We need energy storage and smart controls to reduce the use of gas-fired power stations. It will allow electricity from renewable energy to be stored and fed back to the grid at times of peak demand. Domestic battery storage is one way of helping with this – so what are the potential benefits and impacts of batteries?

Rising electricity prices mean that storing energy in a battery to use later will save you more money than it did a couple of years ago. This is making a battery a more attractive investment – although upfront prices are high.

You need to take a careful approach to be confident of a decent financial saving. We also need to be sure that the resources invested in manufacturing batteries do result in a worthwhile environmental benefit.

Thinking at the larger community scale is important. That’s because we need energy storage that can buffer the grid between off-peak and peak times. This will boost the use of renewable energy from wind farms and other sources. It’s therefore good to think more widely than just matching your own energy needs.

The best setup, environmentally and financially, will be one that allows you to charge the battery from the grid as well as from solar panels, and that allows you to export from the battery to the grid during chosen periods. Bear in mind that this should also enable you to get better payments for exporting electricity at peak times.

What’s the environmental impact of a storage battery?

Studies into the carbon footprint of current lithium-ion batteries for electric cars calculate a figure of around 100kg of carbon dioxide (CO₂) per kilowatt-hour (kWh) of battery capacity when manufactured in factories that use fossil fuels. When renewable energy is used for the manufacturing this is reduced to about 60kg CO₂ per kWh. Gradually decarbonising the supply chains for raw materials will further reduce the carbon emissions.

Developing new types of battery chemistry will also help. For example, the campaign group Transport & Environment recently reported the potential for solid state batteries to reduce the carbon footprint to below 50kg CO₂ per kWh.

New developments should be alongside efforts to improve the recycling of lithium batteries and reduce the environmental and social impacts from extracting raw materials. We can achieve reduced costs and carbon emissions through improved processes, rather than from driving down labour costs or working conditions or creating other long term pollution problems.

Will a battery help to reduce carbon emissions?

In carbon terms, the most advantageous use of electricity storage in the UK is to help reduce the use of gas-fired power stations. That’s because we’ve already nearly eliminated the use of higher carbon coal-fired power.

Replacing 1kWh of electricity from gas will avoid emitting about 0.35 to 0.4 kg of CO₂. A lithium-ion battery carbon footprint of 80kg CO₂ per kWh is about 200 times as much as that. Therefore, for the carbon savings to outweigh the manufacturing impact the battery needs to be charged from zero carbon energy and discharged to replace gas power stations about 200 times.

That’s less than one year of use. Of course in practice not all output from a battery will be directly replacing gas. But it shows the potential for reducing carbon emissions through a combination of renewable energy and energy storage.

A key step to maximise carbon savings is therefore if your battery works as a buffer for the grid, rather than only meeting your own needs. For example, this could mean exporting to the grid in early evening, when demand for electricity is more likely to exceed what is being generated from renewable energy.

Ideally, a combination of smart controls and variable rate tariffs will enable you to receive a better export rate at times like that. This will make it more financially attractive to sell the power than to keep it for your own use.

What’s the cost and lifespan of a domestic battery?

When comparing offers work out the price per kWh of storage capacity. Lithium-ion battery cost is often around £1000 per kWh of storage, but for larger capacity batteries it can be less – perhaps £700 per kWh. For example, a battery with a usable capacity of 10kWh might cost £7,000.

The expected lifespan of a battery is key to estimating the financial payback. A lithium-ion storage battery warranty is usually for either 10 years or a minimum amount of energy stored (‘throughput’), whichever is reached first. Comparing a few different batteries, the warrantied throughput is around 2500 to 3000 kWh per kWh of storage capacity.

The warranty should also describe the expected reduction in storage capacity over time. The capacity after ten years of use may be about 60% to 70% as much as when new. That means a battery that originally stored 5kWh would drop to about 3kWh capacity after a decade of use.

A battery could have a warranty covering the number of charging cycles. However, bear in mind that the reduction of storage capacity means that future cycles will be to a lower level of charge.

