Lithium vs. Lead-Acid Batteries: A Dollar per kWh per Year Cost Comparison
Many think lithium batteries are more expensive than lead-acid ones for off-grid solar solutions. But is that really true?
We use lithium batteries in all our solutions because of their performance, longevity, and lower cost. So let’s do the math to see why this chemistry is the most cost-effective.
Here’s why many people think lead-acid batteries are a better deal:
You get ~20 kWh of capacity for around $5,000 with typical deep-cycle marine-grade or AGM lead-acid batteries, but say, only ~10 kWh for around $4,000 with high-quality lithium ones.
But we must look beyond the nominal dollar per kWh.
What to consider when comparing the cost of batteries
All batteries die. The longer you can use them, the less you pay over their lifetime. So, compare the cost per kWh per year when weighing your options. Here are the factors to consider in your calculus:
Depth of Discharge (DoD)
DoD is the percentage of a battery’s total discharged capacity. It’s an important number because exceeding the recommended DoD causes a battery to degrade faster, reducing its lifespan.
To preserve the longevity of lead-acid batteries, you should not set your DoD to over 50%. That means if you have a 20 kWh pack, you have only 10 kWh available at any given moment. The batteries will be trashed if you set the DoD to over 50%. And if you discharge a lead-acid battery to 100% DoD, it’ll be dead as a doornail.
On the other hand, lithium batteries can survive a 100% DoD. A 90% DoD offers a good balance between usable capacity and longevity for most use cases. We set the DoD to 80% for clients who want a long-life pack. Let’s go the conservative route and set the DoD to 80%. A 10kWh pack will give us an 8kWh usable capacity.
Battery lifespan
Well, this one seems pretty cut and dry. But still, there are some caveats.
Your typical lead-acid batteries have a lifespan of three to five years. Setting the DoD to under 50%, keeping the operating temperature in the 70s, and performing regular maintenance (e.g., topping them off with distilled water, using proper charging techniques, and removing dirt that may cause corrosion) is essential for achieving the maximum lifespan.
Unfortunately, most lead-acid battery installations we have seen are not optimal (e.g., in a shed that would reach 100 degrees in the hot sun or the DoD set too deep) — and the batteries probably won’t achieve the 5-year lifespan as advertised.
What about those “no maintenance” sealed lead-acid batteries? Unfortunately, that’s a misnomer. While you don’t have to flood them regularly or worry about leaked chemicals, the operator must keep the battery top clean, check cable connections regularly, and perform proper charging and discharging to keep them healthy (e.g., no dipping below 50% DoD).
Different lithium chemistries have different lifespans. High-quality lithium cobalt oxide (LiCoO2) cells set at 80% DoD can last up to 7 years. Meanwhile, high-quality lithium iron phosphate (LFP) cells with an 80% DoD work for up to 10 years of daily use*. These batteries are truly maintenance-free, so their lifespan is less likely affected by human errors and oversight.
(*our ultra-high-endurance packs set at ~70% DoD can last up to 15 years.)
Now, the battery math
Let’s combine all the factors and calculate the cost per kWh per year to see which option offers a better deal.
Cost per kWh per year for lead-acid batteries
A client paid ~$5,000 for a ~19.2 kWh battery bank. Let’s be generous and round it up to 20 kWh for easy calculation. The price includes materials (e.g., cables, terminals, and fuses), installation work, and inverter and solar charge controller programming for the appropriate DoD.
Meanwhile, a casual search on Amazon found a set of four 12V lead-acid batteries that combine to create a 6.8 kWh battery bank for $1,000. To build an 18 kWh pack, you’d pay $3,000 plus materials, labor, and expertise to program the equipment. That’d come out not too far from the $5,000 our client paid.
If we set the DoD to 50% for maximum longevity, the usable capacity for the $5,000/19.2 kWh pack is around 9.6 kWh. Let’s keep it simple and round it up to 10 kWh. The cost comes out to ~$500 per kWh.
Most lead-acid batteries last three to five years. Let’s be generous and make it five, assuming perfect operating conditions and impeccable maintenance. $500 per kWh divided by five yields $100 per kWh per year.
Cost per kWh per year for LFP batteries
Our high-endurance custom-built 10 kWh LFP battery pack costs around $4,000. It includes the cells, materials (e.g., cables, fuses, terminals, etc.), a high-end battery management system (BMS), 3-D-printed custom braces, battery build work, BMS programming, and implementation. The whole nine to ensure it works perfectly for the next 10 years.
(Note: LFP cells are more expensive than LiCoO2 ones. We always look for the best deal for our customers, so your mileage may vary depending on the big bad supply chain. But the number is a good ballpark to work with.)
If we set the DoD at 80%, the usable capacity for this $4,000 pack is 8 kWh. The cost also comes out to $500 per kWh.
But now the lifespan comes into play, big time. Let’s take the typical 10-year lifespan. $500 per kWh divided by ten yields $50 per kWh per year — that's half the cost of lead-acid batteries on their best days.
So there you have it. We have a winner. Even if we compare the best-case scenario for a lead-acid battery pack with a typical scenario for an LFP battery pack, the LFP pack wins by a long shot.
