How Much Would you Save with Battery Storage?

Battery storage systems have the ability to store not just energy, but cheaper energy. The source of this energy can come from the excess electricity generated by solar panels or cheap off-peak electricity from the grid.

Either way, battery storage offers a promising solution for those looking to lower their energy bills. Just how much you can save with battery storage depends on various factors, such as the battery size and performance, energy use, energy rates and whether you have solar panels or not. 

With lots of potential scenarios it’s a complex scene, but this article will talk you through how batteries can save you money and give you an understanding of the potential savings.

Factors affecting battery storage savings

As hinted, there are a number of important factors influencing the potential savings you can achieve with battery storage systems. 

• Size and capacity

The size of your battery determines how much energy it can store. The larger the capacity, the more energy it can hold. If this is gathered at cheaper prices or for ‘free’ with solar, the potential savings are much greater. 

You also have to take into account Depth of Discharge (DoD). This refers to the amount of battery capacity you can safely use without damaging the battery. For example, a 10kWh battery with an 80% DoD means you can use 10kWh safely. It’s crucial to choose a battery with a high DoD (minimum 80%) to maximise its usable capacity and lifespan.

• Household energy consumption patterns

Your daily energy usage and the times when you consume the most electricity significantly impact the potential savings from battery storage.

On average, homes use between 6-10kWh of electricity per day, but households with higher energy consumption during peak hours can benefit more from storing and using energy from their battery during these times.

• Electricity tariffs

The type of electricity tariff you have affects how much money you can save. In short, you have flat rate tariffs or variable, time of use tariffs. To reduce your electricity bill with battery storage (and without considering solar panel set up), you need to have a time-of-use tariff to access cheaper energy to fill your battery up.

• Presence of solar panels and their generation

If you have solar panels, the size of your solar array and the amount of energy it produces directly influences how much excess energy you can store in your battery for later use. The more solar energy stored, the more savings you can make.

• Battery lifespan

The expected lifespan of your battery storage system determines the long-term savings potential. Most batteries have a lifespan of 10-15 years, which should be considered when calculating the return on investment. Essentially, you want to know how much money you save a year with a battery, which gets deducted from your initial investment. Once you’ve broken even, you should have a number of years of pure savings.

How does a battery help you save money?

A battery storage system can help you save money on your energy bills in a few related, but different, ways. Let’s take a look. 

1. Maximising the use of your solar energy

The best way batteries can help you save money is by working hand-in-hand with solar panels. 

Not counting the initial set up costs, the solar energy you produce from your PV panels is free! So, you want to use as much of this as possible.

However, with most people out of the house during the day (when solar panels are producing the most electricity), a lot of the energy is being sent straight to the grid – good for the grid, but not for your own finances. 

Installing a battery means you can save this previously unused solar energy and power your home in the evenings when you’re in. This use of stored solar energy helps you to maximise your self-consumption and make cost-effective use of your panels.

2. Reducing reliance on the grid during peak hours

Following on from the above, by using more of your own solar energy during peak times, you’ll save on the energy that you would have otherwise had to buy. 

Peak use time or peak hours refer to the times when electricity demand is highest across the country. This is usually in the morning and in the evening around the core working hours. During these times, electricity companies raise their prices. It’s these high prices you want to avoid. Battery storage can help you with that. 

By storing energy in your battery during off-peak hours when electricity is cheaper (or from solar panels during the day), you can use this stored energy during peak hours, saving money on your energy bills.

3. Benefit from time-of-use tariffs

At the time of writing, the average unit rate of electricity in the UK is 24.5p per kWh. It’s around this mark what you’ll pay during peak times. 

If you have a battery though, you’ll want to make use of a time-of-use tariff, which offers cheaper electricity rates during off-peak hours, usually in the early hours of the morning.

Off-peak rates vary from supplier to supplier, but you’ll be paying significantly less than peak times. A ballpark figure for off-peak rates is around 9p per kWh – around three times less than peak prices. By charging your battery during off-peak hours, and using it during peak times, you’ll significantly reduce your energy costs.

For example, filling a 8kWh battery during off-peak hours (at 9p/kWh) would cost 72p. Using the same amount of energy during peak times (at 24.5p kWh) would cost you £1.96. Over the course of a year, that difference mounts up.

How much can you save with battery storage?

Using battery storage can help you save a substantial amount of money across the year – typically hundreds of pounds. 

Estimates suggest that combining solar panels with battery storage can reduce your annual electricity bill by 70-80%. Without a battery, these savings will be a little less at around 50%. 

