What does “payback period” actually mean?

Simple payback

If a battery costs $8,000 after the estimated STC benefit and is estimated to reduce electricity costs by $1,000 a year, the simple payback is eight years.

What simple payback leaves out

• Battery degradation and usable capacity changes.
• Future tariff and feed-in tariff changes.
• Finance interest or opportunity cost.
• Maintenance or replacement costs.
• VPP income or wholesale-market rewards.
• Backup-power value.
• Changes in household demand, EV ownership or solar size.

Use simple payback as a screening tool, then compare installer modelling and warranty terms before making a purchase decision.

Calculate a simple payback