Estimating payback period for grid independent PV system with batteries

I often get asked is it economically worthwhile to install a PV system on the roof while the government incentives and subsidies are being cut “as we speak”? Take a look at a very simple cost estimate for grid independent PV system. It will give you a piece of mind from rising electricity prices, assuming you live in a sunny place on Earth :)

What is your daily electricity consumption? Lets assume 12 kWh.
What is your electricity bill? Lets assume $1100 per year or $3/day.
What is the MINIMUM solar insolation where you live? Lets assume 3.6 kWh/m2/day (in Perth). Then Sun will produce 12 kWh/day from 12 kWh / 3.6 kWh/m2/day = 3.33 m2 of area. But solar panels can only utilize 10 to 15 % of this energy. Therefore, we need 10 or 6.6 times more area, 33m2 (10% PV panels) or 22m2 (15% PV panels).
Minimum PV system required is 33 m2 * 100 W = 3.3 kW. At 1$/W installed, the capital investment costs are $3500.

For 1 day grid independent system we need 12 kWh * 2 = 24kWh battery capacity (*2 is for 50% battery discharge depth).
Lead acid battery, 12V, 60 Ah, 720 Wh cost around $100 ($0.14/W). Total battery storage costs is: 12000 Wh /720 Wh = 33 batteries * $100 = $3300.
China (ebay) Lithium Ion Battery 18650, 2200mAh-2500mAh cell costs $0.278/W. Battery system of 24kWh - $6672.
Panasonic High Capacity 18650 Battery Cell NCR18650PF costs $0.42/W. Battery system of 24kWh - $10k.
Tesla, 10kWh for $3500 or $0.35/W. Battery system of 24kWh - $8400.
Water-based batteries (available today from Ampetus) cost $0.7/W. Battery system of 24kWh - $17k.

Diesel backup generator
2.7 kW actual output power, cost (ebay) - $1k. Consumption – 0.4 liters/kWh of diesel fuel. At $1.3/liter cost of diesel - $0.52/kWh.

Present electricity network (supply) charge is $172/year, meaning that capital costs for going off-grid and investing in diesel generator pays back in 5.87 years. Diesel generator must be run at a cost of 12 kWh * $0.52/kWh = $6.24/day or double cost of an average on-grid electricity price ($3/day).

Total off-grid power system costs.$3500 for PV.
$6672 for batteries + ~1k for controllers = $8k.
$1k for diesel generator.
In total - $3500 + $8000 + $1000 = $12.5k. With given electricity consumption the payback period is 12.5k / 1100 $/year = 11.4 years.
Assuming that energy price increases by 2% per year (inflation cancels out because yearly bills will be larger while more money needs to be returned), at the end of year 12 the payback period would be $12.5k / $(1100*(2*12.5)) = 9.1 years. Average payback period is (12.5+9.1)/2 = 11 years.

Conclusions
As you see, a typical case study shows that 11 years payback time is not so bad. Through savings you will earn $12.5k (investment doubled) in 22 years. In comparison, you would need a 3% compound interest rate from the bank to make $12.5k from $12.5k invested over 23 years.
However given all the hassle with system maintenance, diesel and battery lifetimes, it does not look extremely attractive. Battery costs need to go down by an order of magnitude for the off-grid systems to become desirable option for the households.


Here are some useful links for Australia

http://nationalmap.gov.au/renewables/ and how to extract the data from this map using QGIS software (alternative is ARCGIS non-free soft):
http://www.ga.gov.au/data-pubs/web-services/using-wms-and-wfs-in-qgis
http://www.qgis.org/en/site/

Further info:

http://www.ga.gov.au/scientific-topics/energy/resources/other-renewable-energy-resources/solar-energy

http://www.ga.gov.au/scientific-topics/energy/resources/other-renewable-energy-resources/solar-energy/active-solar-ground-stations-across-australia

The most useful link with daily downloadable data can be found from Bureau of Meteorology (BoM) (climate data for extraction):
http://www.bom.gov.au/climate/data/?ref=ftr