Battery manufacturer GivEnergy – check out our GivEnergy review here – goes further and says an energy storage system can reduce your bill by 85%. Either way, there are big savings to be made. The exact amount you save depends on the range of factors as discussed above.

Examples of potential savings for different scenarios

The following examples provide a more detailed look at the potential savings in a range of different scenarios. 

Scenario 1: Small home without solar panels

• Annual energy consumption: 1,800kWh/year
• Battery size: 5kWh
• Electricity tariff: 24.5p/kWh (peak), 9p/kWh (off-peak)
• Estimated annual savings: By charging the battery during off-peak hours and using the stored energy during peak hours, this small household could save approximately £280 per year on their energy bills.

Scenario 2: Medium-sized home with solar panels

• Annual energy consumption: 2,700kWh/year
• Solar panel capacity: 3.5kWp, generating 2,800kWh per year
• Battery size: 8kWh
• Electricity tariff: 24.5p/kWh (peak), 9p/kWh (off-peak)

• Estimated annual savings: By storing excess solar energy in the battery and using it during peak hours, this household could save up to £600 per year on their energy bills. Additionally, they could earn around £50 per year through the Smart Export Guarantee (SEG) for any excess energy exported to the grid. Learn more about selling electricity back to the grid.

Scenario 3: Large home with high energy consumption and solar panels

• Annual energy consumption: 4,100kWh/year
• Solar panel capacity: 5kWp, generating 4,400kWh per year
• Battery size: 12kWh
• Electricity tariff: 24.5p/kWh (peak), 9p/kWh (off-peak)
• Estimated annual savings: This large household could save around £900 per year by maximising their solar energy use through battery storage and reducing their reliance on the grid during peak hours. They could also earn approximately £75 per year through the SEG for exported energy.

As you can see, the bigger the battery the larger the savings. But this also comes with a larger upfront investment. For true savings, any initial investment needs to be taken into account too. 

Eco Affect’s owner Matt has made big savings by combining battery storage with solar panels. He went for a Huawei Luna Battery with a 10kWh capacity, which cost £6,000 for the battery and installation in the summer of 2023. He combined this with Octopus Energy’s Go tariff, which provides 4 hours of cheap electricity at 8.5p/kWh between 12:30am and 4:30am.

By charging the battery during the off-peak hours and using the stored energy during the day, he saved £2.25 per day. Over the year, this equates to £821.25. However, because of the presence of solar panels, the battery doesn’t have to be charged at night during the high summer months, meaning these savings are even higher at around £1,000 per year.

Can battery storage power your whole home? 

 In theory, a solar panel and battery system can power a house, but in practice, a standard residential battery won’t have enough capacity to meet all your energy needs for an extended period.

In the UK, the average household consumes between 6-10 kWh of electricity per day. A well-sized 10kWh battery can provide enough electricity for a standard day in a three-bedroom home, powering essentials like lights, TV and appliances. However, high energy appliances like electric heating systems, electric vehicle chargers and even driers can quickly drain the battery.

The battery’s performance also varies seasonally. In summer, a 3-bedroom house with an average solar panel system and good sized battery can often meet its energy needs throughout the day, with the battery charging from the panels and providing power during peak evening hours. However, in winter, the battery may only power the home for a few hours overnight due to reduced solar generation and higher energy consumption.

Whilst a battery can significantly reduce your reliance on the grid, it may not be able to completely cover your energy needs all year-round.

What about long-term savings with battery storage?

When considering the long-term savings potential of a battery storage system, you need to take into account the battery’s lifespan. Most modern lithium-ion batteries have a lifespan of 10-15 years. To calculate the long-term savings, you need to consider the cumulative savings over the battery’s lifetime and compare them to the initial investment cost. 

In our own example, the upfront cost of the battery storage system was £6,000. However, with the annual savings calculated, the payback time was just 6 years. 

Generally speaking, payback times are a little longer, ranging between 8-12 years. The exact time depends on:

• Size of your solar panel array
• Size and cost of your battery system
• Electricity usage during peak times
• The cost of mains electricity and your tariff 
• Presence of high energy appliances
• The income from exporting excess energy to the grid through the SEG

For example, a typical UK household with a 3.5kW solar panel system and a 6kWh battery could save around £336 per year compared to having only solar panels. With a battery cost of £4,000, the simple payback period would be approximately 12 years. 

Over a battery’s 10-15 year lifespan, cumulative savings can hit several thousands of pounds, ranging from £3,000 to around £10,000. These long-term savings often make battery storage systems an attractive investment for homeowners looking to reduce their energy costs and increase their energy independence.

With battery prices continuing to fall and grid electricity costs expected to go up, the savings you can make is expected to increase.