Why the “just wait for cheaper batteries” mindset misses the point - and what to do instead.

For solar, you can back‑solve a price at which projects work. For batteries, you must design a control strategy that stacks enough value streams. A practical rule of thumb: a £400/kWh battery stacks up financially if you can cycle it once per day at ~16p/kWh of value (the spread between charge cost and discharge benefit) every day. If seasonality or operations halve usable cycling days, you effectively need ~32p/kWh on the days you do cycle, or you need to halve the price of the batteries to make bank. The alternative? Create more price signals using tariffs and control the battery to create more value.

In this blog, we'll explore the pricing of batteries and why you need to approach them differently from a simple solar setup. The two solutions are entirely different, and should be treated differently - solar being a passive value-generating asset and batteries being an active asset. This means that asking “at what price do commercial batteries make sense?” is not the right question to ask. This blog breaks the topic down and explores the right questions to ask.

Solar’s pricing playbook and why it works

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Solar is a passive value-generating asset. Once it’s wired in, sunshine turns into electricity that offsets grid consumption at a reasonably predictable rate:

• Solar generation is physics‑driven. For any location in the world, you can model irradiance and determine the panel output.
• Revenue is tariff‑driven. It’s straightforward to determine the typical prevailing retail and wholesale electricity prices for bill savings and export value. If you assume typical self-consumed generation to export ratios (say 4:1), you can determine the savings from solar on a single kWp basis. 
• The investment test is then straightforward. Pick a hurdle (say, 15% IRR), then compute the £/kWp capex at which systems clear that hurdle. Analysts can do this for any country; entire market forecasts (e.g., what’s the next booming market after Germany, Spain or Australia) are built this way.

Because output is passive and predictable, you can meaningfully ask: “At what price does solar take off here?”

Batteries are different: they’re active assets

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A battery doesn’t create value by existing. It has to be told what to do:

• Charge from a low‑value source (cheap tariff window, surplus PV, curtailed export),
• Discharge into a high‑value sink (peak tariff, demand charge window, site constraint, flexibility market),
• Repeat reliably without violating constraints (SoC, cycle life, export limits, compliance).

So the right question changes from “What price makes this work?” to “How will we control the battery to create enough value?”

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A simple rule of thumb for batteries: where is 16p?

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If you can operate the system so that it delivers roughly one full cycle per day where the value of that cycle ≈ 16p/kWh, a typical commercial battery can clear standard investment hurdles:

• Example hurdle: 10% IRR over 10 years, or 15% IRR over 15 years at an indicative installed cost of £400/kWh.
• Here, 16p/kWh is the spread between charge opportunity cost and discharge value - not a market price.

Solar self‑consumption example

• Charge with PV that would otherwise be exported at 6p/kWh.
• Displace grid use later at 26p/kWh.
• Spread = 20p/kWh, which comfortably clears the 16p/kWh rule.

But in places like the UK or Germany, many commercial PV systems only export surplus for around half the year. If you can only find daily cycles for half the days, then on the days you do cycle, you effectively need 32p/kWh of value to average out to the target. 
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Seasonality turns a slam‑dunk into a maybe.
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So what do you do here? Well, you can either:

1. Look for customers paying 38p/kWh or more flat rate for electricity (some, but not many, of these commercial customers are out there!) OR
2. Wait for batteries to halve in price to £200/kWh installed. (Possible, but we might be waiting a while.) OR
3. (As a far better option!) Create more price signals using tariffs, and control the battery to create more value.

The conclusion isn’t “look for a needle in a haystack” or “wait for £200/kWh batteries.”, it’s to take a holistic view on an entire site's electricity supply (i.e. solar, battery and tariffs) and control the battery so it has more work to do!

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So, what actually makes batteries pencil out?

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Three levers unlock value; most successful projects pull at least two:

1. Tariff engineering (create signal)
   Move from flat or weak dual‑rate contracts to structures that expose the battery to real price differences:

• Three‑rate tariffs with a pronounced peak window,
• Pass‑through of wholesale, network, and non‑energy charges (so the battery “sees” volatility),
• Demand charges (for example, like those in Australia or Germany) that a battery can shave down.

2. Sizing both PV and battery together (right‑sized resources)
   Simulate multiple PV/BESS sizes to ensure enough low‑cost charge hours and enough high‑value discharge windows without stranding capacity. Batteries can also be used as an enabler to increase solar sizes where there is concern about the volume of solar generation being exported to the grid.
3. Stack additional value streams (control strategy)
   Layer services where rules allow: peak‑shaving, arbitrage, self‑consumption, export management, and (subject to eligibility) flexibility services. The art is orchestrating them (pun intended) with priority rules or optimisers so the battery is rarely idle.

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A practical workflow we use at Orkestra

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This is where a tool like Orkestra becomes invaluable for identifying new opportunities. When we look at opportunities, we adopt a holistic approach, starting with the problem we're trying to solve for a given site. We consider different sizes of solar, different sizes of batteries, and, crucially, tariff changes. Our constant aim is to find ways to create stronger price signals for batteries.

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When we evaluate a site using Orkestra, we:

1. Map the customer’s goal. What’s the business objective - operational savings, energy independence, carbon savings, resilience or just making a good investment?
2. Model hundreds of potential solutions. Test multiple PV sizes, battery sizes, and tariff changes side‑by‑side to create a large pool of potential solutions.
3. Create more price signals. Where possible, move the customer from flat/weak tariffs to structures with useful peaks and demand components that you can impact with a battery.
4. Optimise control. Simulate dispatch to stack self‑consumption, arbitrage, peak‑shaving, and (where applicable) flexibility participation.
5. Confirm the solution(s) that meet the customer goals. Validate that the solution has met the business requirements of the customer.
6. Check bankability. Validate IRR, payback, and sensitivity to degradation, downtime, and price volatility.

This holistic approach finds value, not just lower equipment prices.

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Common pitfalls to avoid

• “Set and forget.” Batteries are not passive. Without a good control strategy, it doesn’t matter how good the battery pack is technically (i.e. the lithium and inverter); it will never make bank.
• Only considering solar self-consumption. PV‑paired commercial battery systems may lack solar export in winter to have anything to do. Plan for other opportunities for the battery to create value.
• One‑dimensional equipment sizing. Looking at only the solar or only the battery will give you a very different answer if you look at everything together and consider ranges of solar, batteries, tariff changes and other site adjustments. 
• Not considering tariffs. Staying on a flat or weak dual‑rate electricity contract or not being on the right network tariff can suffocate a battery opportunity.

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The bottom line

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Asking “At what price do batteries make sense?” is the wrong starting point. For batteries, price follows performance, and performance is a function of control plus the price signals you expose the asset to. Treat the battery like a Swiss‑army knife and give it real work every day and projects start to meet CFO‑level hurdles like 15% IRR over 15 years.

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Notes: Numbers are illustrative and will vary by site, market rules, and tariff specifics. Always validate with site data and current contract terms.