Home Battery Time-of-Use Arbitrage Calculator
Introduction to home battery time-of-use arbitrage
This home battery time-of-use arbitrage calculator estimates how much value a battery can create by charging when a utility tariff is cheap and discharging when the tariff is expensive. It focuses on the energy-spread part of the decision, so it is most useful when you want to know whether the daily price difference is large enough to matter before you consider backup power, solar self-consumption, or incentives.
The estimate is intentionally simple and transparent. It multiplies usable battery capacity by round-trip efficiency to approximate the energy that can actually come back to the home, then applies the peak-minus-off-peak rate spread and your expected daily cycling pattern. That makes the result easy to interpret as savings per cycle, annual savings, and simple payback.
Because utility tariffs can change by season, weekday, or hour, the most helpful way to use the model is to enter realistic numbers rather than best-case brochure values. A battery that looks excellent on paper may be far less impressive if the cheap charging window is short, the peak window is narrow, or you need to keep part of the battery reserved for outages.
How to use this home battery arbitrage calculator
Start with the battery capacity that can genuinely be shifted each day. For a home battery, that is usually less than the nameplate rating once you leave room for backup reserve, inverter limits, or a minimum state of charge. Then enter the round-trip efficiency, the peak rate you want to avoid, the off-peak rate you expect to pay, how many full or partial cycles you think will happen per day, and the system cost you want to recover.
A conservative pass should reduce usable capacity or daily cycles if your battery is often held in reserve for outages or if the household only occasionally has enough peak-period load to absorb a full discharge. A more optimistic pass can reflect the widest rate spread you expect during the year, but it should still be tied to a real tariff window rather than an idealized one. If your utility publishes different rates for summer and winter, or for weekdays and weekends, run the calculator more than once so you can compare those scenarios separately.
As you test values, pay special attention to the spread between the two rates rather than the individual prices on their own. A battery only earns arbitrage value when the avoided peak cost is meaningfully higher than the charging cost, and a small mistake in either rate can change the result noticeably. The calculator is most useful when it helps you see whether the spread is strong enough to justify the installation cost on its own.
Formula for home battery time-of-use arbitrage
This calculator treats arbitrage savings as the amount of dischargeable battery energy multiplied by the difference between the peak price and the off-peak price.
The annual value comes from repeating that cycle over the year, so the battery has to be able to charge cheaply, discharge during the expensive window, and repeat often enough to matter. Simple payback is the installed system cost divided by the estimated annual savings. In practice, a wider rate spread, higher usable capacity, better efficiency, and more frequent cycling all raise the estimate, while a narrow tariff spread, a larger reserve requirement, or low daily usage lowers it.
Worked example for a home battery tariff swing
This home battery arbitrage example uses the calculator’s default values. A 13.5 kWh battery at 90% round-trip efficiency delivers about 12.15 kWh of shifted energy per cycle. With a peak rate of $0.40 per kWh and an off-peak rate of $0.15 per kWh, the spread is $0.25 per kWh, so the modeled savings are about $3.04 per cycle.
At one cycle per day, that works out to roughly $1,109 per year. Against an $8,000 installed cost, the simple payback comes out to about 7.2 years. That is a useful benchmark, but it is only the energy-arbitrage portion of the story; if the battery also has backup value or solar-matching benefits, the full economics may look different.
Limitations of home battery arbitrage estimates
This home battery time-of-use arbitrage estimate does not model every reason people buy storage. It leaves out export compensation, demand charges, financing, maintenance, replacement timing, tax effects, and any incentive that reduces the net purchase price. It also assumes the battery can actually charge during the cheap window and discharge during the expensive window without hitting inverter limits or reserve settings.
Another limitation is that the calculator uses a steady daily cycle assumption. Real households often see seasonal swings, weekend differences, vacation periods, and days when the battery is needed for outage protection instead of arbitrage. If your utility’s tariff changes over the year, or if the battery is paired with solar and you are comparing store-versus-export decisions, you should treat the result as a screening number rather than a final purchasing model.
It is also important to remember that a favorable peak-to-off-peak spread does not automatically mean the battery will cycle at full depth every day. The actual value depends on the timing of household load, the length of the utility’s cheap window, and whether the battery can be filled before the expensive period begins. If any of those pieces are uncertain, use a more cautious set of inputs and compare the result against a second scenario that reflects a less aggressive operating pattern.
Practical notes for home battery time-of-use arbitrage
If you are comparing battery quotes, run this calculator with conservative, realistic, and optimistic tariff spreads so you can see how sensitive the result is to the utility rate structure. In the conservative case, lower usable capacity and daily cycles to reflect a backup reserve. In the optimistic case, use the best off-peak-to-peak spread you actually expect to see, not the widest spread that appears in a brochure or one isolated month. The realistic case should sit between those two and should reflect the way you expect to operate the battery most of the year.
It is also worth checking whether the rates you enter are all-in energy charges or whether additional delivery charges, minimum bills, or time-of-use riders change the economics. Some utilities define a peak window that is short but very expensive; others spread the same cost over many hours, which changes how often a battery can be used profitably. The calculator is most helpful when you are honest about which part of the tariff your battery can really avoid, because the battery only earns value during the hours when it is actually offsetting a price you would otherwise pay.
Finally, remember that simple payback is a blunt measure. It does not discount future savings or show how battery wear might reduce performance over time. Even so, it is a good starting point because it shows whether home battery arbitrage is likely to be a meaningful contributor or just a minor bonus alongside the battery’s other benefits. If the payback still looks reasonable after you lower the inputs a bit, then the project is at least worth a closer look with the installer’s tariff assumptions and your own usage pattern.
Enter your battery and tariff assumptions
Adjust the inputs and calculate a summary you can copy.