Battery storage costs have changed significantly in recent years, and so has the potential return on investment. When we installed solar for many of our customers, battery storage was a very different proposition. The technology was already capable of storing excess renewable energy, but the financial case did not always stack up. For many commercial sites, battery storage could mean a payback period of five, six, seven or even eight years.
Today, we are seeing commercial battery storage systems achieve average payback periods of less than four years in many cases across England and Wales. That means the payback period we are seeing has almost halved compared with the figures that were common a few years ago. For businesses that already have solar, that makes it well worth taking another look at battery storage costs, potential savings and the overall return on investment.
What has changed about battery storage costs?
There is no single reason why battery storage has become more financially attractive. Several changes across the energy market have contributed to improving the overall business case. Battery technology has continued to develop, energy markets have become increasingly dynamic, and there are now more opportunities to use battery storage intelligently rather than simply charging a battery from solar during the day and using that energy at night.
The way we assess battery storage has also evolved.
Rather than simply asking how much surplus solar a business generates, we look at the complete energy picture. That includes your electricity usage, your contract, the cost of wholsesale electricity at different times and the opportunities available to reduce or manage those costs. For some businesses, the biggest opportunity comes from using stored energy to avoid purchasing electricity when prices are highest. For others, there can be additional opportunities through participation in wider energy markets. The result is that battery storage can now offer considerably more value than just storing excess solar and doing even more to save your business money on energy.
How do battery storage costs compare with potential savings?
When considering battery storage, it is easy to focus on the initial investment which is completely understandable. Any significant investment needs to make commercial sense. However, the purchase price of battery storage is only one part of the equation. The more important question is what value the battery can generate over its lifetime.
Depending on your business and energy contract, a battery could potentially reduce the amount of electricity you purchase during higher-cost periods, allow you to make greater use of your solar generation and provide opportunities to take advantage of changing energy prices. This is why we focus on payback, rather than simply looking at battery storage costs in isolation. A system that costs more initially could potentially provide a stronger return if it is correctly sized and operated for the site. Equally, a larger battery is not automatically a better investment. The right solution is the one that creates the best balance between the initial investment and the value the battery can deliver. That is why we assess each site individually.
How does a battery work with your existing solar?
If you already have solar installed, you have already taken an important step towards generating your own electricity. During periods of good solar generation, your panels produce electricity for your site. Depending on your energy demand at that time, you may have more solar generation than you can immediately use. Without battery storage, that surplus electricity may be exported to the grid. With a suitably sized battery, some of that energy can instead be stored and used later. For example, your solar may generate strongly during the middle of the day when your business has relatively low electricity demand. Your battery can store some of that energy, allowing it to be used later when your site requires more electricity.
This can increase the amount of renewable energy you use on site and reduce the amount of electricity you need to purchase from the grid. For businesses that have already invested in solar, adding battery storage can therefore be a way of getting even more value from an existing renewable energy system. However, this is only part of the opportunity.
What factors affect commercial battery storage costs?
Commercial battery storage costs can vary significantly from one business to another because every site has different requirements.
The overall cost of a system can be influenced by factors including:
- The storage capacity required
- The power output required
- Your site’s electricity demand
- Existing electrical infrastructure
- Installation requirements
- Your existing solar PV system
- How the battery will be operated
- The opportunities available through your electricity contract and the wider energy market
Battery sizing is therefore very important. A battery needs to be large enough to provide value, but installing additional capacity simply because it is available does not improve the financial return. For some businesses, the primary objective may be to store surplus solar generation. For others, the main opportunity could be reducing exposure to expensive electricity periods or taking advantage of market trading opportunities. The best solution depends on what your business is trying to achieve. This is why our approach starts with your energy data rather than a particular battery size or product.
Your electricity contract matters
When we carry out a battery storage assessment, we look closely at how your business is currently buying electricity. Different contract structures can create different opportunities. For example, some businesses have aggregated energy contracts, while others have pass-through arrangements where certain charges are directly reflected in their bills. For larger energy users in particular, policy and transmission-related charges can represent a significant part of the overall cost of electricity. Battery storage can potentially help businesses manage some of these costs by changing when electricity is imported and when stored energy is used. This is why two businesses with similar solar systems can have completely different battery opportunities.
Your electricity usage, contract structure, operating hours and site load all matter. When we assess your battery storage costs and potential return, we therefore look at your actual circumstances rather than applying a standard calculation.
