Battery storage systems work by storing excess energy generated from the sun into a battery for usage at night. During the day, the energy produced by the solar PV panels that does not get used during the day is stored into the battery and reduces dependence on the grid. The low credits offered for excess electricity given back to the grid is an incentive to invest in battery systems which ensure there is power during the night and also during power outages.

For more information on how a battery storage system works, the below diagram will help illustrate.

During the day the solar panels produce DC electricity from sunlight. The inverter converts the DC electricity to AC to be used within the home through appliances and lights. The excess power generated by the solar panels is used to charge the battery, this excess power would otherwise go back into the grid. Once the battery is fully charged, excess power would then go back to the grid. At night time, the stored energy in the battery is used to power the home and as a result there is little reliance on the grid for power.