking at $1500 to $2,000 credits per year as a result of releasing their unused battery power during the peak evening period, and on the occasions when the spot market for power jumps up to $15.50 a kilowatt hour.

“You've got to stop looking at solar now as a way to reduce the power bill and change the paradigm and start looking at yourself as a solar manufacturer,” says Koslowski.

“This is the opportunity to see solar households as partners, not as a revenue cash cow [for networks].”

For consumers a battery also provides greater resilience. Koslowski predicts that with increasing extreme weather events – fire, flood, and strong winds, that will result in more power outages  – the grid will become more unstable.

“If you have a solar system only, and the power grid goes down, your solar system goes down with it, because it's connected to the grid,” says Koslowski. “When you put a battery in [on a dedicated backup circuit], what you're able to do is switch to a pure off grid mode, and you get power.”

You can hear the full interview with Norman Koslowski on the SwitchedOn Australia podcast here and you can read about the latest drop in solar feed-in tariffs here on One Step off the Grid.