“If storage costs more than 10c per kWh don’t buy it”. The inconvenient truth about batteries

Are you thinking of lowering your energy costs or trying to help alleviate the pain you know is coming from rising energy prices! Well, if you don’t have solar then get it and as quickly as possible.

Moreover, get as much solar as you can. Also get some Zenaji batteries. Three at a minimum (about 6kWh) as you can always add more later. Here is why.

The most important thing about batteries is the cost of energy stored and retrieved over the life of the battery. If it’s above 10 cents then don’t buy it. You will not make a decent return on your investment before the battery dies. There may be other reasons to buy batteries but if the main one is economic then a cost above 10 cents per kWh (kilowatt hour) will mean the battery is unlikely to ever pay for itself. I explain shortly how to calculate this price easily.

If the battery is Lithium based and one of the following LFP, LiPo or NMC and most batteries are then the price will be above 10 cents. You will be lucky if you make an economic return in any situation and very shortly after you do then the battery will die. Of course, the higher the power price the more the economic return will bend in your favour. However, if it stays say 40% higher than it is currently then you may get a return on your non LTO battery investment. But you can seriously improve on this.

So, what to look for.

1. The cycle life of the battery.
2. The depth of discharge. I.e. is it 100% or something less.
3. The actual initial rated kWh of the battery on installation.
4. The manufacturer’s warranty on battery life. And cycles.
5. The rated cycle life of the cells by chemistry.
   Here is table of cycle life of each major cell type. These numbers can be readily
   confirmed.
   
   
6. Forget what the marketing rubbish is saying the truth is decided by the chemistry and not the marketing department. The chemistry is the major determining factor as to how many kWh can be stored and retrieved over time in any battery. Of course, the number of cells and the resulting initial capacity matters but it is the chemistry that determines how the cells will perform. Depth of Discharge is also important as is temperature, charge rate but it is the chemistry which is the key determining factor.
7. The efficiency of the battery usually sated between 98% and 90% for Lithium batteries.

So, examine the LTO compared with any other battery. If you charge and discharge this battery once per day over its mid-point cycle life (above) it will last 82 years. That’s if you fully cycle it with 100% depth of discharge once every day for 82 years or more.

An LFP battery, the best of the other chemistries in cycle life, by comparison will last 11 years. Hence the reason most battery companies have a maximum 10-year warranty on their batteries.

But what if you want to take advantage of low power prices at night and cycle the battery twice per day? All lithium batteries can be cycled more than once per day but other than LTO the life of the battery is seriously badly affected if you do this so it is not recommended and usually voids the warranty.

Let’s get back to price. 

A basic price of a battery can be calculated initially as the price you pay for the battery divided by its rated kWh.  For example, you pay $10,000 dollars for a 10kWh battery.  This means each kWh costs $1,000 dollars.  But to really compare you need to then do the following steps.

1. Take the initial price per kWh & divide by 365 days in the year.
2. This number is then divided by the number of years the battery will last.
3. Take this price then divide by 0.85 in order to take into account the battery degradation over its life (eg: average degradation until the battery death)
4. The divide by the efficiency as given by the manufacturer.  
5. Now this will provide you the real price as to the cost per kWh you are paying to store and retrieve energy through your battery for its life & easily comparable to your current electricity price for return on investment. 

Hence the reason ALL long-term storage whether for a house, business or grid scale storage should be done at a cost of less than 10 cents per kWh and less than this for large installations.  The upfront cost may appear high but the real return is based on the chemistry which determines the life cycle and the real storage and retrieval capacity of the battery. 

*NB: All prices are in Australian dollars.