Business case for a battery

[JamesPa]

16 hours ago, SteamyTea said:

That's OK.

 

Basically, the amount of low and medium CO₂ generation is fixed, so marginal increases are dealt with burning gas. Gas has a volatile price.

Also, because we don't have enough spare RE generation, and very little storage, in the scheme if things (pumped storage is to do with load balancing), we rely on demand predictions. It is those demand predictions that set the price, and because they are predictions, some margin has to be built in.

When it goes wrong, and we have to quickly add generation, what actually happens is that the 'hot spinning reserved' come on line. It is those reserves that cost a fortune i.e. £500+/MWh.

When the prediction is the other way, and there is over production, it is often the RE that gets switched off, and that has to be paid for, often at double the going rate i.e. the strike price.

It may seem strange to switch off the low CO₂ generation, but it works out cheaper because it is easy to switch of say 10, 2 MW turbines, in different places to balance the local grids, that switch off a 100 MW CCGT and switch on a few  small diesel generators to make up the 80 MW.

 

It is more common complicated than that in reality as other factors have to be taken into account. 

One more of the pervers factors us the way that the half hour bidding auctions have elevated some RE generation that is still based in gas prices.

While this does not affect new RE generation, the legacy stuff is still generating, and because they have a lot of data, and market experience, they can decide not to bid on the day ahead market, but hope to pick up some balancing capacity, which pays better.

 

While our wholesale market has generally been very good at keeping the price down, it has caused, at times, higher CO₂ generation overall.

 

So getting back to storage, local or large scale, at the moment, it probably increases overall CO₂ grid intensity.

This will change in time with the introduction of more RE, but not for a decade or so.

 

It has been a long time since I looked at all this, but I seem to remember that grid frequency, which many people think can be used to control local storage i.e. elevated frequency, start storing, lower frequency, start delivering, does not work. 

The Grid Operator, predicts about 4 hours in advance the short term needs, and allows the frequency to rise and fall a bit. It is similar to slightly raising your house temperature because you know the night will be extra cold.

 

The whole grid balancing is a (expletive deleted)ing marvel and we should really not tinker with it too much to save a few quid on our bills. The security of supply is globally second to none. We don't want our hospitals, and traffic lights losing power at 6PM, so we can earn £2. 

It is one of the reasons that these ToU tariff trials are small scale, it will be very hard to integrate in a large scale.

Thanks for the explanation.  I cant find a business case for batteries, at least for me, and the power round here only fails rarely for short periods.  So if a battery doesn't help the environment then there is absolutely no reason to have one.   Thats why its so important to understand if it actually helps the environment, as some people claim

 

If I understand you correctly, your conclusion is that local storage, where the choice to store or not is based essentially on retail price, is currently (and wont be for perhaps a decade) of benefit to the environment, and in fact is probably harmful.

 

Is it possible to envisage a chart that demonstrates this simply without going through all the arguments?

[SteamyTea]

9 hours ago, JamesPa said:

Is it possible to envisage a chart that demonstrates this simply without going through all the arguments

No.

Mainly because there is not a simple formula i.e. y = mx+c or y = m x exp^x

 

I have a suspicion that the ToU tariffs are to enable the retail energy companies to dump over purchased energy more than doing the customers a favour.

 

 

Edited October 29 by SteamyTea

[sharpener]

1 hour ago, SteamyTea said:

I have a suspicion that the ToU tariffs are to enable the retail energy companies to dump over purchased energy more than doing the customers a favour.

 

There does seem to be some hidden agenda. If you look at the national demand profile here the big overnight dip clearly justifies trying to fill it with the traditional E7 tariff, but the fine detail in e.g. the Cosy tariff doesn't seem to be a very good match for the rest of it. Tomato offers a cheap rate from 0930 - 1130 which actually corresponds with a small hump in demand.

 

[Archer]

Putting the environmental arguments to one side for a moment, I could use some advice on how strong the business case is for home batteries in our circumstances. Our house is not well insulated by Buildhub standard - it's very much average for the UK stock with around 70mm mineral wool in walls and floor and a better insulated attic. We have a heat pump running heating and hot water but no solar PV (partly because of shading and partly cost). 

 

I estimate on our current tariff we're spending around £1300 a year on electricity at 23p/kwh and perhaps around an average of total 16kwh per day (if my calculations and understanding are sound... always a danger). 