Battery storage is no longer just about storing solar
This is perhaps the biggest change we want existing solar customers to understand. When people think about adding a battery to solar, the obvious question is: “How much excess solar do I have to store?”. Whilst that is still important, it is no longer the whole story.
A battery can potentially be used to:
- Store excess solar generation for later use
- Reduce the amount of electricity purchased during expensive periods
- Charge when electricity prices are lower
- Discharge when prices are higher
- Increase the proportion of your solar generation used on site
- Help manage certain energy costs and charges
- Participate in wider energy market opportunities where suitable
The exact strategy depends on your individual circumstances. For some sites, the primary benefit may be reducing electricity costs. For others, there may be opportunities to generate additional value through energy market participation. This is why a proper assessment and conversation is so important.
What about wholesale energy trading?
The energy market is becoming increasingly sophisticated, and battery storage can potentially play a role beyond the boundaries of an individual site. Wholesale electricity prices can move throughout the day. There are periods when electricity is available at relatively low prices and periods when demand and market conditions result in significantly higher prices. Battery storage can potentially take advantage of these fluctuations by charging when energy is cheaper and discharging when it has greater value.
This type of strategy is different from simply optimising a battery around your electricity bill. It can involve third-party specialists actively monitoring the energy market and managing when the battery charges and discharges based on market conditions. We are continuing to investigate these opportunities with our partners as the market develops. For suitable businesses, this can provide another potential source of value from battery storage and is one of the reasons the financial case has changed so significantly.
Is battery storage worth the cost for every business?
No. And we think that is important to say.
A shorter average payback period does not mean every business will achieve the same return. Battery storage needs to be assessed against your individual energy profile. We look at factors including your electricity consumption, contract rates, site load, operating hours, existing solar generation and the potential opportunities available through battery optimisation or market participation. The size of the battery also needs careful consideration. A bigger battery is not automatically a better investment. The objective is to find the right balance between the capital cost of the system and the value it can create for your business. That is why our approach starts with your data rather than a particular battery size or product.
Why now is the right time to revisit battery storage costs
If you have already invested in solar with us, you may have considered battery storage in the past. Perhaps you looked at the numbers and decided the payback was too long. Perhaps the technology was not quite right for your site. Or perhaps battery storage simply was not a priority at the time.
Whatever the reason, it is worth looking at the numbers again. The market has changed significantly, and the payback we are seeing today can be dramatically shorter than it was previously. For many businesses, an average payback of less than four years changes the conversation. It can turn battery storage from a long-term sustainability investment into a commercially compelling energy asset in its own right. And because you already have solar, you are starting from a strong position.
Your solar investment could now do even more
We have always believed that renewable energy should make commercial sense as well as environmental sense. Solar can reduce your reliance on grid electricity and help your business generate clean energy on site. Battery storage can take that a step further by giving you greater control over when and how that energy is used. It can help you make better use of your existing solar generation while potentially giving you additional ways to manage your electricity costs. The energy market will continue to evolve, too.
As renewable generation increases, electricity prices can become increasingly dynamic. Battery storage provides a way for businesses to respond to those changes rather than simply being exposed to them. For an organisation that has already made the decision to invest in solar, adding battery storage could be the next step in making that investment work harder.
What could battery storage mean for your business?
There is no universal answer. The potential value of battery storage depends on how your business uses energy, how much electricity you consume, when you consume it and how you currently purchase your electricity. That is why we believe the most useful starting point is an assessment based on your own data. Rather than giving you a generic battery storage cost or recommending a standard system, we can look at your individual circumstances and establish whether the numbers make sense. This can include reviewing your existing solar generation, electricity usage, contract details and potential battery opportunities. From there, we can help you understand the likely investment, potential savings and estimated payback.
We would be happy to take another look with you
If we installed your solar system, we already have an understanding of your site and your renewable energy journey. That means this does not need to start from scratch. We can review your current energy usage, electricity contract and existing solar system to assess whether battery storage now makes financial sense for your business. There is no obligation to proceed. If the numbers work, we will show you why. If they do not, we will tell you that too. Our aim is simply to make sure you have the information you need to make an informed decision.
If we didn’t install solar but you already have it installed, we can help too. Lets have a conversation to understand more about your generation and energy usage and understand if battery storage is a worthwhile investment for your business.
