Household energy bill crisis - can a small battery system help?

Some of you will have heard of household battery storage systems. These systems are typically installed as part of a solar PV install, however they are increasingly being installed without solar to supplement household energy use by storing off-peak electricity for use during peak time. The savings can be significant as off-peak electricity is around 75% cheaper than peak time electricity. Even at small levels this can make a difference to household energy bills.

For example:

An average UK household uses 8kWh of electricity every day (2900 kwh per year - see footnote *). As of the 1st of April 2022 the typical cost of that electricity in the UK is 30p per kWh. If your house had a 2.4kwh battery and it was loaded up during off-peak hours it would cost 18p (see footnote **). If you then used that 2.4kwh during peak, instead of costing around 74p (2.4kwh at 30p) it would cost 18p (2.4kwh at 7.5p). That’s a daily 56p saving by using off-peak electricity. Now 56p doesn’t sound much, however it soon adds up - £17 per month or over £200 saving per year on electricity bills.

The retail price for a 2.4kwh battery kit is £1,500 (see footnote ***) and a typical install could cost around £200. Based upon a saving of £200 per year, that cost would take between 8 and 9 years to pay back. Over the 10 year life of the battery (it will likely last longer, but that’s the warranted lifespan) you’d save £2,000 in electricity costs, or around 15% return on your original investment.

On the surface that’s not a great return, however keep reading as this is the foundation for something much bigger

Now there are a couple of caveats to this. Firstly you have to be able to afford the battery and secondly you have to be able to get onto an off-peak tariff (most are for people with EV's). However what if these hurdles were overcome and a few changes were made to how we charge for electricity?

1. Make home storage batteries 0% Vat - this would reduce the costs for households that can afford the investment and would drive uptake of household battery storage systems.
2. Now here’s the first radical bit - what if energy companies provided a battery specific tariff with 2 small off-peak windows? It only needs to be a 1 hour window as that’s all that would be needed to charge the battery. One slot overnight (say between midnight & 4 am) and one during the day (say midday and 4pm). These could be staggered across installs to balance the energy networks morning and evening peaks (eg 25% at midnight/midday, 25% at 1am/1pm, 25% at 2am/2pm, 25% at 3am/3pm). The result would be a benefit to energy companies as there would be a more balanced network and as the battery is being used twice a day, savings from the use of battery storage would double from 56p per day to £1.12 per day or over £400 per year. 
3. And the second radical bit - this battery tariff need not require a smart meter. In simple terms, if you have one of these batteries, and you are on the battery tariff, 4.8kwh of daily consumption would be at the off-peak rate - so a periodic meter reading would suffice (eg a meter reading provided once a year would result in a bill of 365*4.8 at off-peak rate, and the rest at normal rate)

If these changes were implemented, the cost of 2.4kwh would drop to around £1500 installed and it would provide 4.8kwh of off-peak energy. The result would be a reduction in energy bills of around £400 per year, it would pay for itself in under 4 years, and it would save and additional £2400 over the 10 year life of the battery. That’s over 100% return on the investment in batteries. 

Think about that - a £400 annual reduction in energy bills and 100% return in 10 years

Now what if we went one step further? What if energy companies provided batteries for low income families. This may not be as daft as it sounds - batteries in households would provide a huge storage network for electricity companies and would result in a smoothing the daily peaks of energy generation. This would have the effect of reducing the energy companies generation costs. If done correctly, this could result in a straight saving of £400 per year for low income families with no upfront cost to them.

It's just an idea, however the principles seem sound enough to me. Now how do we get this idea moving forward and put into action? 

Footnotes

* https://www.simplyswitch.com/energy/guides/average-energy-usage-uk/#pc3

** Base on Octopus Go tariff - 7.5p off-peak 30.83 peak

*** https://www.itstechnologies.shop/products/pylontech-us2000c-2-4kwh-complete-kit-charges-from-solar-octopus-go