 

Installing a 13.5kw home battery seems to cost around £7.3k with an advertised saving of £900 per annum which is maybe a bit optimistic but feels broadly in the right ballpark (if we can get most of use through the battery at a time of use tariff around 8p/kwh)

 

So perhaps a 9 year payback on the investment? Not spectacular but pretty solid and with the added benefit of some protection in the event of a powercut. Advice appreciated - are my logic and sums above ok... what are the gotchas here?! Compatibility with high demand heat pumps, risk of the future Time of Use Tariffs being less generous, sizing the battery for winter peak demand or summer use...?

 

Thoughts appreciated

[Wumpus]

1 hour ago, Archer said:

if we can get most of use through the battery at a time of use tariff around 8p/kwh

This is the key. You will likely do well in heating season, through the winter, but does this hold out in the summer, when presumably your heat pump is working a lot less hard? You can shift some/most hot water to off-peak tariffs anyway, so perhaps not so much saved there?

 

I suggest looking at how your electricity demand varies month by month and see how many months of the year you would get 13.5kWh of benefits. That might extend your payback calculation a lot?

[G and J]

Payback calculations are, in my experience, often very difficult to nail down to a high level of confidence.  And payback is only break even.  An investment decision usually wants to see profit in return for the risk. 
 

The risk of future ToU tariffs having a smaller differential (which is what I think of as your ‘less generous’) ‘feels’ small to me.  Growing national solar capacity must be driving an ever increasing differential in generation cost and ToU is all about demand shifting.  
 

In this instance though I think there is significant technology related risk. 9 years is a long time for a battery.  That’s over 3,000 days, so presumably at least 3,000 charge/discharge cycles and some ToU tariffs have three low periods a day.  
 

How does a 9 year old electric car perform?  Are there many that last that long? Those that do won’t have the same range they started with.  
 

How reliable are the charge/discharge efficiency figures you are using?  Is it something like 100Wh in for 90Wh out?

 

What’s your cost of capital? Current deposit rates are circa 3% so that’s a minimum I guess. 
 

The ToU tariffs I’ve looked at charge more than standard for some periods, which also needs to be factored in. 
 

What is the probability of the system working without needing costly repair for the time needed to payback, (let alone profit).
 

How much will a battery system be in the future? Say two years time? I’m guessing less. 
 

But….   often a good way to kill an idea is to assume perfect everything, and if the results are either crap or borderline then no further work required as it’ll all be downhill from there.  
 

A sub 9 year payback requires 16kWh totally battery provided (there are multiple cheap rate periods and usage is perfectly distributed so battery never runs flat) at 100% efficiency, and zero cost of capital and no repairs. I think in reality it’s an unlikely best case break even over 15+ years unless ToU tariffs significantly increase their differential.  
 

Sorry. 
 

However, it’s still ok to do it if it feels good.  Maybe power cut cover appeals (which it does to me) or you accept you are gambling on future tariffs being more advantageous.  
 

For me it’s a ‘wire up ready but wait till prices drop’ thing.  Though I keep watch.  

[jack]

Factoring in only your own use may undersell the financial case.

 

If you're on a true ToU tariff such as Octopus Agile, my understanding is that the best option is to discharge when the grid is paying the most (typically early evening in winter), rather than solely maximising your own self-consumption. 

 

This approach can offer better financial results, albeit at the cost of additional complexity. 

 

 

[Archer]

46 minutes ago, G and J said:

Payback calculations are, in my experience, often very difficult to nail down to a high level of confidence.  And payback is only break even.  An investment decision usually wants to see profit in return for the risk. 
 

The risk of future ToU tariffs having a smaller differential (which is what I think of as your ‘less generous’) ‘feels’ small to me.  Growing national solar capacity must be driving an ever increasing differential in generation cost and ToU is all about demand shifting.  
 

In this instance though I think there is significant technology related risk. 9 years is a long time for a battery.  That’s over 3,000 days, so presumably at least 3,000 charge/discharge cycles and some ToU tariffs have three low periods a day.  
 

How does a 9 year old electric car perform?  Are there many that last that long? Those that do won’t have the same range they started with.  
 

How reliable are the charge/discharge efficiency figures you are using?  Is it something like 100Wh in for 90Wh out?

 

What’s your cost of capital? Current deposit rates are circa 3% so that’s a minimum I guess. 
 

