If you have ever considered using solar power rather than traditional fossil fuel energy, you may know that one of the biggest obstacles to entry is the battery solar prices. This is even more apparent when you start comparing it to other solar system elements like solar panels and inverters. Most manufacturers of solar systems will explain to their clients that solar batteries are unfortunately what pushes the price up. The question we have to ask then is why are solar batteries so expensive and is there anything that can be done about it?
It is essential to begin by noting that there are many factors to consider when pricing an item like solar batteries. From the impact of demand and supply, to how expensive it is to extract the necessary raw materials, while also considering the difficulty behind manufacturing a solar battery on a large scale. These elements will not only determine the price of a solar battery, but as they change over time, they will be directly responsible for price variations.
Relative to other energy sources or even other parts of a solar system, battery solar prices may seem high. We, at Alumo Energy, believe that by educating our customers on why solar components are priced the way they are, we can help you understand why solar batteries are priced the way they are. In this article, we will discuss several of these essential economic factors while also showing how many of these financial considerations are driving the price of solar batteries down, making them more affordable in recent times.
Historical Perspective Of Battery Solar Prices
The thesis of this article is that multiple economic factors determine battery solar prices. Furthermore, we posited that the variations in these financial considerations would ultimately change the cost of the solar battery over time. As we delve further into this article, we will investigate many of these critical factors in greater detail. But first, it is essential to take a step back and look at the history of the solar battery.
When discussing the history of the solar battery, it is essential to remember that, although connected to the account of the solar system and the solar cell, battery development as a storage solution begins much later. The need to have a system in place to store the excess energy generated by solar cells only became critical later on, as the solar cells became more efficient at converting solar power into a usable energy source. So, although the history of solar cells can be traced back to 1839, the real history of solar batteries only practically began in 1991.
In this section, let us first investigate some of the significant milestones in the development of solar batteries over the years and discuss how these would have impacted battery solar prices:
1991: Sony uncovers its new lithium-ion battery, which is not only effective at storing solar power but is also rechargeable, meaning that it can be used multiple times, making it both practical and sustainable. This made the battery successful in several industries. This invention is not yet in mass production, and without competition, the battery solar prices are still relatively high, and making one large enough to work effectively with solar systems is also costly.
Early 2000s: Between 1994 and 2006, countries worldwide began driving solar power initiatives. Japan’s 70 000 Roofs (1994) and Germany’s 100 000 Roofs (1999) solar programs are some of the earliest examples of government-driven solar subsidy projects. America’s 2005 tax credit creating a 30% tax incentive to invest in solar power and California’s 2006 solar initiative were also significant drivers to the uptake of solar energy.
With the rapid increase in solar system demand, companies moved quickly to invest in research and development of more efficient energy storage solutions for these quickly developing solar systems. This research and development of better solar batteries also saw battery solar prices begin to fall.
2010 Onward: Around 2010, large Chinese manufacturers began to develop large factories to supply all the significant components of solar systems to meet the demand driven by government subsidies. This, of course, included solar batteries. These large manufacturers could make solar batteries much cheaper than in the past, which brought the price down for all solar components, including batteries. By 2012, the cost per watt of power from a solar system dropped from $5 to only $1 in the US, showing how large-scale research and manufacturing made solar systems more affordable.
Although the history provided here is a drastically diluted one, with many significant developments left out, the point of this section is to show how, historically, the role of technological advancement and the power of large-scale manufacturing can drive the battery solar price down significantly. In the following sections, we will look in greater detail at how technology and manufacturing impact the cost of solar batteries.
The Impact of Technology On The Price Of Solar Batteries
Technological advancement is one of the most critical factors in determining the price of almost anything, including battery solar prices. As technology allows us to do things more efficiently and effectively, many costs can be cut in the long run. This makes products more accessible to a broader audience as they become more affordable.
The section above showed how solar systems became more popular as governments began implementing solar initiatives worldwide. In turn, this increase in demand meant that the solar market became more lucrative, and technology companies looking to drive profits started to invest in this space. This in itself caused a double-fold effect:
Technology companies investing in the research and development of solar systems inevitably led to considerable developments in the effectiveness of solar power. From the very first commercial photovoltaic launched in 1954 at Bell Labs, which only had a conversion rate of sunlight to usable energy of around 4%, constant development, especially in the mid to late 2000s, allowed this rate to increase to 15 – 20% drastically
As the efficiency of solar cells developed, there was a shortage of storage. As solar cells could now generate more energy, letting the excess power not taken up by electric consumption go to waste was not sustainable. Instead, these technological innovators began to invest in developing better lithium-ion batteries that could store energy for extended periods so that the excess power generated by the solar cells could be used when the sun was not providing the necessary amounts of light.
