A home battery can help reduce your electricity costs in multiple ways. You can use more of your own solar power, take advantage of cheaper electricity rates and, in some cases, receive payments for supporting the electricity grid.

In this article, we look at the main ways to save money with a home battery in the UK and explain how these savings affect the payback period.

What is a home battery?

A home battery stores electricity so you can use it later. In homes with solar panels, the battery usually charges with surplus solar power generated during the day. When the sun goes down or the panels are no longer producing electricity, the stored energy can be used to power your home. This reduces the amount of electricity you need to buy from the grid.

A home battery can also be useful without solar panels. With a time-of-use or dynamic energy contract, the battery can charge from the grid when electricity prices are low, such as overnight. You can then use the stored electricity during more expensive peak hours, helping you reduce your energy costs.

Why are home batteries becoming more popular in the UK?

Home batteries are becoming more popular in the UK for multiple reasons. Electricity prices have increased in the last few years, encouraging people to look for ways to reduce the amount of power they buy from the grid. More homes are also getting solar panels on their roof, creating more demand for batteries that can store surplus solar power for use later in the day.

Time-of-use and dynamic energy contracts are another reason for this growth. Although many households still have a fixed contracts, customers with a flexible contracts could be able to charge their battery when electricity is cheaper and use the stored energy during more expensive periods. A home battery also gives households more control over when they buy, store and use electricity. In some cases, batteries can also support the electricity grid by storing surplus power and releasing it when demand is higher, this is called a Virtual Power Plant.

How can a home battery save you money?

A home battery is a great way to start using more of the energy that you’re solar panels are producing. Without a home battery, the average household with solar panels only uses about 30% of their self-generated solar power. A home battery can make that number go to 70 or even 80%.

1. Use more of your own solar power

Without a home battery, a household with solar panels feeds the majority of their generated electricity back to the grid. This usually happens during the day when the solar panels produce  a lot of electricity and the amount of electricity used is low. This creates a surplus that you can store in the home battery and use at night when the panels aren’t producing any power.

By storing more of your own electricity and using it later, you can reduce both the amount of energy you export to the grid and the amount you need to buy back from the grid.

2. Charge when electricity is cheaper

A home battery can also be charged from the grid during cheaper hours. This is particularly useful with a time-of-use or dynamic electricity contract.

A time-of-use contract has set periods with different electricity prices. For example, electricity may be cheaper overnight and more expensive during the early evening. The battery can charge during the cheaper period and supply your home when the higher rate applies.

With a dynamic contract, electricity prices change more frequently, often every half hour. Prices depend on supply and demand and may be lower when large amounts of renewable energy are available. A smart home battery can respond to these changes by charging during the cheapest periods and using the stored electricity when grid prices rise.

3. Join a virtual power plant or grid service

Some batteries can support the grid through a virtual power plant. An energy supplier or aggregator may charge or discharge the battery when needed. In return, the owner may receive payments or bill credits, depending on the provider and programme terms.

4. Avoid wasting cheap or surplus electricity

A battery lets you store cheap grid electricity or surplus solar power until it is more useful. This helps you avoid exporting at a low rate or buying electricity later at a higher price.

How much can you save with a home battery?

The amount of money you can save depends on the way you use the battery and your personal situation. There is no fixed saving that applies to every household.

1. The amount of electricity you use and send back to the grid each year: The more electricity you can store and use later, the more you may save.
2. Your energy tariff: A time-of-use or dynamic tariff can make it possible to charge the battery when electricity is cheaper and use it when prices are higher.
3. The difference between off-peak and peak prices: A larger price difference creates more room to save money by moving electricity use to cheaper periods.
4. Income from grid services: Some households may receive payments or bill credits by connecting their battery to a virtual power plant or another grid service.

A household has 2,000 kWh of surplus solar electricity each year. Without a home battery, this electricity is exported to the grid at 10p per kWh, providing £200 in export payments.

With a home battery, the household stores the surplus electricity and uses it later instead of buying electricity from the grid at 30p per kWh. This electricity is then worth £600. Compared with exporting it, the battery provides a potential additional benefit of £400 per year before energy losses.

Example without solar panels:

A household moves 2,000 kWh of its annual electricity use from peak to off-peak periods using a home battery. Charging at an off-peak rate of 15p per kWh costs £300. Buying the same amount of electricity during peak hours at 35p per kWh would cost £700.

The difference creates a potential saving of £400 per year before energy losses and battery costs. Actual savings depend on the electricity price, battery efficiency and how often the battery is used.

What is the payback period of a home battery?

The payback period of a home battery is calculated by comparing the total cost of the battery and installation with the amount saved each year.

This period can vary considerably between households. A battery that is well matched to the home’s electricity use, solar generation and energy tariff will usually deliver better savings than a system that is either too small or unnecessarily big.

Is a home battery worth it for your home?

A home battery can be a good choice for households that generate a lot of solar power during the day but use most of their electricity in the evening. It can also be useful if you have an energy contract with cheaper and more expensive periods, want to rely less on the grid.

How much you can save depends on your electricity use, solar generation and energy contract. Use this home battery configurator to find a suitable battery size and get a better idea of the possible savings for your home.