What Does Solar Battery Degradation Cost?

How the model works

The calculator starts with your usable battery energy and applies the selected annual degradation rate on a compound basis. If the annual assumption is 2.5%, the remaining modeled capacity is multiplied by 97.5% each year.

Why economic degradation is not the same as technical degradation

A 1 kWh reduction in storage capacity does not have a universal monetary value. The value depends on electricity prices, export compensation, backup requirements, cycling strategy, system constraints and the amount of useful work that the lost capacity would otherwise perform.

Use replacement cost carefully

Replacement cost is included as decision context rather than as a direct replacement recommendation. A battery may continue providing useful service after substantial capacity loss, while a different application may require replacement sooner because its minimum usable capacity is higher.

Better inputs for a real project

• Use measured usable capacity where available.
• Use manufacturer degradation or warranty assumptions when evaluating contractual performance.
• Separate battery capacity loss from inverter efficiency and other system losses.
• Use the economic value actually relevant to the battery's application.

Frequently asked questions

Is compound degradation always realistic?

No. It is a transparent planning approximation. Real degradation can vary with cycling, temperature, SOC exposure, chemistry and calendar time.

Does capacity loss mean the battery has failed?

No. A battery can remain operational while retaining less energy than when new.

Can I use this to evaluate replacement timing?

Yes, as one input into a broader replacement analysis. Warranty terms, measured performance and installed replacement cost should also be considered.

Should I value lost energy at my electricity tariff?

Only when that tariff is an appropriate representation of the avoided or replacement value of the battery's lost capacity.

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