This development led to the invention of solar batteries that consumers of the middle class could realistically afford. The 2015 TESLA power wall is a great real-world case study that shows the results of modern technological development efforts. A solar battery perfectly designed for a broader consumer market.
As one may already assume, this double-fold effect, caused by research and development into solar technology, made solar systems more efficient, meaning that the solar systems could be built smaller and still generate the same output. Smaller units requiring fewer materials to manufacture combined with better and cheaper material options being developed meant that battery solar prices and entire solar units were brought down dramatically.
The Impact Of Manufacturing And Economies Of Scale On Pricing
Above, we saw how government incentives drove companies to invest in developing the technology behind solar-powered systems and their various components, reducing battery solar prices. So, too, do government subsidy programs influence the willingness of companies to manufacture the different parts of solar systems, including solar batteries. As we will show in the following section, the increase in manufacturing also directly impacted the battery solar price. Let us investigate how.
In the historical analysis at the beginning of this article, we briefly highlighted how, from approximately 2010 onwards, large Chinese manufacturers moved into the solar system market and began to produce solar system components like solar batteries on a much larger scale at a more affordable price than ever before. But how does this work? How does simply producing more of a product make it cheaper to produce? The mechanics behind manufacturing are rooted in the study of economics. Here, let us investigate a few economic principles that allow for more affordable solar systems and lower battery solar prices.
Economies Of Scale:
This is the primary reason why large-scale manufacturing of solar systems and components like batteries makes them cheaper to produce and, thus, more affordable. The principle of economies of scale states that there is a relationship between how much you have and the price per unit to make something. The larger the quantity you produce, the cheaper it becomes to pay per unit.
This principle is true in every market and applies to solar batteries. Therefore, the decision of large manufacturers like those in China in 2010 to produce solar batteries in huge quantities allowed for the price of these items to drop significantly. But why does this economies of scale relationship exist?
Multiple micro-economic factors are present in large-scale production that allow for this principle to be true. Here are only a few of these that would make solar batteries cheaper as more are produced:
Specialisation: As something is produced multiple times, either the factory labourers become specialised (or adept) at doing the task effectively, or machinery is built that can complete the process effectively, leading to it taking less time to produce the same thing.
Bulk Material Discounts: Many raw materials are needed when something is produced in mass quantity. Because factory owners need to purchase large amounts of these materials, they are often given better prices the more they buy. These savings are thus converted to more considerable savings further down the manufacturing chain.
Financing: Large-scale manufacturers’ access to financing is another advantage. Large operations are generally given better financing terms from financial institutions like banks. Because they are given more money, they can afford better technologies and equipment, making manufacturing more efficient. This, too, will reduce the battery solar prices.
Affordability Today, Alumo Energy And The South African Market
So far, this article has examined how both technological advances and large-scale manufacturing can directly impact the price of solar batteries. From the historical context above and general knowledge that these factors have been in place for solar systems for a long time, the question becomes, what is the financial reality today? To answer this, let us look at South Africa in 2023 and what batteries may cost you.
We, at Alumo Energy, are proud to offer some of the most competitive prices in the South African market today regarding solar-powered systems, and we are also delighted that we can provide financial solutions that make the cost of solar batteries affordable for the broader consumer market.
It is important to note that even with all the technological development and manufacturing that has occurred in recent years, solar batteries will always be the most expensive part of any solar system due to the complexity of the manufacturing process relative to other solar system components. That being said, the price of a solar battery is also determined by the size of the battery you need.
The most popular size for a residential set-up is about 5 kilowatts (kW), with one of the most affordable and recognisable brands in South Africa being Sunsynk. We, at Alumo Energy, are proud to stock Sunsynk products, as we use them in our installations. Although the costs may seem like a significant capital investment upfront, along with favourable solar loans from most South African banks, our Alumo Energy rent-it program also offers viable financial solutions to those who want to invest in solar power.
Conclusion
Battery solar prices are constantly changing, but with Alumo Energy, you can rest assured you are getting the best solar prices for your needs. So don’t hesitate to contact us today, and we can work together to bring you the best prices on solar batteries and an entire solar system that will work for you.