The price of solar panels has been decreasing in recent decades, and they can now generate electricity at a lower cost than fossil fuel power stations. However, solar panels have technical limitations like any other generation system:
The technical limitations of solar PV systems can be eliminated by adding a battery bank. You can store electricity when your solar panels are productive and use it later: at night, on cloudy days, during blackouts, etc. Stand-alone solar panels cannot operate 24/7, but a charged solar battery can be used regardless of sunshine conditions.
For example, the Tesla Powerwall is a popular solar battery with a storage capacity of 13.5 kilowatt-hours (kWh). The official price published by the Tesla UK website is £6,000, and the installed price can range from £9,000 to £13,000.
The payback period of a solar battery varies widely depending on your electric tariff and energy usage habits. However, there is also a non-financial reason to install a battery: having a backup power source that does not depend on fuel deliveries.
In many cases, a home battery can increase the savings achieved by a solar panel system. Even if a battery does not increase your savings by a significant amount, it can be used as a backup power source during blackouts. Here are some general scenarios where installing a solar battery makes sense from a technical or financial standpoint:
If your solar PV system generates more electricity than what your home needs, the difference is sent to the National Grid. The Smart Export Guarantee (SEG) scheme ensures you are paid for this excess energy, but most electric companies offer low tariffs. As a result, the kilowatt-hours (kWh) sent to the grid are much less valuable than the kWh you use directly.
If you consider a 30-day billing period with an excess production of 10 kWh/day, you get £18 for exporting 300 kWh to the grid. On the other hand, if you store 10 kWh/day in a battery and use them at night, you save £105 during the same billing period.
There is a common misconception that solar panels can keep your home powered during a blackout. However, this is only true if the system includes a battery bank. Stand-alone solar panels cannot be used as a backup power source:
However, you can store electricity in a solar battery system, and use it as your backup power source. A battery system is optional if your only goal is saving on power bills, but it becomes mandatory if you want to use solar energy during blackouts.
You also need a battery system if you plan to go off-grid with solar energy. As explained above, solar panels by themselves cannot provide electricity 24/7. If you want an off-grid power source that is fully independent from the grid, you must add a large battery bank to your PV system.
Going off-grid is a lifestyle decision, but you can achieve a better ROI with a grid-connected solar battery. An off-grid battery must be sized for the worst-case scenario, while a grid-tied battery can be sized for optimal savings. Using the grid occasionally as backup is more cost-effective than installing a 100% off-grid solar system and spending 2-3 times more.
The UK offers a Value-Added Tax (VAT) exemption for solar panels, but keep in mind that this exemption only applies for complete systems installed by professionals. If you buy solar panels from a retailer with no installation services included, you are charged the VAT.
Home batteries are not directly covered by the VAT exemption. However, a battery installed along with solar panels is considered part of the same project, and eligible for 0% VAT. There are two important requirements:
Not paying the VAT represents major savings. For example, if you purchase a stand-alone battery for £9,000, the 20% VAT is £1,800. On the other hand, if you purchase this battery along with a 4-kW solar system having a price of £8,400, you save the following taxes:
Considering how the VAT exemption works, it makes sense to install your solar panels and home battery as a single project. Also consider that UK electricity prices exceed 30 p/kWh: changing a battery with your own solar energy is much cheaper than using grid power.
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