Home battery storage is a hot topic for energy-conscious consumers. If you have solar panels on your roof, there's an obvious benefit to storing any unused electricity in a battery to use at night or on low-sunlight days. 

And batteries are becoming increasingly popular, with the number of installations increasing every year . As of 2024, according to data from solar analytics company Sunwiz, there are more than 250,000 home storage batteries installed in Australia. Approximately 57,000 were installed in 2023 alone. The majority are installed as part of a brand new solar panel system, but a significant number of batteries are additions to an existing solar panel system.

We explain how these batteries work and what you need to know before installing one.

On this page:

• How do home solar batteries work?
• How much does a home solar battery cost?
• Are home solar batteries a worthwhile investment?
• Battery calculator
• Rebates, subsidies and Virtual Power Plants
• Grid-connected vs off-grid
• What happens in a blackout?
• Types of solar battery
• Battery specifications
• How long do solar batteries last?
• Terminology

How do home solar batteries work?

The concept of home battery storage isn't new. Off-grid solar photovoltaic (PV) and wind electricity generation on remote properties has long used battery storage to capture the unused electricity for later use. Storage batteries are increasingly popular with new solar installations, and it's possible that within the next five to 10 years, most homes with solar panels will have a battery system.

If your solar panel array and battery are large enough, you can run your home substantially on solar power

A battery captures any unused solar power generated during the day for later use at night and on low-sunlight days. Installations that include batteries are increasingly popular. There's a real attraction to being as independent as possible from the grid – for most people it's not just an economic decision, but also an environmental one, and for some it's an expression of their wish to be independent of energy companies.

If your solar panel array and battery are large enough, you can run your home substantially on solar power. Using electricity from your battery can be cheaper per kilowatt-hour (see Terminology) than using electricity from the grid, depending on the time of day and electricity tariffs in your area.

Check out some of our other articles on home batteries:

• Independent test of solar storage batteries
• A case study of the first Australian home to install a Tesla Powerwall battery

How much does a home solar battery cost?

Costs vary significantly for solar batteries, but generally, the higher the battery capacity, the more you can expect to pay.

Here are typical battery costs for some common sizes (including basic installation). Prices are based on information from SolarQuotes.

• 5-6kWh: $6,500–10,000
• 10kWh: $9,000–13,000
• 13kWh: $11,000–16,000

Most households are likely to benefit from a battery with a decent amount of capacity, about 10kWh or more. But a smaller battery can be sufficient for small households with low energy usage.

As an example, one of the most popular batteries is the 13.5kWh Tesla Powerwall 2. This currently costs about $12,100 before any subsidies. Fully installed it will come to about $15,500 (or more, if the installation is complex). 

The lower-end prices tend to be for a battery pack only (cells plus battery management system). Higher-end prices often mean that the battery system has a built-in battery inverter and other integrated components as well. When getting quotes, make sure it's clear whether the cost of a new inverter and extra electrical work are factored in.

It can be more cost-effective to buy a battery as part of an entire new solar panel system package than to retrofit it to an existing system, especially if the existing system is several years old (it may need substantial upgrading to accommodate the battery; for example, older systems are often relatively small, say 3-5kW, and may need more panels added to deliver enough power for charging the battery and powering the home).

Are home solar batteries a worthwhile investment?

For many homes, we think a battery doesn't make complete economic sense yet. Batteries are still relatively expensive and the payback time will often be longer than the warranty period (typically 10 years) of the battery. 

Batteries are still relatively expensive and the payback time will often be longer than the warranty period of the battery

Currently, a lithium-ion battery and hybrid inverter will typically cost between $4000 and $16,000 (installed), depending on capacity and brand. As the electricity market changes over the next few years, and (hopefully) battery prices improve, it may then make clear economic sense to always include a storage battery with a new solar PV system.

So why install a storage battery?

Despite the points made above, a storage battery can still be worthwhile, economically and for other reasons. Households with high power consumption that are savvy about using their solar-generated and stored power can make the battery pay for itself in less than 10 years. Joining a Virtual Power Plant (VPP) scheme can improve the economics too (see below for more on VPPs).

For many people investing in home battery storage, the motivation isn't just about the economics. Protection against blackouts, maximising the benefits of your solar panels, and even simply liking this new technology are all perfectly good reasons to consider a battery. Or at least making sure your solar PV system is battery-ready for a future installation. Batteries are often seen as being less about the pure economics and more about being as independent from the grid as possible. 

