In my solar panels post, I promised a full battery deep-dive. Here it is.
The short version: batteries are not the no-brainer that solar panels are. Solar is almost always positive NPV. Batteries are more nuanced. Whether one makes financial sense for you depends heavily on where you live, what you pay for electricity, and how much you export to the grid. But the economics have shifted a lot in the last 12 months, and for some households, a battery now genuinely stacks up.
What a home battery costs in 2026
The standard residential battery in Australia is 10 to 13.5 kWh. That covers most of your evening and overnight usage after your solar stops producing. At current installed prices, you are looking at roughly $1,000 per kWh for a quality system like a BYD or Alpha ESS, or about $1,100 to $1,200 per kWh for a Tesla Powerwall 3 (13.5 kWh).
So a 10 kWh battery is about $10,000 installed. A 13.5 kWh Powerwall 3 is $13,000 to $16,000. That sounds like a lot, but two things have changed dramatically.
The federal rebate is real, and it is dropping
The Cheaper Home Batteries program launched in 2025 and works through the same STC system as solar rebates. Right now, you get 8.4 STCs per usable kWh, each worth about $39. For a 10 kWh battery, that is roughly $3,300 off the sticker price. For a 13.5 kWh Powerwall 3, about $4,400 off.
That is a 30 to 35% discount, applied at the point of sale. You do not need to apply for it or wait for reimbursement. Your installer handles the paperwork.
Here is the catch: on 1 May 2026, the rebate drops by about 20%. The STC factor falls from 8.4 to roughly 6.8 per kWh. For a 10 kWh battery, that is about $600 less in rebate. For a 13.5 kWh system, about $850 less. And it does not stop there. After May 2026, the STC rate continues declining every six months (6.0, 5.2, 4.5, 3.8, 3.1, 2.8, 2.4, 2.1), making delayed installations progressively less subsidised. If you are on the fence, the next six weeks are the best time to lock in a quote.
How a battery actually saves you money
This is the part most battery marketing glosses over, so I want to be specific.
Without a battery, a typical solar home uses about 30% of its solar production directly (daytime loads like the fridge, washing machine, and hot water). The other 70% gets exported to the grid at whatever your feed-in tariff is. In 2026, feed-in tariffs are terrible: 3c in WA, 3.3c in VIC, 5c in NSW, 6c in SA. Queensland is the exception at 8.7c (regulated).
A battery shifts that equation. Instead of exporting 70% at 5c and then buying grid electricity back at 33c in the evening, you store your excess solar and use it yourself. With a properly sized battery, your self-consumption jumps from about 30% to about 70%.
The savings come from the spread between what you pay for grid electricity and what you get for exports. In South Australia, that spread is 37c per kWh (43c retail minus 6c feed-in). In Victoria, it is 24c (27c minus 3.3c). That spread is everything. It is why a battery in Adelaide pays for itself in half the time it takes in Melbourne.
State-by-state: what a 10 kWh battery looks like
Same solar system (6.6kW), same battery (10 kWh), different economics. Costs include the federal STC rebate and any state-level incentive. Year 1 savings include VPP revenue where available ($300/year in NEM states).
| State | Spread | Net cost | Year 1 savings | Payback |
|---|---|---|---|---|
| SA | 37c/kWh | ~$5,200* | ~$1,350 | ~3.9 yrs |
| NSW | 31c/kWh | ~$6,200 | ~$1,170 | ~5.3 yrs |
| WA | 29c/kWh | ~$5,400** | ~$810 | ~6.7 yrs |
| QLD | 24c/kWh | ~$6,700 | ~$970 | ~6.9 yrs |
| VIC | 24c/kWh | ~$6,700 | ~$950 | ~7.1 yrs |
* SA includes ~$1,500 REPS VPP rebate (for batteries connected to a VPP). ** WA includes ~$1,300 Synergy rebate ($130/kWh, capped at $1,300). Regional WA customers on Horizon Power may qualify for a separate $380/kWh rebate capped at $3,800. WA is not eligible for VPP revenue (separate grid). Payback periods are simple (undiscounted). All figures assume existing 6.6kW solar, 10 kWh battery at $1,000/kWh installed.
South Australia is the standout, and it is not close. The combination of the highest electricity rate in the country (43c), a decent state VPP rebate, and strong solar production means a battery in Adelaide pays for itself in under 4 years. In Queensland, where the regulated 8.7c feed-in tariff narrows the spread, batteries take nearly twice as long.
Why simple payback is misleading
Here is where I need to be honest. The payback numbers above look decent -- 3.9 to 7 years for an asset that lasts 15 years. But they ignore two important things.