The ToU tariffs I’ve looked at charge more than standard for some periods, which also needs to be factored in. 
 

What is the probability of the system working without needing costly repair for the time needed to payback, (let alone profit).
 

How much will a battery system be in the future? Say two years time? I’m guessing less. 
 

But….   often a good way to kill an idea is to assume perfect everything, and if the results are either crap or borderline then no further work required as it’ll all be downhill from there.  
 

A sub 9 year payback requires 16kWh totally battery provided (there are multiple cheap rate periods and usage is perfectly distributed so battery never runs flat) at 100% efficiency, and zero cost of capital and no repairs. I think in reality it’s an unlikely best case break even over 15+ years unless ToU tariffs significantly increase their differential.  
 

Sorry. 
 

However, it’s still ok to do it if it feels good.  Maybe power cut cover appeals (which it does to me) or you accept you are gambling on future tariffs being more advantageous.  
 

For me it’s a ‘wire up ready but wait till prices drop’ thing.  Though I keep watch.  

 

 

No, this is what I needed to understand and is really useful. All of your risk points are totally valid. There is also the question about whether the technology now gets superceded quickly by something better/ cheaper and also whether increasing adoption flattens out the difference between peak & off peak power demand. 

 

You can get interest free finance and 10/12 year warranties which reduces some of your risks above but obviously not completely. 

 

I'm not sure if I'm allowed to link products in forum rules, but there is a 15.5kw Fogstar home battery with great reviews that is currently retailing for £2000. Changes the payback to 4-5 years but (allowing for the inverter and capable electrician to install). Does anyone have any experience with DIY installation - it's definitely beyond me but I'm not sure how to go about finding someone who will be comfortable installing this sort of kit...??

Edited December 1 by Archer

[Archer]

Also, another thing I don't understand - from reading other posts it seems there are efficiency losses between the grid, your battery and your home. Is it easy to quantify what these losses are? I've seen people use 10% to 25% which is quite a big range

[JohnMo]

1 minute ago, Archer said:

There is also the question about whether the technology now gets superceded quickly by something better/ cheaper

That is almost always the case. But if that was part of the decision process, you would buy or do  nothing.

 

In some cases that may be the best option.

 

My decision was easy, I'm earning, won't be earning as much in a couple of years and would like cheaper ongoing bills would there is less income. For less than the price of a holiday, I have cheaper electric bills for the foreseeable future. We pay less each month compared to no battery. When the battery fails we will replace with a newer, cheaper technology. Just like a computer.

[G and J]

12 minutes ago, Archer said:

I'm not sure if I'm allowed to link products in forum

Link away, and save me fruitless searching….

[G and J]

30 minutes ago, jack said:

Factoring in only your own use may undersell the financial case.

 

If you're on a true ToU tariff such as Octopus Agile, my understanding is that the best option is to discharge when the grid is paying the most (typically early evening in winter), rather than solely maximising your own self-consumption. 

 

This approach can offer better financial results, albeit at the cost of additional complexity. 

 

 

When I looked at this it seemed really attractive.  But then I thought, hang on, if that kind of storage and resell type system paid in then in no time we’d see farms of batteries springing up all over the place, trading on an increasingly tight margin.   Thus market forces would depress the margin perhaps to the point that it becomes irrelevant fir the domestic battery owner.  
 

I accept that in the short term it might work, but the paybacks are v long term at the mo.

[G and J]

20 minutes ago, Archer said:

but there is a 15.5kw Fogstar home battery

Found it!

 

https://www.fogstar.co.uk/products/fogstar-energy-15-5kwh-48v-battery?variant=41607893876795&country=GB&currency=GBP&utm_medium=product_sync&utm_source=google&utm_content=sag_organic&utm_campaign=sag_organic&gad_source=1&gbraid=0AAAAADdkPQNr_gr7TdOVsH8qb_ItWShjf&gclid=EAIaIQobChMIk8vFmZiGigMVwJtQBh340gUqEAQYASABEgJlKPD_BwE

 

Can one of the grown ups add the cost of an appropriate stuff and inverter and gubbins to make it a complete thingy?   (I’m assuming it has to be an ac coupled battery to do the job).

[JohnMo]

16 minutes ago, G and J said:

inverter

Something like this allows just battery or battery and solar and or generator etc. so pretty flexible. That's from City Plumbing, many other similar units available depending on size you want. You would need cables etc and they would be pretty chunky.

