What this calculator does
A battery charged cheaply and discharged expensively earns the difference, minus the energy it loses on the way through. That loss is the part most estimates skip, and it is not small: at 88 per cent round-trip efficiency you buy 11.4 kilowatt hours for every 10 you deliver.
The consequence is a floor on the peak price. Off-peak energy at 18 cents, bought through an 88 per cent efficient battery, effectively costs 20.5 cents by the time it comes out. Below that peak rate the battery loses money on every cycle no matter how large it is.
The formula
Each cycle delivers the usable capacity at the peak price, and costs capacity ÷ round-trip efficiency bought at the off-peak price. The value per cycle is therefore capacity × (peak − off-peak ÷ efficiency). Multiply by cycles per day and 365 for the year. Dividing the installed cost by the yearly value gives a simple payback, before any degradation or tariff change.
| Term | Meaning |
|---|---|
| Usable capacity | What the battery will actually deliver, which is less than the nameplate because of the reserved depth of discharge. |
| Round-trip efficiency | Energy out divided by energy in, including the inverter. Typically 85 to 92 per cent for a lithium home battery. |
| Effective cost of stored energy | Off-peak price divided by efficiency. The real cost of a delivered kilowatt hour. |
| Arbitrage | Buying at one price and selling, or in this case avoiding buying, at a higher one. |
The inputs explained
| Field | What to enter |
|---|---|
| Usable capacity (kWh) | Usable rather than nameplate capacity. A 13.5 kWh battery with a 10 per cent reserve gives about 12.2. |
| Cycles per day | Full cycles per day. One is typical for a simple off-peak to peak shift; two needs a tariff with two peaks and enough capacity. |
| Peak import price ($/kWh) | The import price the battery is displacing. Use the actual peak rate, not an average across the day. |
| Off-peak import price ($/kWh) | The price the battery charges at. Overnight controlled load, or zero if you are charging from surplus solar. |
| Round-trip efficiency (%) | Round-trip efficiency as a percentage, including inverter losses in both directions. |
| Installed battery cost ($) | Fully installed cost after any rebate, which is what the payback should be measured against. |
When to use it
Checking whether your tariff spread is wide enough
Compare the peak price against the effective cost of stored energy. If the spread is narrower than that, no battery size or cycling pattern makes money, and the answer is a better tariff rather than a bigger battery.
Charging from surplus solar instead
Set the off-peak price to your feed-in tariff, because that is what you give up by storing rather than exporting. At a 5 cent tariff the stored energy effectively costs 5.7 cents, and the value per cycle rises sharply.
Sanity-checking a payback claim
A quoted payback that ignores round-trip losses overstates the saving by roughly the efficiency gap. At 88 per cent that is about 14 per cent of the charging cost, which on a ten-year payback is most of a year.
Worked examples
Every figure in the tables below is produced by this page’s own calculator at build time, so the numbers and the tool always agree. Select any row to load that scenario.
How wide does the peak to off-peak spread need to be?
Only the peak rate changes.
| Peak price | Value per year | Value per cycle | Simple payback |
|---|---|---|---|
| $0.20 | −$16.59 | −$0.05 | never at this spread |
| $0.25 | $165.91 | $0.45 | 54.2 years |
| $0.35 | $530.91 | $1.45 | 17.0 years |
| $0.45 | $895.91 | $2.45 | 10.0 years |
| $0.60 | $1,443.41 | $3.95 | 6.2 years |
| $0.80 | $2,173.41 | $5.95 | 4.1 years |
What do round-trip losses cost?
Only the efficiency changes.
| Round-trip efficiency | Value per year | Effective cost of stored energy | Simple payback |
|---|---|---|---|
| 70% | $703.93 | $0.26 per kWh | 12.8 years |
| 80% | $821.25 | $0.22 per kWh | 11.0 years |
| 88% | $895.91 | $0.20 per kWh | 10.0 years |
| 95% | $950.92 | $0.19 per kWh | 9.5 years |
| 100% | $985.50 | $0.18 per kWh | 9.1 years |
Questions
Does this include the value of backup power?
No. Keeping the lights on in an outage has real value that this does not attempt to price, and for some households it is the main reason to buy a battery at all.
What about battery degradation?
Not modelled. Capacity falls over the battery's life, so the later years earn less than the early ones and the real payback is longer than the simple figure shown.
Why divide by efficiency rather than multiply?
Because the loss happens on the way in. To deliver 10 kilowatt hours at 88 per cent you must buy 10 divided by 0.88, which is 11.36, and you pay the off-peak rate on all of it.
Is one cycle a day realistic?
For a simple overnight-charge and evening-discharge pattern, yes. Two cycles needs a tariff with two distinct peaks and a battery large enough to serve both, which is uncommon on residential tariffs.
What if I charge from solar instead of the grid?
Enter the feed-in tariff as the off-peak price, since exporting is the alternative use of that energy. It makes the economics considerably better than grid charging.
For how a battery raises the value of an array, see solar self-consumption. For sizing rather than economics there is off-grid battery sizing and battery runtime.