Batteries for savings: time-of-day tariffs and self-consumption

Customers often assume a battery will "save more" on top of solar. Sometimes it does. Often, in India today, it does not, and a good installer explains why before the customer spends ₹1 lakh. The test is simple: does the value of moving one unit of solar from the afternoon to the evening exceed what it costs the battery to store it?

The wear cost of a stored unit

Every kWh that passes through a battery uses up part of its life. In lesson 1 we worked out an illustrative figure for an LFP pack: about ₹6.55 per kWh delivered (₹1,10,000 ÷ 16,790 kWh over 10 years). Add the energy lost in round-trip efficiency, about 8%. This is the hurdle. A battery saves money only when the spread (the difference in value between storing a unit and using it later) is bigger than this.

Case 1: plain net metering

Under net metering, every unit exported in the afternoon offsets a unit imported in the evening, at the same retail rate. The grid already acts as a free battery. Adding a real battery:

• saves nothing on the bill (the unit was going to be offset anyway),
• loses about 8% of the stored energy in round-trip losses,
• and wears the battery.

With net metering and a flat tariff, a battery is a backup product, not a savings product. Sell it for backup and say so.

Case 2: time-of-day tariffs

The Electricity (Rights of Consumers) Amendment Rules, 2023 require ToD tariffs: from April 2024 for commercial and industrial consumers with maximum demand above 10 kW, from April 2025 for most other consumers (except agriculture), and immediately once a smart meter is installed. The rule sets floors: solar-hour rates (eight hours a day, fixed by the SERC) at least 20% below the normal rate, and peak rates at least 1.2 times normal for C&I and 1.1 times for other consumers. Each state commission sets the hours and exact rates, and in practice few yet charge households a peak premium (check your SERC's current tariff order).

The effect on solar depends on how your state settles net-metered energy under ToD. If exports in the cheap solar hours are credited at the solar-hour rate, and evening imports are charged at the peak rate, then a stored unit is worth the difference.

Worked example: home on ToD with net metering

• Normal rate ₹8.00; solar-hour rate ₹6.40 (20% lower); peak rate ₹8.80 (10% higher).
• The battery shifts 4 kWh a day into the evening peak. It must store 4 ÷ 0.92 = 4.35 kWh.
• Avoided peak import: 4 × 8.80 = ₹35.20
• Export credit given up: 4.35 × 6.40 = ₹27.83
• Net gain: ₹7.37 a day, about ₹2,690 a year

Value per kWh shifted: ₹1.84. That is far below the ₹6.55 wear cost. The battery loses money as a savings device.

Case 3: net billing or a low export rate

Under net billing, exports are paid at a fixed rate well below retail (for example ₹3.65 in Rajasthan for domestic net billing; ₹2–3.5 in many states, check the current order). Now storing a unit for your own evening use is worth more.

• Same home: avoided peak import ₹35.20; export given up 4.35 × 3.65 = ₹15.88
• Net gain: ₹19.32 a day, about ₹7,050 a year
• Value per kWh shifted: ₹4.83, still below ₹6.55.

Simple payback on a ₹1,10,000 battery would be about 15–16 years, longer than its expected life. Closer, but not there yet, unless the customer also values the backup.

Case 4: replacing diesel

This is where batteries win today. A shop or clinic in a town with long cuts runs a small diesel generator. At about ₹90 a litre and roughly 2.5–3 kWh per litre from a small DG at part load, DG power costs ₹30–36 per kWh before maintenance.

• The battery covers 3 kWh a day of what the DG used to supply, 300 days a year: 900 kWh.
• Saving at ₹30/kWh: ₹27,000 a year, minus the solar units that would otherwise have been exported (900 ÷ 0.92 × ₹4 ≈ ₹3,900).
• Net about ₹23,000 a year on a ₹1,10,000 battery: payback under 5 years, plus quieter, cleaner premises.

Value per kWh shifted: about ₹26, four times the wear cost.

The rule of thumb

These are illustrative; the inputs that move them most are your state's tariff design and the battery price. Battery prices have been falling, and as ToD spreads widen, the middle rows will move towards "pays back". Recalculate every year.

Self-consumption for other reasons

Sometimes a battery is required or helpful even when the bill saving is small: - Regulations: some states have proposed storage or lower export credit for larger systems (Kerala's 2025 draft regulations, for example; the notified terms differ and have been challenged, so check the current notification) or limit export. - Export limits: where the DISCOM caps export because the local transformer is full, a battery lets the customer use the solar instead of curtailing it. - Demand charges: commercial customers billed on maximum demand (kVA) can use a battery to shave the peak, which may be worth more than the energy saving. - Voltage problems: on weak rural feeders, charging a battery at noon reduces export and the over-voltage trips that come with it.

Key points

• A battery saves money only if the spread per kWh shifted is larger than its wear cost (roughly ₹5–7 per kWh for LFP today, illustratively).
• Under net metering with flat tariffs, a battery saves nothing; sell it for backup.
• ToD tariffs and net billing create a spread, but in most homes today it is still below the wear cost.
• Replacing diesel generation is the strongest savings case for batteries now.
• Recalculate as battery prices fall and ToD spreads change.

Check yourself

1. Under net metering with a flat ₹7 tariff, what does a battery save on the bill?
2. Net billing pays ₹3.00 for exports; the evening rate is ₹9.00; round-trip efficiency 92%. What is the value of each kWh shifted?
3. Why does replacing diesel make a strong battery case?