 

 

[G and J]

Just now, JohnMo said:

Something like this allows just battery or battery and solar and or generator etc. so pretty flexible. That's from City Plumbing, many other similar units available depending on size you want. You would need cables etc and they would be pretty chunky.

 

 

So £3k (exc. vat as I’m building a new build and can claim it back) all in with battery rated at 3,500 cycles, which means it is likely it would be good for more than that, a lot more if you are lucky.

 

Using the Nirvana figures above £3k is equivalent to 20,000kWh at 15p saving per kWh.  At 16kWh per day payback that’s a ~3.5 year break even.

 

Getting warmer.

[Archer]

49 minutes ago, G and J said:

Found it!

 

https://www.fogstar.co.uk/products/fogstar-energy-15-5kwh-48v-battery?variant=41607893876795&country=GB&currency=GBP&utm_medium=product_sync&utm_source=google&utm_content=sag_organic&utm_campaign=sag_organic&gad_source=1&gbraid=0AAAAADdkPQNr_gr7TdOVsH8qb_ItWShjf&gclid=EAIaIQobChMIk8vFmZiGigMVwJtQBh340gUqEAQYASABEgJlKPD_BwE

 

Can one of the grown ups add the cost of an appropriate stuff and inverter and gubbins to make it a complete thingy?   (I’m assuming it has to be an ac coupled battery to do the job).

 

That's the one! 

 

Well a chap on Money Saving Expert reckons he's got an "all in" price of £4.5k and that was based on buying the Fogstar for more (£2500). Feels quite daunting to find an installer though unless anyone has suggestions

 

https://forums.moneysavingexpert.com/discussion/6457277/fogstar-home-batteries-domestic/p5

Edited December 1 by Archer

[G and J]

21 minutes ago, Archer said:

 

That's the one! 

 

Well a chap on Money Saving Expert reckons he's got an "all in" price of £4.5k and that was based on buying the Fogstar for more (£2500). Feels quite daunting to fine an installer though unless anyone has suggestions

 

https://forums.moneysavingexpert.com/discussion/6457277/fogstar-home-batteries-domestic/p5

Oh it must be true then.  Was the next article DIY battery install?  You know, the one that linked the blog about rebuilding after a house fire lol

 

Being serious if one can buy the bits that cheap it might not be long before complete ‘plug in’ packages get to sensible money.

[Archer]

27 minutes ago, G and J said:

So £3k (exc. vat as I’m building a new build and can claim it back) all in with battery rated at 3,500 cycles, which means it is likely it would be good for more than that, a lot more if you are lucky.

 

Using the Nirvana figures above £3k is equivalent to 20,000kWh at 15p saving per kWh.  At 16kWh per day payback that’s a ~3.5 year break even.

 

Getting warmer.

Definitely getting warmer I'd say. By the time you've paid for an installer and with real life / non Nirvana usage, it would likely be a 5-6 year payback. But that's decent given it has an 8 year warranty and should last 10+

 

Feels like a good deal, but still brings me back to trying to work out how to get a decent installer who would fit one and know what they are doing to get me started on the energy management side. 

[Archer]

4 minutes ago, G and J said:

Oh it must be true then.  Was the next article DIY battery install?  You know, the one that linked the blog about rebuilding after a house fire lol

 

Being serious if one can buy the bits that cheap it might not be long before complete ‘plug in’ packages get to sensible money.

I'm normally sceptical but Fogstar seem to be well rated for budget batteries. Uk customer service, long trading history, lots of previous customers etc. Not as dodgy as it seems. But also riskier than getting a big brand through a well known installer

[G and J]

14 minutes ago, Archer said:

I'm normally sceptical but Fogstar seem to be well rated for budget batteries. Uk customer service, long trading history, lots of previous customers etc. Not as dodgy as it seems. But also riskier than getting a big brand through a well known installer

Ideally you need an enthusiastic sole trader sparky. 

[Bramco]

58 minutes ago, G and J said:

Ideally you need an enthusiastic sole trader sparky. 

Friends found one of those - he managed to set things up so that they never seemed to use any Solar and the battery never discharged - not sure how he managed to do that.

 

DIY is pretty simple if you are competent and trust yourself - and AFAIK, doesn't need a sparkies sign off, if everything is connected to an existing properly rated spur that has been signed off. Someone will be along in a bit to either confirm this or tell me I'm wrong.

