Guess what! You can now read another tax-payer funded document that does more harm than good.
The NSW Government has published the NSW Home Solar Battery Guide 2020. It’s supposed to help the people of NSW and Australia decide if getting batteries is right for them.
I have read the report and have concluded that it is insane.
By insane, I mean it appears to support two mutually contradictory ideas:
- Home batteries can pay for themselves if they are bought at the same time as solar power.
- Home batteries are the last thing households should consider.
I can only guess it was written by committee. A committee who decided not to work out which advice was correct for NewSouthWelshpeople. It seems they, instead, decided to simply lump the two mutually contradictory views into the one report.
If you don’t like me describing it as insane — if you think that’s an insult to insane people — then I’ll say it is totally Star Wars. There is a light side to the advice and a dark side to the advice.
On the side of giving bad advice to people:
- The NSW Minister for Energy and the Environment states, “While batteries may not be suitable for everyone, people with rooftop solar should consider whether storage works for them.” This is despite the fact that, at the moment, it’s completely unrealistic to expect a home solar battery to pay for itself in NSW.
- The report claims a payback time under 10 years for solar and batteries when bought together. But the report fails to disclose how they use solar’s excellent payback time to hide the truth of the matter: that home batteries in NSW are unlikely to ever pay for themselves at their current installed costs.
- It has a number of amusing little blunders such as failing to define power correctly.
On the good side it…
- Contains a lot of information that isn’t wrong or misleading.
- Gives advice on a range of alternatives that make a lot more sense than getting a solar battery.
- Wasn’t printed on paper, so no trees died for a report that needs to be rewritten.
I’ll start off by describing the bad advice in the report before moving onto the good. The section on bad advice will be a lot longer because it’s a comedy gold mine, but this doesn’t mean there isn’t a lot of good advice in the guide. The problem is, when people are relying on the guide to help them make big financial decisions, it doesn’t take much bad stuff to make the whole thing worse than useless.1
The report begins with a foreword from the NSW Minister for Energy and Environment, the Honorable Matt Kean, who seems awfully keen on home batteries for some reason. He wrote…
“While batteries may not be suitable for everyone, people with rooftop solar should consider whether storage works for them.”
That’s a shitty thing for the Minister to say. This is because it’s his job to serve the people of NSW, not to help them get served by being sold a solar battery system that only ends up costing them money. As home batteries right now will cause the typical family in NSW to lose money, he should use his taxpayer-funded position to be clear about this fact. Let me fix his statement for him…
“Currently batteries will lose normal households money. People interested in buying batteries to save money should not consider storage unless their situation is exceptional.”
There, that’s a better use of state resources! After all, he’s a Minister, not a battery salesman. I don’t expect Ministers to understand stuff like solar battery payback, but I do expect them to make an effort to protect the people they serve from making financial blunders. It’s not as if NSW is suffering from some sort of critical lack of battery optimism he has to make up for.
A Poor Start
The third and fourth sentences of the guide state:
“Home solar battery systems can store solar energy generated during the day and make it available when the sun isn’t shining—potentially saving the household money. They deliver a clean, secure and reliable energy supply.”
We’re just on the second paragraph of the first page and we’ve already run into problems. These are:
- The suggestion that normal households saving money by getting a battery is a realistic possibility.
- Saying energy from solar batteries is clean when — at the moment — their use generally results in increased pollution and greenhouse gas emissions.
Not A Money Saver In NSW
Unlike South Australia, NSW doesn’t have a big battery subsidy of up to $4,000. What they do have are interest-free loans for batteries provided you live in the right postcode. This is not nearly as good as thousands of dollars off the cost of a solar battery like in SA. On top of that, electricity prices are lower in NSW. So while a subsidised battery may pay for itself in the Festival State, it’s not a realistic possibility for any NSW home that is remotely close to normal. This is true even for the cheapest batteries I’ve seen advertised and buying the cheapest solar batteries on the market may not be a great idea.2
Joining a Virtual Power Plant (VPP) should improve the return from batteries, but they haven’t proved themselves yet and joining one isn’t without problems. It involves giving up some control over your battery and VPPs have a financial incentive to make as much money from a home solar battery as possible while paying you as little as they can. Current VPPs are likely to deliver lower profits this year – due to lower wholesale electricity prices – thanks to COVID. We will have to wait and see how much benefit VPPs can provide in the future.
Use Our Solar & Battery Calculator
If you don’t believe me that batteries can’t pay for themselves yet in NSW, go to the SolarQuotes Solar & Battery Calculator and see what it gives as the simple payback time for batteries for a typical household and a household with 3 times the typical electricity consumption, on a flat-rate tariff. While it varies depending on the solar battery system chosen, it’s often over 30 years.
