Battery Storage ROI Calculator
Battery System
Utility Rates
Solar
Year-by-Year Breakdown
| Year | Capacity (kWh)↕ | Annual Savings↕ | Cumulative↕ |
|---|---|---|---|
| 1 | 13.5 | $1,404.00 | $1,404.00 |
| 2 | 13.2 | $1,376.00 | $2,781.00 |
| 3 | 13.0 | $1,349.00 | $4,129.00 |
| 4 | 12.7 | $1,322.00 | $5,451.00 |
| 5 | 12.5 | $1,295.00 | $6,746.00 |
| 6 | 12.2 | $1,269.00 | $8,016.00 |
| 7 | 12.0 | $1,244.00 | $9,260.00 |
| 8 | 11.7 | $1,219.00 | $10,479.00 |
| 9 | 11.5 | $1,195.00 | $11,674.00 |
| 10 | 11.3 | $1,171.00 | $12,845.00 |
This battery storage ROI calculator estimates the payback period and ten-year return for a home battery used mainly for time-of-use rate arbitrage: charging cheaply off-peak and discharging during expensive peak hours. It accounts for usable capacity (90% depth of discharge), round-trip losses (90% efficiency), optional solar charging, annual capacity degradation, and demand-charge savings. The output includes daily and seasonal savings, a year-by-year breakdown, and the resulting ROI.
Formula
dailySaving = (D × peakRate) − (D / 0.90 × offPeakRate), where D = min(capacity × 0.90, power × peakHours)
- D
- Daily energy cycled in kWh, limited by usable capacity and by power × peak hours
- peakRate
- On-peak electricity price in $/kWh (value of discharged energy)
- offPeakRate
- Off-peak price in $/kWh used to recharge
- 0.90
- Round-trip efficiency, so recharging needs D/0.90 kWh from the grid
How it works
- Enter the battery capacity (kWh), power rating (kW), and installed cost, then your peak and off-peak electricity rates and the number of peak hours per day.
- Daily discharge is capped at the smaller of usable capacity (capacity × 90%) and power rating × peak hours. Arbitrage savings equal the peak value of that energy minus the off-peak cost of recharging it, adjusted for 90% round-trip efficiency.
- Each year the capacity is reduced by your degradation rate, savings are recomputed, and cumulative savings are compared against the installed cost to find the payback year and the ten-year ROI.
Worked example
A 13.5 kWh, 5 kW battery costing $9,000, peak $0.45/kWh, off-peak $0.10/kWh, 3 peak hours/day, 2% yearly degradation, no solar.
- Daily energy D = min(13.5 × 0.90, 5 × 3) = min(12.15, 15) = 12.15 kWh.
- Discharge value = 12.15 × 0.45 = $5.47; recharge cost = (12.15 / 0.90) × 0.10 = 13.5 × 0.10 = $1.35.
- Daily arbitrage saving = 5.47 − 1.35 ≈ $4.12; year-1 annual saving ≈ $1,503.
About $4.12/day, roughly $1,503 saved in year 1, payback near 6.3 years, and a 10-year ROI of about 52.7%.
Frequently asked questions
- What is rate arbitrage and why does it drive the savings?
- Rate arbitrage means charging the battery when electricity is cheap (off-peak) and using that stored energy during expensive peak hours. The bigger the gap between peak and off-peak prices, the more each cycle saves.
- Why is the recharge energy larger than the energy discharged?
- Batteries lose energy on every charge-discharge cycle. With 90% round-trip efficiency the calculator assumes you must draw about 1.11 kWh from the grid for every 1 kWh you later discharge, which is built into the cost side.
- How does pairing with solar change the result?
- If you enable solar pairing, part of the daily charging is assumed to come from your panels at no grid cost, which lowers the recharge cost and increases net savings compared with charging entirely from the grid.
- Why might the payback show as never within ten years?
- If the daily savings are small relative to the installed cost, cumulative savings may not reach the purchase price within the ten-year window, so no payback year is reported. Raising the peak/off-peak spread or lowering the cost shortens payback.