We recommend you work through two or three quotes from reputable installers before committing to a battery installation. The results of an independent trial of storage batteries show that you need a strong warranty, and commitment of support from your supplier and battery manufacturer in the event of any faults.

Battery calculator

Our solar partner SolarQuotes has a battery calculator to help you figure out the savings you might make from adding a storage battery to your existing solar panel system. 

To use it, you'll first need to obtain a NEM12 file from your electricity distributor; this is the data collected by your smart meter, which shows in detail how much energy your solar panels generate, how much electricity your home uses at different times of the day (night-time power consumption is a key factor here), and therefore how much would be available to charge a battery. Here's their guide to how you obtain this file. Request 12 months of data, so that you have a full picture of your solar usage in every season.

If you don't have solar at all, and are wondering if you should buy a system with battery included, the CHOICE Solar Estimator is a quick and easy way to look at the potential savings with and without a battery.

Rebates, subsidies and Virtual Power Plants

Rebates and subsidies

Government rebate schemes, and energy trading systems such as Reposit, can definitely make batteries economically viable for some households. Note that the Small-scale Technology Certificate (STC) financial incentive for solar panel systems (the "solar rebate") only applies to the solar panels in the installed system, not the battery. But there are currently battery-focused rebate or special loan schemes in some states and territories.

Victoria: Solar Homes Program

Northern Territory: Home and Business Battery Scheme

Note that the Victorian Solar Homes Program has a fixed number of subsidies available over a set period. So it's possible for a subsidy scheme to be active, but unavailable until the next round of subsidies opens up.

Rebate schemes are revised from time to time, so it's worth also checking the federal government energy website to see what's available in your area.

Virtual Power Plants

A Virtual Power Plant (VPP) is a network of solar and battery systems installed on homes and businesses, centrally controlled by a computer system run by the VPP operator company. By joining a VPP program, you agree to make the stored energy in your home battery available to the VPP operator who can then use it to supply the grid in times of high demand.

In return, you're paid a subsidy, which might be in the form of reduced energy bills, a rebate towards buying the battery, or even free solar and battery installation. But note that even joining a VPP program won't always guarantee that your battery pays for itself, and it can mean that you'll sometimes find your own battery is running low at night when you want it, due to the VPP having taken some of the stored energy earlier that day.

Playing the electricity market

Some electricity retailers such as Amber offer plans that price your electricity in 15 minute intervals, based on the wholesale market price at that moment in time. This price can vary wildly, from extremely expensive to buy (but great to sell your excess solar or stored battery energy at that moment), to negative pricing (when you'll actually be paid for using grid energy, but might have to pay the retailer for any solar power you export; so that's a great time to charge your battery with solar or grid power).

These plans can be very effective, even profitable, if you are prepared to monitor prices daily and adjust your home energy usage accordingly. But if you'd rather just "set and forget" your electricity plan and not worry too much about when you run your appliances, this type of plan could end up costing you more.

Don't forget the feed-in tariff

When you're doing the sums to decide whether a battery makes sense for your home, remember to consider the feed-in tariff (FiT). This is the amount you're paid for any excess power generated by your solar panels and fed into the grid.

For every kWh diverted instead into charging your battery, you'll forgo the feed-in tariff. While the FiT is generally quite low in most parts of Australia, it's still an opportunity cost you should consider. If you still have a generous FiT (30c/kWh or more), it could be more profitable to not install a battery and just collect the FiT for your surplus power generation. However, any system still on those rates is probably an older, small capacity system, and it may be better in the long run to upgrade it to a new, larger capacity system.

Home insurance

Your solar panel system (panels, inverter, and battery if you have one) is part of your house, and as such it's covered by your home insurance. However, you should make sure your home's insured amount is increased to cover the replacement cost of the solar panel system. Check out our guide to solar panels and home insurance for more info.

Grid-connected vs off-grid

There are four main ways your home can be set up for electricity supply.

Grid-connected (no solar)

The most basic set-up, where all your electricity comes from the main grid. The home has no solar panels or battery.

Grid-connected solar (no battery)

The most typical set-up for homes with solar panels. The solar panels supply power during the day, and the home generally uses this power first, resorting to grid power for any extra electricity needed on low-sunlight days, at night, and at times of high power usage.

Grid-connected solar + battery (aka 'hybrid' systems)

These have solar panels, a battery, a hybrid inverter (or possibly multiple inverters), plus a connection to the main electricity grid. The solar panels supply power during the day, and the home generally uses the solar power first, using any excess to charge the battery. At times of high power usage, or at night and on low-sunlight days, the home draws power from the battery, and as a last resort from the grid.