Degradation. Lithium batteries lose about 2 to 3% of their capacity every year. A 10 kWh battery stores about 8.5 kWh in year 10. Your savings shrink accordingly.
Time value of money. A dollar saved in year 8 is worth less than a dollar saved today. When you apply a 10% discount rate (roughly what you would expect from a stock market index fund), battery-only installations typically come out with a negative net present value in most states. That means you would do better financially putting that money in the market.
This is different from solar, which almost always beats the market on an NPV basis. Batteries are closer than they have ever been, but they are not quite there yet for most homes at current prices.
But electricity prices keep rising
Here is the thing the NPV comparison misses: electricity prices do not stand still. Australian residential electricity has increased at roughly 4 to 5% per year over the last decade, and there is no sign of that slowing down. The Iran conflict is adding pressure on gas prices, which flow through to electricity because gas-fired generators set marginal prices during peak periods.
The calculator models this. It assumes electricity escalates at about 4% per year and gas at a similar rate. That means your battery savings in year 5 are meaningfully higher than year 1, and year 10 higher still, because the grid electricity you are avoiding keeps getting more expensive.
If the NPV comparison between a battery and the stock market is close -- and in SA and NSW it is -- a battery is also a hedge against electricity price rises. Index funds give you a return that has nothing to do with your power bill. A battery locks in a portion of your electricity cost at today's solar production price (effectively zero) for the next 15 years. If electricity goes up 6% instead of 4%, the battery wins. If there is another energy price shock like 2022, the battery wins by a lot. You cannot say the same about a stock portfolio.
When a battery does make sense
That said, there are situations where a battery is clearly the right call.
- You live in SA or WA. The combination of high electricity prices, state rebates, and strong solar production puts these states closest to positive NPV. SA is essentially there already.
- You are on a time-of-use tariff with a big peak/off-peak spread. If you are paying 50c+ during peak (4 to 9pm) and your feed-in is 5c, the maths changes substantially.
- You are buying solar and battery together. A combo installation saves about $1,500 (shared hybrid inverter, one truck roll). That saving alone shifts the economics meaningfully. The calculator models this as a bundled package for exactly this reason.
- You value blackout protection. If you lose power regularly or work from home and cannot afford outages, a battery has value that does not show up in the financial maths.
- You are exporting most of your solar. If you are away during the day and self-consuming less than 20% of your solar, a battery captures more value per kWh than average.
When it does not
- You do not have solar. A battery without solar can do time-of-use arbitrage (charge cheap at night, discharge during peak), but the savings are much smaller. You need solar producing excess electricity to make a battery work.
- You already self-consume most of your solar. If you are home all day and already using 50%+ of your production directly, the battery has less to shift.
- Your electricity rate is low. In Victoria at 27c/kWh, the spread between retail and feed-in is only 24c. Compare that to SA at 37c. The smaller the spread, the longer the payback.
- You are purely optimising for financial return. If you are treating this as an investment and comparing it to index funds at 10%, batteries in most states still lose on NPV. That gap is closing, but it is there.
The combo advantage
If you do not have solar yet and you are considering both, getting them together makes a lot more sense than adding a battery later. The combo saves about $1,500 in installation costs, and the combined package often has a positive NPV even in states where a standalone battery would not.
The calculator models this as a "Solar + Battery" option that accounts for the shared inverter, the installation saving, and the interaction between production and storage. It is the single most common recommendation the calculator makes.
The May 1 deadline
If you are considering a battery, the timing matters. The federal STC rebate drops on 1 May 2026 and will reduce your discount by roughly $600 to $850 depending on battery size. Installers are going to get busy in April. If you want to lock in the current rebate, get quotes now.
Battery prices are also expected to keep falling over the next few years as LFP chemistry matures and manufacturing scales up. But the rebate is falling too. Whether waiting saves you money depends on the race between falling hardware costs and falling rebates. Right now, the rebate reduction in May is larger than the expected price drop over the same period.
Run your own numbers
Everything above is based on averages, and batteries are more sensitive to your specific situation than solar is. Your electricity rate, feed-in tariff, solar system size, and usage pattern all matter. The best thing you can do is plug your details into the calculator and see whether a battery (standalone or bundled with solar) comes out positive for your home. You can adjust the assumptions under "Under the Hood" if you want to match your actual tariff.
Where these numbers come from
Battery pricing from SolarChoice and SolarQuotes (March 2026). STC rebate values from the Clean Energy Regulator. State incentive details from published government programs. Self-consumption modelling based on the methodology described on the methodology page. Full data source list on the data sources page.