How Batteries Work
Posted on 17 March 2026
How Battery Systems Work
What a battery does
A home battery stores energy so it can be used later. Most commonly, this energy is generated during the day from solar panels and then used in the evening, overnight, or during poor weather when the solar system is not producing enough power.
Instead of exporting unused solar energy back to the grid for a small feed in tariff, that energy is stored and used within the home. This reduces the amount of electricity that needs to be purchased from the grid.
Some battery systems can also be programmed or automated to charge from the grid when electricity prices are low. That stored energy can then be used later in the day or evening when prices are higher, or exported back to the grid for higher credits. This approach is popular with homes that cannot install a large solar system and still rely on grid energy to charge the battery.
Retailers that offer time varying or wholesale pricing, such as Amber Electric, or retailers with free or discounted midday charging periods, allow batteries to be charged at very low or even zero cost during the day. With a suitably sized battery inverter, large batteries can be reliably charged at low cost and used to offset expensive evening peak rates.
How energy flows through the system
During the day, solar panels generate electricity and that energy is used by the home first.
If the home is not using all of the solar power being generated, the surplus energy is directed to charge the battery.
Once the battery is full, any additional excess energy is exported to the grid.
When solar production drops, such as at night or during cloudy weather, the battery discharges stored energy to supply the home. If the battery reaches its minimum state of charge, the home then draws power from the grid as normal.
Battery charging and discharging
Battery charging and discharging is automatic and controlled by the inverter and energy management settings.
A battery can charge from:
- Solar generation during the day
- The grid during low price periods if configured to do so, either by setting time of use schedules within the battery system or by participating in a virtual power plant (VPP)
The battery discharges when the home requires energy and solar production is insufficient.
When compatible batteries are enrolled in a VPP, they may also discharge energy back to the grid during peak demand periods to generate higher feed in credits or bill rebates.
The role of the inverter
The inverter is the heart of both the solar and battery system. Depending on how a system is designed, a property may have one inverter, multiple inverters, or in some cases many small inverters installed across the system.
At a basic level, inverters convert electricity between direct current (DC) and alternating current (AC). This conversion determines how much energy can be generated, stored, used, or exported.
Inverters also use built in or external meters to measure and control the flow of energy between the solar system, the battery, the home, and the grid.
Types of inverters used with battery systems
There are four main inverter categories relevant to solar and battery installations.
Solar inverters
Solar inverters convert DC power from solar panels into AC power for use within the home. They are not directly part of the battery system but process the energy that may later be stored in a battery.
Most homes have a single solar inverter, although systems expanded over time may have multiple. Batteries can generally be added as AC coupled systems to this setup. If the system meets current Australian electrical standards, the solar inverter may also be replaced with a hybrid inverter for DC coupling.
Micro inverters
Micro inverters perform the same DC to AC conversion but are installed on the back of each individual solar panel. A residential system may therefore have dozens of micro inverters.
Micro inverters are not part of the battery itself. Batteries added to systems with micro inverters are almost always AC coupled.
Battery inverters
Battery inverters convert AC electricity back into DC electricity for storage in the battery and then convert DC back to AC when the energy is required.
Dedicated battery only inverters are becoming less common as hybrid inverters are now more popular due to their flexibility and reduced component duplication.
Hybrid inverters
Hybrid inverters combine the functions of both solar and battery inverters in one unit. They can convert energy from DC to AC and from AC to DC, allowing them to manage solar generation, battery storage, and household consumption simultaneously.
Hybrid inverters can be used in both AC coupled and DC coupled battery systems.
AC coupled vs DC coupled battery systems
When adding a battery to a solar system, there are two main connection types. The difference comes down to where the battery connects and how many times energy is converted.
DC coupled battery systems
In a DC coupled system, the solar panels and battery connect on the DC side of a hybrid or battery ready inverter. The inverter manages both solar generation and battery charging.
How it works:
- Solar panels generate DC power.
- DC power is stored directly in the battery.