For more on different types of inverters, how they work and their pros and cons, check out our guide to buying a solar inverter.

Off-grid

This system has no connection to the main electricity grid. All the home's power comes from solar panels, and possibly some other types of power generation as well, such as wind. The battery is the main power source at night and on low-sunlight days. The final back-up is usually a diesel-powered generator, which may also kick in when there's a sudden high demand for power (such as when a pump starts up).

Off-grid systems are usually much more complex and expensive than grid-connected systems. They need more solar and battery capacity than a typical grid-connected system and may also need inverters capable of higher loads to cope with peak demands. Homes that run off-grid need to be particularly energy-efficient and the load demand needs to be well-managed throughout the day. 

Off-grid systems generally only make sense for remote properties where a grid connection isn't available or would be prohibitively expensive to install.

What happens in a blackout?

For most grid-connected systems, having a battery doesn't necessarily protect you in the event of a blackout. You may still lose all power to your home, despite having solar panels producing power and a charged battery ready and waiting.

This is because grid-connected systems have what's known as 'anti-islanding protection'. During a blackout, the grid and any engineers working on the lines must be protected from 'islands' of electricity generation (such as your solar panels) pumping power unexpectedly into the lines. 

You may still lose all power to your home, despite having solar panels producing power and a charged battery ready and waiting

For most solar PV systems, the simplest way to provide anti-islanding protection is to shut down entirely. So, when it senses a grid blackout, your solar PV system shuts down and you have no household power at all.

More sophisticated inverters can provide anti-islanding protection during a blackout, but still keep the solar panels and battery operating so that the house has some power. But expect to pay a fair bit more for such a system, as the hardware is more expensive and you may need more solar and battery capacity than you think to run the house for a few hours during a blackout.

You should probably choose to allow only critical household circuits to operate in that situation, such as the fridge and lighting (and that might require extra wiring work). A storage battery is likely to be drained very quickly if it also has to run things such as a pool pump or underfloor heating, which can draw a lot of power.

Types of solar battery

Lithium-ion

The most common type of battery being installed in homes today, lithium-ion batteries use similar technology to their smaller counterparts in smartphones and laptop computers. There are several types of lithium-ion chemistry. A common type used in home batteries is lithium nickel-manganese-cobalt (NMC), used by Tesla and LG Chem. 

Another common chemistry is lithium iron phosphate (LiFePO, or LFP) which is said to be safer than NMC due to lower risk of thermal runaway (battery damage and potential fire caused by overheating or overcharging) but has lower energy density. LFP is used in home batteries made by BYD and Sonnen, among others.

Pros

• They can give several thousand charge-discharge cycles.
• They can be discharged heavily (to 80–90% of their overall capacity).
• They're suitable for a wide range of ambient temperatures.
• They should last for 10+ years in normal use.

Cons

• End of life may be a problem for large lithium batteries. 
• Fires and thermal runaway are fortunately very rare in these home storage batteries, but can be severe if they do happen. For safety, lithium batteries must be installed only in certain locations; typically outdoors (usually near the solar inverter) or in a garage.
• They need to be recycled to recover valuable metals and prevent toxic landfill, but large-scale programs are still in their infancy. As home and automotive lithium batteries become more common, it's expected that recycling processes will improve.

Lead-acid, advanced lead-acid (lead carbon)

The good old lead-acid battery technology that helps start your car can be also used for larger-scale storage. It's a well-understood and effective battery type, and banks of these batteries can be (and are) used for home storage batteries. But attempts to develop advanced lead-acid technology over the past several years have not delivered sufficient results, and this technology is fading away as a storage solution as lithium storage batteries have more advantages. It's extremely unlikely that you'll be offered a lead-acid battery these days.

Pros

• They're relatively cheap, with established disposal and recycling processes.

Cons

• They're bulky and require a lot more space than an equivalent lithium battery.
• They're sensitive to high ambient temperatures, which can shorten their lifespan.
• They have a slow charge cycle.
• They require regular maintenance.
• Lithium batteries offer advantages such as relatively compact size, low maintenance and longer warranties.

Flow battery

One of the most promising alternatives to lithium-ion, this type uses a pumped electrolyte (such as zinc bromide or vanadium ions) and chemical reactions to store charge and release it again. Redflow's ZCell battery is the main flow battery currently available in Australia. They haven't really taken off as a home battery option, but are being installed in large commercial and utility-scale applications.

Pros

• They can be discharged to 100% of their capacity and have no residual discharge so they won't lose charge over time.
• They don't lose capacity over time.
• They operate well in high ambient temperatures.
• They're relatively easy to recycle.
• They should last for 10+ years.
• No fire risk.

