How can you figure up the payback period for a home battery system?

Energy storage can improve the self-consumption level of household photovoltaics, smooth peak and valley power consumption fluctuations, and save household electricity expenses. Since photovoltaic power generation during the day does not fully match the application of household loads in terms of time (photovoltaic power generation during the day, the utilization hours are about 3-4 hours, while household users generally have a higher load in the afternoon or night), household energy storage is usually related to household load applications. With the use of photovoltaics, users can effectively increase the self-consumption rate of photovoltaic power generation through the conversion of peak and valley electric energy, greatly reduce electricity bills, and even achieve self-sufficiency in power demand during the day and night, avoiding the risk of rising electricity prices and losses caused by power supply shortages .

The battery energy storage systems play the energy storage role in the households, they are usually called as HOME BATTERIES. They are installed on residential buildings or in the home, and their operation modes include independent operation, supporting operation with small wind turbines, rooftop photovoltaics and other renewable energy power generation equipment, etc.

After being recharged by either grid or other power sources like solar PV system, the HOME BATTERY discharges during the peak electricity price time during the day, enhances the quality of electricity consumption for consumers, lowers electricity prices, maintains the regular functioning of the power grid, and increases energy efficiency.

The HOME BATTERY is mainly used to meet the needs of self-generation and self-use of electricity, peak-valley price difference arbitrage, saving capacity electricity charges, and improving power quality. At present, due to the use of market-based electricity prices overseas, self-consumption is already highly economical, especially for the areas with high electricity prices.

NORD POOL electricity prices

The most straightforward way to value how does a HOME BATTERY reduce your power use and electricity bills, let’s calculate it together as followings.

Take the electricity prices in Denmark shown on Nord Pool as an example, suppose a home battery is installed. The HOME ESS is recharged during the low electricity price period, and to be recharged at the peak hours of electricity prices. Thus, the household consumers can shave peaks and fill valleys to obtain price difference benefits.

Peak / Valley


Duration (Hours)

Electricity Rate per kWh

Battery Status











Cost (Charge):  €0.0288 × 30kWh = €0.864

Revenue (Discharge): €0.1109 × 30kWh = €3.327

Revenue per day is: €3.327-€0.864=€2.463

As you can see, the bill for power consumption for consumers can be obviously reduced where there have price differences between peak and valley electricity prices. The bigger the price differences are, the more profit the HOME BATTERY generates.

Assume the cost of a 10kWh home battery system is €4,500 for the battery + €2,400 for a 5kW inverter, for a total of €6,900. Only calculate peak-valley difference arbitrage for self-consumption, the payback period is around €6,900/€2.463/365=7.6 years! Considering the potential policy subsidies, as some aggressive countries even offer rebates covering up to 50% of the cost, in addition, power trading is permitted in several nations, so the payback period will be even much shortened! Let alone upgrading solar PV with energy storage, which adds a battery system to an existing solar installation, the cost would be considerably lower owing to the savings in national grid electricity costs.


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