As the maximum warranty length for lithium batteries is normally 10 years and they degrade with both use and time, it is not at all realistic to expect one to last 20+ years. If you don’t like the default prices our calculator uses, you can enter your own, letting you use any advertised installed price you think is fair dinkum.
Note from Finn: What about Time of Use Tariffs?
The SolarQuotes calculator makes its calculations based on a flat tariff3. A common argument for money-saving batteries in NSW goes along the lines of:
“The peak rate on the nastiest time of use tariff is 52c per kWh with a feed-in tariff of 7c. So if I drain my 13.5 kWh battery in the peak period, I’ll save 52c – 7c = 45c per kWh = $6 per day = $2,190 per year = 7 year payback on a $16,000 battery!”
A few issues here:
- If you settle for a 7c FiT in NSW you are a sucker as 11c or more is easily available.
- If you want a ToU tariff and you choose one with a 52c peak tariff you are a sucker as other retailers offer a 43c peak rate.
- The peak rate is not available in Spring or Autumn, that’s half the year.
- In summer the peak rate is from 2pm – 8pm. Sunset is about 8pm in Sydney in January
- Why are you choosing the most expensive tariff possible to compare with? – battery savings should be compared with the cheapest electricity plan for solar owners. For most solar owners this is a flat-rate tariff.
So no: cherry-picking expensive time of use tariffs for your calculations does not make your solar battery magically pay for itself.
The Guide Should Be Honest With The NSW Public
By not making it clear that there is no real hope of home batteries paying for themselves at this time, the guide has done the people of NSW a disservice.
Not Very Green
As this article explains, energy is wasted every time a battery is charged or discharged. Storing solar energy in one during the day and using it at night increases emissions compared to sending that solar electricity directly into the grid during the day. I wrote that article four years ago and said the environmental benefit of solar batteries would improve in the future. Since it’s the future now, or at least it will be soon, I can say the environmental credibility of batteries is getting better, as a larger portion of our electricity is coming from solar and wind and joining a Virtual Power Plant can greatly increase the ability of home batteries to support the integration of renewables into the grid. This integration includes helping avoid further restrictions on the ability of rooftop solar panels to export energy to the grid, so batteries can be a big help to solar power.
But, generally speaking, home solar batteries are still likely to be environmentally worse than greener options such as more solar panels, home insulation, a heat pump hot water system, or replacing your V8 interceptor with an electric car or — better yet — a bicycle.
It’s Full Of Blunders
If you want to make an engineer cry all you have to do is show them the following passage on measuring energy from the guide:
Nooooooooooooo! Power doesn’t measure energy! Power measures power! I may as well go to the Apple shop right now and buy a new laptop, because when Finn reads this his laptop won’t just short out from his tears, it will probably get washed out to sea.
It’s like saying there are two units to measure distance: distance (km) and speed (kph). It is nonsensical.
But I should probably relax because this could just be a typo. I’m going to keep telling myself it was probably just a typo until the pain starts to go away.
Unfortunately, my mental equilibrium isn’t helped by them immediately giving a poor example of appliance energy consumption :
It’s not that they’ve written anything wrong. If something uses 1.5 kW for 13 hours it does indeed use 19.5 kWh of energy. But it’s a lousy example. An air conditioner changes its power draw all the time as it regulates the indoor temperature. It is very unlikely to draw a constant amount of power for 13 hours. Not unless it’s operating flat out through a heatwave. But I’m probably overreacting here. I should be glad they didn’t get power and energy confused.
But here’s something that really steams my clams. At the bottom of the same page they have this graphic:
Five kilowatts of solar panels exposed to the sun for 4 hours is not going to produce 20 kilowatt-hours of electrical energy.
Not on this planet. Sure, maybe they could produce 5 kilowatts of power at noon, but you may have noticed noon doesn’t normally last 4 hours.4
Maybe what they meant was the equivalent of four hours of sunshine under Standard Test Conditions (STC). But that’s not the sort of conclusion you should expect a casual reader to leap to. Then they say “If the solar energy was stored in a battery” it could power a 1.5 kilowatt appliance for 13.3 hours. This is not correct because energy is always lost when charging and discharging batteries. If the round trip efficiency was 90% — which is high for a home battery system — then it could supply 1.5 kilowatts for 12 hours.
A 10% difference may not seem like much, but when you have a 71-page guide that’s enough bloody space to include a clear description of battery losses, rather than a single vague bullet point mentioning “efficiency losses between solar, the battery and your appliances” two dozen pages further in.
