Methodology
Home battery payback — methodology
The exact formulas, assumptions, default values and limitations behind the home battery payback calculator.
Last updated
This documents the Home Battery Payback Calculator.
What this calculator does
It estimates whether a home battery pays for itself and what its lifetime value is. A battery earns money by shifting energy in time — storing cheap or self-generated energy and using it when grid energy would cost more. The whole economic case rests on the daily price spread you can capture, derated by the energy lost charging and discharging.
The formulas
Annual and daily saving
annual_saving = daily_cycled_kwh * round_trip_efficiency * 365 * price_spread_per_kwh
daily_saving = annual_saving / 365
Each day you shift daily_cycled_kwh of energy. Round-trip efficiency derates
it, because charging and discharging both lose a little, and each usefully
delivered kWh earns the price spread.
Payback (years for cumulative savings to repay the battery)
payback_years = annual_saving > 0 ? net_battery_cost / annual_saving : null
We guard the division: if there is no positive annual saving (a zero or negative spread), the battery never pays back on arbitrage and we report that honestly as “not in lifetime” rather than showing infinity.
Lifetime value
lifetime_savings = annual_saving * battery_life_years
net_lifetime_value = lifetime_savings - net_battery_cost
The chart plots cumulative savings (annual_saving * year) against the flat
battery cost line; where they cross is the payback point.
Default values
Most inputs are user-supplied — your usable capacity (10 kWh), daily energy cycled (10 kWh), price spread captured ($0.20/kWh), net battery cost ($10,000) and service life (10 years). These are starting points, not statistics, and should be replaced with your own. The one sourced figure is round-trip efficiency (90%), a representative value for residential lithium-ion systems shown with its source in the calculator’s assumptions table.
Limitations — read these
- It’s all about the spread. The value depends entirely on the price spread you can actually capture — either time-of-use (TOU) arbitrage (peak minus off-peak) or avoided grid import when paired with solar (retail minus export rate). Use the spread that matches how you will run the battery. - No degradation. We hold capacity and the daily saving flat over the battery’s life. Real batteries lose capacity over time, so later-year savings are optimistic — set a conservative service life to compensate. - No backup-power value. The resilience benefit of keeping the lights on during an outage is real but very personal, so it is excluded. Treat any backup value as a bonus on top of this result. - No incentives. Rebates, tax credits and other incentives can materially change the net cost — subtract them yourself before entering the cost. - One cycle a day. We assume a single cycle per day at the stated spread. Fewer cycles, or days you cannot capture the full spread, reduce the saving.
How we keep it honest
The calculation logic lives in a small, pure function that is unit-tested against normal, edge and invalid inputs (for example, a zero price spread returns “not in lifetime” rather than infinity). If you spot an error, tell us and we’ll fix it.
Sources
Every default in this calculator traces to one of these.
- Lithium-ion battery storage round-trip efficiencyNational Renewable Energy Laboratory (NREL) · retrievedResidential lithium-ion systems typically have ~85–95% round-trip efficiency.
By EnergyTally Team · Editorial & analysis team
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- EnergyTally Team,