Solar and Battery Payback: What the Numbers Look Like

Solar and storage are usually quoted together, but they pay back for different reasons. Solar earns from generation. A battery earns from the difference between what you would have paid and what you would have been paid.

The core idea

Without a battery, surplus daytime generation is exported at the export rate. With one, that surplus is stored and used in the evening, displacing a unit you would otherwise buy at the retail price.

So the value of each stored kilowatt-hour is roughly:

retail price − export rate − losses

If you export at 5p and buy at 26p, each stored kWh is worth about 19p after losses. A 10kWh battery cycling 300 days a year at 90% depth of discharge yields roughly 500–600 stored kilowatt-hours of useful value per year in that scenario, or £95–£115. Against a £4,900 battery, that alone is a 40-year payback — which is why a battery justified purely by solar self-consumption rarely works in low-spread markets.

Add tariff arbitrage and it changes

If you can also charge from the grid overnight at a much cheaper rate, the battery cycles twice as hard. In a market with a 7p overnight rate and a 28p daytime rate, a 10kWh battery cycling daily can earn several hundred pounds a year on arbitrage alone, on top of the solar benefit.

That is the difference between a 12-year payback and a 7-year one, from the tariff alone.

Worked example: UK

• 4kW solar, £7,400, generating 3,600kWh a year.
• Without battery: 40% self-consumed, 60% exported at 12p. Annual benefit around £630.
• With a 5kWh battery at £4,900: self-consumption rises to about 75%, and the battery also shifts cheap overnight power. Annual benefit around £1,050.
• Extra benefit: £420 a year on a £4,900 cost — a 12-year payback for the battery portion, improving if overnight spreads widen.

Worked example: Australia

• 6.6kW solar, A$5,600, generating 9,000kWh a year.
• Without battery: 30% self-consumed, 70% exported at 5c. Annual benefit around A$1,180.
• With a 10kWh battery at A$7,800 and a state rebate: self-consumption rises above 70%, and evening peak shifting adds value. Annual benefit around A$2,100.
• Extra benefit roughly A$900 a year, and less after a rebate — a 6 to 9 year payback.

The tariff is the lever, not the hardware

The same battery on a flat tariff is a poor purchase. On a well-chosen time-of-use tariff it is a good one. Before accepting a storage quote, ask the installer to model your actual half-hourly usage against a specific tariff, and ask what happens if that tariff is withdrawn — which has happened in several markets.

What to insist on in the quote

1. Assumed daily cycles and depth of discharge.
2. The tariff used in the payback model, by name.
3. Whether backup circuits are included and which ones.
4. Round-trip efficiency, stated.
5. A breakdown of the solar portion versus the storage portion, so you can judge each separately.

Read our guide to whether home battery storage is worth it for the cases where storage does not pay, and compare accredited installers in the UK or Australia.

Frequently asked questions

Is it cheaper to buy solar and a battery together?

Usually yes, by 10–20%, because the installer is on site once and the inverter can be specified as hybrid from the start.

Can a battery pay for itself without solar?

Only where the overnight-to-evening price spread is large and stable. In most markets it needs solar to work.

Do batteries lose capacity over time?

Yes, gradually. Expect 70–80% of original capacity at the end of the warranty period, which is why the warranty's throughput terms matter more than the year count.