 

The Sunsynk inverter above, may not be man enough for many homes, ideally you want one that can supply enough power for a couple of big white goods needs, so something closer to 6kW.  Also, look at the Sunsynk batteries. The last time I checked these were cheaper than Frogstar. And in terms of battery sizing, you need to match the amount you might need to cover at the higher rates, if you're installation isn't big enough, you'll still be using expensive electricity. 

There are a couple of other good sites TradeSparky and ITS Technologies with products from many suppliers.

We bought and installed a Sunsynk 5kW hybrid inverter and 3 5kWh batteries from ITS for £5k inc VAT. Works very well for us with the 6.5kW Solar array. Loading everything at night on the 6 hours of Int. Octopus Go, means we very rarely use any full price electricity, it's all at the 7p night rate.

One thing to think about, is that Solar installs can be zero rated VAT, if done by a sparky (not sure if it has to be an MCS sparky). So you could 'install' 1 panel and get the VAT back on the whole installation. 

 

Also, not many systems can cover you during a power outage - Telsa and some others can - if this is important, then make sure you've checked this.

[Bramco]

2 hours ago, JohnMo said:

Something like this allows just battery or battery and solar and or generator etc. so pretty flexible. That's from City Plumbing, many other similar units available depending on size you want. You would need cables etc and they would be pretty chunky.

 

 

 

 

Check out the price on ITS Technologies - £690 + VAT. It pays to shop around....

 

[Archer]

2 hours ago, Bramco said:

 

One thing to think about, is that Solar installs can be zero rated VAT, if done by a sparky (not sure if it has to be an MCS sparky). So you could 'install' 1 panel and get the VAT back on the whole installation. 

 

Also, not many systems can cover you during a power outage - Telsa and some others can - if this is important, then make sure you've checked this.

This is all really helpful stuff, thank you. Just to add that I think the restriction on VAT to solar installs has been lifted - at least according to this. All battery installations are now exempt (is this right?)

 

https://contact-solar.co.uk/blog/uk-government-scraps-vat-on-battery-storage/

[Bramco]

50 minutes ago, Archer said:

This is all really helpful stuff, thank you. Just to add that I think the restriction on VAT to solar installs has been lifted - at least according to this. All battery installations are now exempt (is this right?)

 

https://contact-solar.co.uk/blog/uk-government-scraps-vat-on-battery-storage/

 

Ah yes - I remember this now...    Getting old, memory not what it was.

 

Doesn't work for DIY installs though, you have to have a supplier do the install to reclaim the VAT - or, I guess, have a friendly sparky that will do the paperwork for you.

 

[jack]

On 01/12/2024 at 08:31, Archer said:

I'm not sure if I'm allowed to link products in forum rules...

 

Existing members posting commercial links in the context of research and recommendations is fine. It's just people advertising that we don't allow.

 

On 01/12/2024 at 08:48, G and J said:

When I looked at this it seemed really attractive.  But then I thought, hang on, if that kind of storage and resell type system paid in then in no time we’d see farms of batteries springing up all over the place, trading on an increasingly tight margin.   Thus market forces would depress the margin perhaps to the point that it becomes irrelevant fir the domestic battery owner.  
 

I accept that in the short term it might work, but the paybacks are v long term at the mo.

 

I agree that the gap will close as more people (and eventually grid-scale storage) absorb cheap energy at offpeak times for re-use when it's expensive. However, relatively few households installed solar when the government was guaranteeing two decades of index-linked payments. Financial conditions for most people are worse now and I don't see them improving in the near future. Even if battery prices continue to fall there're still additional costs associated with installation that won't get much cheaper. I just don't see vast numbers of people getting into battery tech in the near term.

 

Also, there's some complexity around operating these systems in a way that takes full advantage of the time of day pricing. I'm sure set and forget systems are on their way, but we still have some time. People are generally not that interested - look at how few people building an extension bother spending 10 minutes researching what insulation to put under their new UFH system.

 

Overall, I doubt there's much risk of the market changing so much in the next 3-5 years that ToU tariffs won't still offer an arbitrage opportunity. For some of these systems that's the entire payback time. With a decent solar array, you almost certainly get more time before the financials deteriorate.

Personally, I'm very close to the point where installing a decent battery system makes sense. Just need to find the time to research the options (the massive number of which is another impediment to mass-market uptake!)