A home battery stores your spare solar during the day so you can use it in the evening, instead of exporting it cheaply and buying it back at full price later. Whether that pays for itself comes down to a fairly simple sum. Here it is, worked through, so you can redo it with your own numbers.
The two numbers on every battery
Every battery has two ratings, and you need both. If kW vs kWh isn't second nature yet, this three-minute explainer covers it.
- Capacity, in kWh: how much energy it stores. Check the usable capacity, not the total. Some batteries keep part of their capacity in reserve to protect the cells, so a "10 kWh" battery might only give you 9.
- Power, in kW: how much it can supply at once. A battery with 5 kW of output can't run a 2 kW kettle, a 3.5 kW oven and a 2 kW air conditioner at the same time; the rest comes from the grid.
Also worth knowing: round-trip efficiency. Storing energy and taking it out again loses some, typically about 10% for modern lithium batteries. Put 10 kWh in, get about 9 kWh out.
What does each stored kWh save you?
This is the heart of the sum. Without a battery, your spare solar is exported and earns the feed-in tariff. With a battery, it's stored and used in the evening instead of buying power at the full retail rate.
saving per kWh = retail rate − feed-in tariff
In much of Australia in 2026, that might be 35 cents to buy and 5 cents to export: a saving of about 30 cents per kWh you shift. Your rates are on your bill; our bill guide shows where. On a time-of-use tariff, use the evening peak rate, which makes the battery worth more.
How much can you shift each day?
The battery can only save on energy that is both spare during the day and used in the evening. The daily amount it can shift is the smallest of:
- the battery's usable capacity;
- your spare solar on a typical day (not just a sunny one). Our solar output guide has typical figures;
- what you use between sunset and sunrise.
A household with a 6.6 kW system exporting 15 kWh on an average day, and using 12 kWh overnight, can fill a 10 kWh battery most days in summer and partly in winter. Call it 8 kWh a day across the year.
The payback sum
yearly saving = kWh shifted per day × saving per kWh × 365
payback (years) = installed price ÷ yearly saving
Worked example, Australia, 2026:
- 13.5 kWh battery, installed for about AU$12,000–14,500 after the federal rebate (installer estimates for a Tesla Powerwall 3; prices vary by brand and by how much switchboard work is needed)
- 8 kWh shifted a day × 30 cents × 365 = about AU$880 a year
- AU$13,000 ÷ 880 = about 15 years
Most batteries come with a 10-year warranty, and usually guarantee around 60–70% of their capacity at the end of it. So in this example, the battery wouldn't pay for itself within its warranty period on bill savings alone. Change the inputs and the answer changes quickly:
- A smaller, cheaper battery that is full and empty every day pays back faster than a big one that's rarely full. Match the capacity to what you can actually shift.
- A higher evening rate, such as a time-of-use peak of 50 cents, raises the saving per kWh to about 45 cents and shortens the payback by a third.
- A virtual power plant (VPP), where your retailer can use your battery at times of grid stress, often pays an extra credit each year.
- Two daily cycles: some tariffs let you charge the battery cheaply overnight or during a cheap midday window, and use it in the morning peak too.
Rebates and incentives in 2026
- Australia: the federal Cheaper Home Batteries Program cuts the installed price, aiming for roughly 30% off for most households. Since 1 May 2026 the discount has been reduced every six months, and capacity above 14 kWh gets a smaller discount per kWh. The next step down is on 1 January 2027. Some states add their own incentives or VPP offers. Check the official program page before you sign, because the discount is set by the installation date.
- United States: the 30% federal Residential Clean Energy Credit (25D), which covered batteries, ended for systems placed in service after 31 December 2025. Some states and utilities still offer rebates or pay for batteries to join VPP programs.
- United Kingdom: since February 2024, home batteries have been zero-rated for VAT, including batteries added to an existing solar system. The relief is currently due to run until March 2027.
Do you need solar to make a battery worth it?
Not always, but it helps. Without solar, a battery can only save money by charging when power is cheap (overnight, or during a free or cheap midday window that some tariffs now offer) and discharging when it's expensive. The saving per kWh is the gap between those two rates, minus about 10% in losses. On a flat-rate tariff with no cheap period, a battery without solar saves almost nothing.
Reasons that aren't on the bill
- Backup during blackouts. Many batteries, but not all, can keep essential circuits running when the grid goes down. This often needs extra hardware, so ask for it specifically. If backup matters most to you, it can justify a battery that the bill alone doesn't.
- Using more of your own solar, for its own sake.
- Preparing for an EV. A battery usually isn't the cheapest way to charge a car: it's better to charge the car directly from your solar during the day. But some households use both.
So, is it worth it?
On bill savings alone, a battery is most likely to pay off if:
- you export a lot of solar and are paid little for it;
- you use a lot of power in the evening and overnight;
- your evening rate is high, as on many time-of-use tariffs;
- you can get a rebate or join a VPP;
- the battery is sized to what you can fill most days, not the biggest on offer.
If none of those apply, you're usually better off adding solar panels, which pay back faster, or shifting your daytime use first. Get two or three quotes, and ask each installer to show their payback sum. If it assumes a full battery every day of the year, or rising power prices every year, ask them to redo it without.