Cons

• They're relatively expensive compared to lithium-ion.
• They don't tolerate cold well (below 15°C).
• They require frequent maintenance which takes them temporarily out of service.

Other types

Battery and storage technology is in a state of rapid development. Other technologies currently available include hybrid ion (salt water) batteries, molten salt batteries, and graphene supercapacitors. None of these are in common usage at this stage. 

Battery specifications

These are the key technical specifications for a home battery.

Capacity

How much energy the battery can store, usually measured in kilowatt-hours (kWh). The nominal capacity is the total amount of energy the battery can hold, while the usable capacity is how much of that can actually be used, after the depth of discharge is factored in.

Depth of discharge (DoD)

Expressed as a percentage, this is the amount of energy that can be safely used without accelerating battery degradation. Most battery types need to hold some charge at all times to avoid damage. Lithium batteries can be safely discharged to about 80–90% of their nominal capacity. Lead-acid batteries can typically by discharged to about 50–60%, while flow batteries can be discharged 100%.

Power

How much power (in kilowatts) the battery can deliver. The maximum/peak power is the most that the battery can deliver at any given moment, but this burst of power can usually only be sustained for short periods. Continuous power is the amount of power delivered while the battery has enough charge.

Efficiency

For every kWh of charge put in, how much the battery will actually store and put out again. There's always some loss, but a lithium battery should usually be more than 90% efficient.

Total number of charge/discharge cycles

Also called the cycle life, this is how many cycles of charge and discharge the battery can perform before it reaches the end of its life. Different manufacturers might rate this in different ways. Lithium batteries can typically run for several thousand cycles.

Lifespan (years or cycles)

The expected life of the battery (and its warranty) can be rated in cycles (see above) or years (which is generally an estimate based on the expected typical usage of the battery). The lifespan should also state the expected level of capacity at the end of life. For lithium batteries, this will usually be about 60–80% of the original capacity.

Ambient temperature range

Batteries are sensitive to temperature and need to operate within a certain range. They can degrade or shut down in very hot or cold environments.

How long do solar batteries last?

In principle, most solar battery types should be able to last 10 years or more under normal usage and if not subjected to extreme temperatures. That is, they should be able to last at least as long as their warranty period, which for most models is 10 years.

However, there isn't enough market data to show whether modern solar batteries typically last that long in real-world home installations – recent generations of batteries have only been around for a few years. 

Most solar batteries should be able to last 10 years or more under normal usage and if not subjected to extreme temperatures

Lab testing of battery durability and lifespan has not been encouraging. A solar battery trial in Australia found a high rate of failure, with very few of the batteries in that trial operating without any major problems. Most of them either had operational problems the manufacturer had to step in to resolve, or failed and needed to be replaced, or failed and couldn't be replaced (for example because the manufacturer was out of business or would no longer support that product). 

That said, several batteries from major brands performed well, or at least had good manufacturer support when problems occurred.

But consumer reviews on a variety of websites suggest that most households with storage batteries are happy with them so far, especially with the major brands. Some customers report problems with battery failure or with customer support from the supplier, but in most cases it appears that the batteries are performing as expected.

Future changes to the electricity market

The electricity grid in Australia wasn't originally designed to cope with large numbers of homes exporting solar power into it. There are proposals for how to modernise the grid and manage it more effectively and fairly, and these include a possible surcharge – or 'solar tax' – to owners of solar PV systems who want to sell their excess power to the grid. What's this all about, and does it mean a storage battery becomes a better option?

Terminology

Watt (W) and kilowatt (kW)

A unit used to quantify the rate of energy transfer. One kilowatt = 1000 watts. With solar panels, the rating in watts specifies the maximum power the panel can deliver at any point in time. With batteries, the power rating specifies how much power the battery can deliver.

Watt-hours (Wh) and kilowatt-hours (kWh)

A measure of energy production or consumption over time. The kilowatt-hour (kWh) is the unit you'll see on your electricity bill because you're billed for your electricity usage over time. A solar panel producing 300W for one hour would deliver 300Wh (or 0.3kWh) of energy. For batteries, the capacity in kWh is how much energy the battery can store.

BESS (battery energy storage system)

This describes the complete package of battery, integrated electronics, and software to manage the charge, discharge, depth of discharge (DoD) level and more.

Acknowledgement

Our thanks to ITP Renewables for their assistance in producing this guide.

Stock images: Getty, unless otherwise stated.

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