Battery life should be a bit longer than is warrantied, depending on usage. Despite this, the continued degradation means that the warrantied throughput could be a good figure to use when estimating financial savings.

What is the financial payback on a battery?

It’s hard to give a good estimate for the time needed to recoup the money spent on a battery. It will depend on the different prices available to you for importing and exporting electricity. It also depends on your level of electricity consumption. If you also fit a heat pump to heat your home, then a battery could give a lot more potential for reducing running costs.

Back when electricity prices were about 15 pence per kWh and you could export directly for a few pence per kWh, the net benefit of storing energy to use later may have been only £250 to £300 per kWh of capacity, over a full ten years of use. For someone on the feed-in tariff scheme the export rate will probably not be a factor. In that case the saving would have been about £100 to £150 more per year. Either way, that’s less than the battery cost.

Import prices went up a lot in the last few years, while export rates were usually still only a few pence. However, import prices are now dropping, and better export rates have also become more available. How much this will continue to change in the next ten years is very hard to say, so estimating long term financial benefits is tricky.

From April 2024 the price cap equated to an electricity cost of about 24.5p per kWh, but may continue to drop. If the longer term saving is assumed at 20p per kWh, then storing 3000 kWh (over the battery life) to use later adds up to about £600. However, if you could have exported that electricity for say 10 to 15 pence per unit instead of putting it in a battery, the actual benefit would  be less than £300 per kWh. Estimates like this can be compared to current battery costs per kWh of capacity, to see if the likely savings are bigger than the cost, or if the cost will not be recouped.

Getting a better return with smart imports and exports

Even with high import energy prices, to get a good financial payback from a battery you really need to make use of ‘time-of-day’ tariffs for importing and exporting energy at different rates during the day. And remember that this also ties in with the approach mentioned above for maximising carbon savings.

For example, with a battery you could avoid importing during the early evening peak. Instead, draw only from solar panels and/or battery at that time. Exporting excess energy to the grid at peak times can give a better payback than keeping it to use later. A combination of these should give a much better return than the payback calculated above – but exact savings will vary.

It’s important to get a reasonable export price for electricity generated from a solar PV array, because there will always be seasonal limits on how much you can use directly. In the UK summer a 4 kilowatt PV roof should produce about 15 to 20 kWh per day. This is about 2 to 3 times as much as average daily electricity use (or could be 4 or 5 time more than in a very energy efficient home). You will therefore be exporting most of this electricity – either directly, or later in the day via a battery. Exporting energy is good, as it all contributes to decarbonising the grid!

At the moment you need to be more careful when choosing and using a time-of-day tariff. Variable wholesale gas prices can mean that imports during peak periods could be at a very high cost.

Will a battery work during a power cut?

Most standard battery installations will cut off during a power cut. This is to avoid sending electricity out to the grid when engineers may be working on a fault. For most people this is fine, as they rarely get power cuts. A well-insulated home will retain heat for many hours until the power comes back on,

You can have a system that will run as an ‘island’ during a power cut. It just costs more money to put in the extra equipment to allow you to do this. You therefore need to weigh up that cost against the need to run your electrical appliances during a power cut. You may need to be more careful selecting the battery size, to ensure it has sufficient peak power output.

Vehicle to grid (V2G)

For electric vehicle (EV) owners, another option is to make use of the car battery as a buffer for the grid by using a charger with ‘vehicle-to-grid’ (V2G) capability. Car battery capacities are much higher than domestic batteries – even smaller cars will store about 40kWh. On a day when you’re not driving far you could charge on a cheap night rate or from your solar panels and sell back to the grid for a high rate.

At the moment you can only get a V2G charger through an approved trial. If interested, you could register with some energy providers and car manufacturers to get updates on these. More widespread deployment should be possible soon.

The main driver of V2G is the need to buffer grid demand at peak times. Exports will be triggered by a control unit that communicates with the grid, based also on the preferences you set. It is also going to be possible to have a vehicle-to-home approach with this sort of technology.

Further information

For some additional details, see our questions and answers section below.