How Does Adding Batteries Work?
Let’s say a household uses 12,000 kilowatt-hours (kWh) of electricity each year and pays an average of $300 monthly.
The Solar System
They install a 7.2 kilowatt (kW) solar system that will produce 12,200 kWh in the first year. The cost is $26,640, but they get a 30% federal tax credit, so the net price is $18,648.
The solar panels have a 25-year warranty. If they yield 12,200 kWh in the first year and degrade at an average of .05% per year, they will produce an estimated 287,383 kWh over 25 years.
If we divide the net system cost of $18,648 by 287,383 kWh, we get an average of 6.5 cents per kWh for the solar power over the 25-year warranty period.
Added Battery Storage
The system also includes 20 kWh of battery storage for $28,000, minus the federal tax credit, for a net cost of $19,600. So the total cost of the solar + batteries system will be $38,248.
The batteries have a 10-year warranty. So if all 20 kWh of storage is used daily for ten years, the anticipated battery storage will total 73,000 kWh. Take the net cost of the batteries, $19,600, and divide it by 73,000 kWh, and you get an average of 26.8 cents per kWh.
In 10 Years
In ten years, the solar system will have produced about 119,291 kWh at 6.5 cents per kWh for $7,741. The batteries will have stored and reused 73,000 kWh at 26.8 cents per kWh for $19,600. The amount paid between the solar and batteries is $27,341. Divide that by 119,291 kWh and the average of 23 cents per kWh for solar plus battery storage over the ten years. The estimated payback period on a cash purchase of this solar plus battery system is just over nine years.
Compared to PG&E
Compare 23 cents per kWh to the 30 cents per kWh average cost paid to PG&E today. If PG&E rates only go up 4% per year, you will average about 43 cents per kWh in 10 years. Without solar, you will have paid PG&E $43,222 with nothing to show for it. Suddenly $27,341 or 23 cents per kWh looks alright!
Peace of Mind
So, in addition to less expensive clean power generated by solar and batteries, you’ll also get the peace of mind of knowing that you’ll still have power during a blackout.
Cost after 30% Federal tax credit = $18,648
Produces 12,200 kWh year one
Produce 12,200 kWh year one,degrade at .05% per year
Estimated production over 25 years = 287,383 kWh
Cost after 30% Federal tax credit = $19,600
Net cost solar + battery system = $38,248
Battery storage over ten years = 73,000 kWh
Net cost of batteries $19,600 ÷ 73,000 kWh
= 26.8 cents per kWh (average)
Ten year system production/costs:
119,291 kWh @ 6.5 cents per kWh = $7,741
73,000 kWh @ 26.8 cents per kWh = $19,600
Amount paid for system:
$27,341 ÷ 119,291 kWh= 23 cents per kWh (average)
just over 9 years