Biggest Blunder = Blended Payback
By far the biggest blunder, and the one that makes this guide royally bin-worthy, is where they mislead the people of NSW into thinking a battery can pay for itself within 10 years by blending the good payback time of solar panels with the bad payback time of a home battery:
This is an idiotic mistake with plenty of potential to cause financial hardship for families. It is also against the long term interests of the solar battery industry.5 Even worse, this mistake was completely unnecessary, as there was at least one person involved in writing the guide who grasped the problem of blended payback – on page 41 the guide says people should try to understand…
“…what part of the savings are due to the battery itself and what parts are due to installing solar panels.”
But this advice is completely ignored in the section on battery payback.
There is a small particle of truth in what the guide says about the payback of getting solar and batteries at the same time, so I’ll get that out of the way before dealing with a huge dollop of stupidity.
A Battery Can Be Cheaper When Bought With Solar
The cost of getting solar panels and a battery at the same time as an integrated system can be cheaper than getting a solar system and then adding a separate battery system. But this difference is nowhere near enough to allow a battery system to have a payback time of under 10 years. If you use our Solar & Battery Calculator and look at the payback time for just the battery, you’ll see there aren’t any that have a simple payback period of under 20 years for a typical household. This is more than twice the maximum 10-year warranty of lithium battery systems and, because solar batteries wear out with use, there is no chance of them lasting that long, unless perhaps they are hardly being used, but that means it’s not going to pay for itself anyway.
To sum up: Yes, batteries can be cheaper when bought with solar power. No, the difference is nowhere near enough to make them pay for themselves.
Blending Payback Doesn’t Magically Make Batteries Pay
If you buy a chicken that lays 20 eggs a month and at the same time buy another chicken that lays zero eggs, just because you bought them at the same time doesn’t mean you have two chickens that lay 10 eggs a month each. It means you have one hen that’s a good layer and one that’s only good for the pot.
It’s the same with batteries and solar. If you buy a battery system that loses money, it is going to lose you money no matter if you buy it with solar power or without. Getting both at the same time doesn’t magically make the solar battery pay. It just means you have one thing that saves you money and another thing that doesn’t.
Obviously, if your main motivation is to save money and you have the opportunity to buy something that doesn’t save you money, you shouldn’t. When the guide gets rewritten to correct its mistakes, it should make this 100% clear for the good of society6.
What The Guide Gets Right
The guide isn’t all bad. There’s a lot of good advice in there. The trouble is, the people it’s aimed at aren’t going to know what is good advice and what stinks worse than an Appalachian skunk kicking contest, which makes the whole thing useless.
This is a pity because they’ve screwed up a good opportunity to help people. There’s a whole list of things they recommend doing before people even think about getting a solar battery:
- Make sure you have the best retail electricity plan for your circumstances.
- Insulate your home.
- Cut energy use by using LED lights and washing clothes in cold water.
- Buy energy-efficient appliances.
- If you have solar power, set appliances and hot water systems to run during the day.
- Get an energy-efficient heat pump hot water system
- Finally — install more solar panels.
A Battery Calculator
In addition to the guide, there is a companion Solar Battery Calculator. I intend to check it out sometime in the next few days and write about how it stacks up. It will be interesting to see which of the committee members who put this guide together worked on the calculator. It may have been someone who understands battery payback and presents the results without bullshit.
Redo From Start
The NSW Home Solar Battery Guide has the potential for economic harm. It encourages people to incorrectly believe that a battery system can save NSW families money provided they cast the magic spell of buying it at the same time as solar power. This version should be thrown out. They can replace it with version 1.1 with all the errors removed.
If they don’t do this, then if I was the NSW Minister for Energy and Environment, I’d want to take my name off it. I’d sign it the Honorable Alan Smithee, Minister for Pigs, Lipstick and Self Preservation.
- It’s kind of like how it only takes three or four dead cockroaches to put me off my entire meal. ↩
- I think the possibility a battery will turn into a brick after the companies providing warranty support disappear from the country should be considered before buying and the chance of this may be higher for batteries that seem to be real bargains. ↩
- watch this space – ToU compatible calculator coming soon ↩
- Yes, solar panels on a tracker could have a pretty constant output over 4 hours. No, most people aren’t going to put a tracker that follows the sun on their roof. ↩
- “A happy customer tells a friend; an unhappy customer tells the world.” Note: This is a business proverb, not an opportunity for a revolutionary new world-spanning communication system. ↩
- That was a literal statement and not comedic exaggeration. If it appears to be an exaggeration it’s because our standards are too low. ↩