- The hybrid inverter converts DC energy to AC when required by the home.
- Once the battery is full, excess energy is exported to the grid
Because solar panels generate DC energy and batteries store DC energy, DC coupled systems avoid unnecessary conversions. This improves efficiency.
A common example is an oversized solar array, such as a 6.6kW array connected to a 5kW inverter. Without a battery, the system can only export or use 5kW at any moment. With a DC coupled battery, the inverter can supply 5kW to the home while simultaneously charging the battery with the remaining capacity. Once the battery is full, the system is again limited by the inverter’s AC rating.
Key points:
- Requires a hybrid inverter with both solar and battery connected
- Usually only one inverter on site
- Higher efficiency due to fewer conversions
- Common for new solar and battery installations
- Battery choices are often limited to compatible brands
Things to consider:
If a standard solar inverter is already installed, moving to DC coupling usually requires replacing that inverter with a hybrid unit.
AC coupled battery systems
In an AC coupled system, the battery is connected on the AC side of the system using a separate battery or hybrid inverter.
How it works:
- Solar panels generate DC power
- The solar inverter converts DC to AC for household use
- Surplus AC energy is converted back to DC to charge the battery
- Stored DC energy is converted back to AC when needed
Key points:
- Uses an additional battery or hybrid inverter
- Installed downstream of the existing solar inverter
- Can be added to existing systems without replacing the solar inverter
- Greater flexibility for retrofits
- Slightly lower efficiency due to multiple conversions
Things to consider:
The additional energy conversions create small inefficiency losses. Multiple inverters can also increase long term maintenance considerations. AC coupled systems are most common for homes with older solar systems or installation constraints.
Which option is better?
DC coupled systems are generally the better option when designing a solar and battery system from scratch.
AC coupled systems are often the better choice when a home already has solar installed and replacing the inverter would add significant cost or complexity.
Your installer should assess system age, compliance, inverter location, and battery placement requirements to determine the most appropriate option.
Battery capacity and usable energy
Battery capacity is measured in kilowatt hours and represents how much energy the battery can store.
Not all capacity is usable. Batteries reserve a small portion to protect lifespan. For example, a 10kWh battery may provide approximately 9.6kWh of usable energy depending on the manufacturer.
Backup power and blackout protection
Some batteries can provide backup power during grid outages, but this requires
- A compatible inverter
- Selected circuits wired to the battery backup port
- Suitable switchgear protected by Type A RCDs
Battery installations do not include blackout protection by default. Backup capability must be designed into the system after assessing switchboard condition and identifying suitable backup circuits.
The inverter must be sized to handle the backup loads. Undersized inverters may overload and shut down.
As a guide:
- Partial backup of 1 to 3 circuits typically suits a 5kW single phase inverter
- Larger single phase loads usually require a 10kW inverter
- Three phase properties commonly require at least a 15kW inverter for backup
If solar is DC coupled, it can continue to operate during a blackout and recharge the battery. With AC coupled systems, it may also be possible to wire solar into the backup supply depending on inverter compatibility and system size.
Without circuits connected to the backup port, a home will not be powered during an outage and grid connected solar systems will shut down for safety reasons.
Interaction with time based pricing and VPPs
With time varying or wholesale energy pricing, batteries can be programmed to:
- Charge during low or negative price periods
- Discharge or export during high price periods
Virtual power plants may also control battery exports during periods of high grid demand in exchange for bill credits or payments.
Robbie, our Sales Manager, documented his 18 month experience using Amber Electric, including VPP participation and wholesale pricing outcomes. This is available in the article titled “18 Months with Amber”.
What a battery does not do
A battery does not generate energy. It only stores energy that has already been produced or imported.
A battery will not eliminate grid reliance unless the system is correctly sized and household energy use supports it.
Key benefits of battery systems
- Increased self consumption of solar energy
- Reduced grid imports during peak periods
- Potential income from high export pricing
- Greater control over how and when energy is used