Are solar batteries worth the investment? As a renewable energy specialist with more than 15 years of experience in installation and consulting, I frequently hear this from homeowners.
The answer will vary, depending on what you expect to gain from your solar battery storage. Are you looking for financial benefits, such as energy savings? Or are you more concerned about having a reliable way to power your home if the utility grid goes down?
I’m also frequently asked if solar power is worth it. I addressed this in part one of our blog series, where I examined key factors homeowners should consider before investing in a new solar system.
In this second blog post, I’ll look at some important financial and practical factors to consider when weighing the potential pros and cons of solar battery storage as part of your home energy management system. Before I can say whether solar batteries are worth it, I should first clear up the biggest misconception I encounter when people are exploring solar plus storage. This is crucial in understanding whether it’s worth it for you.
Most people assume that a typical home battery system, just like a typical whole-home generator system, would power your home during an outage. That’s only partially true. In fact, a typical 10 kilowatt-hour (kWh) battery system that costs between $8,000 and $10,000 can likely power a limited set of loads — such as your fridge, a few lights, a Wi-Fi router, and a couple other small devices — for most of the day without a re-charge from a solar system, but it’s not going to keep your whole home running for that time.
How long you can power your home with battery storage varies greatly with each home but depends primarily on your battery storage capacity, your solar power system, and your electrical needs during an outage. You can combine multiple batteries for additional capacity, but a whole-home battery is probably going to cost a lot more, while a 10-kWh battery is typical for most homes.
So, why are batteries getting so popular if they can’t power your essentials for very long? The best use case for solar battery storage isn’t long-term outages — it’s short-term outages. And short-term outages are a lot more common. Since the U.S. Energy Information Administration began collecting reliability data in 2013, electricity customers have consistently experienced average total power interruptions of about two hours (106 minutes to 118 minutes) per year when major events are excluded. In those situations, if you have a home battery, you don’t need to lug out your portable generator, which is noisy, pollutes, and can freeze up in winter. Not only is that a huge convenience, but also a big carbon win.
Plus, unlike generators, you can pair solar panels with battery storage to replenish your battery. During an outage, the utility shuts off the backflow of electricity to protect its workers. But your solar-plus-storage system can operate independently when the grid is down. And remember, solar panels alone won’t power your house during an outage for the same backflow safety measure. But with a storage system and some additional switchgear, you can use rooftop solar energy during an outage.
But the long-term outage issue isn’t solved by solar alone. Later, I’ll share what I think is the “Goldilocks” approach to achieving low-carbon backup power at a similar price point as whole-home generators. But before I do, I want to spend a little more time comparing generators vs. batteries, as this is key to answering the question of “is it worth it?”
Solar battery storage vs. generators
Generators are a popular option for homeowners in a home energy management system. Generally, there are two types of residential generators. A portable generator is usually powered by gasoline or propane and requires manual startup, similar to a lawn mower. A standby or whole-home generator is an automatic backup power solution permanently installed outside your home. This type of generator is powered by natural gas, gasoline, diesel, or liquid propane, and automatically starts when the power goes out. Standby and whole-home generators use the same technology but vary in size and capacity — the latter are sized at a higher capacity and thus cost more.
Many people compare standby and whole-home generators to battery storage systems, but they don’t do the same things in the same way.
Unless you invest in a large battery storage system, these two options aren’t really comparable. This is because a “whole-home” battery system could cost north of $30,000 with installation, even with the Inflation Reduction Act (IRA) incentives. Although the IRA allows homeowners to subtract 30% of the cost of installing a new solar and storage system via new tax credits, such a system still likely costs far more than a whole-home generator. Dollar for dollar, today, a solar battery storage system priced the same as a whole-home generator has far less capacity. For additional information on solar incentives, consult the Database of State Incentives for Renewables & Efficiency®.
A typical whole-home generator is rated at about 20 kW and costs approximately $8,000 – $10,000. That’s about the same cost as a typical battery system. It can power most, if not all, of your home (depending upon your home’s electrical needs) as long as there’s fuel — and you can store days’ worth of fuel in nearby tanks. Meanwhile, batteries drain unless replenished by solar. If you’re only comparing a generator to battery storage based on backup power capacity and dollar-per-dollar reasoning, the whole-home generator will win every time. But solar plus storage pays you back over time, and, as I’ll expand on in a minute, it also delivers benefits in carbon reduction, convenience, clean air, and sustainability. The one big remaining advantage of generators is that they’ll get you through long-term outages, whereas a battery system of comparable price won’t. But there is a solution to get the best of both worlds — ongoing savings and clean energy from batteries, with long-term outage protection. This is where my Goldilocks solution comes in.
My Goldilocks “plug-in hybrid” battery storage-generator combo
For many people, a combination of solar battery storage and a portable generator will be the best home energy management system.
A (solar) battery-plus-portable-generator combination offers low-carbon short-term backup power and ongoing net-metering savings through a typical battery system; plus low-cost, long-term outage protection through the portable generator. The battery gets you through the common nuisance outages, while the $300 – $500 portable generator is ready for the once-a-year long-term outage.
I’ll use a plug-in hybrid vehicle to illustrate the point. The chargeable electric battery powers the vehicle for the first 50 miles or so, which often covers the entire trip. For longer drives, the gasoline engine kicks in, removing any concerns about the electric range and letting you drive with peace of mind.
A solar battery-plus-portable-generator system works in a similar way in your home. The battery powers many of your electrical needs during common short-term outages. For longer outages, you can rely on your portable generator. Once your home battery is drained during that big storm, you can crank up your portable generator, which can get you through a multi-day outage.
Overall, a solar battery-plus-portable-generator combo costs about the same as a whole-home generator upfront, but the battery starts saving you money almost immediately, which adds up over the life of the system. The generator does not offer the same long-term payback.
Solar-plus-storage systems offer a range of benefits
The most obvious benefit of solar battery storage is that it works for the homeowner every day by shifting load demand from peak hours to off-peak hours, minimizing peak charges, and adding resilience to the grid.
The Office of Energy Efficiency & Renewable Energy summarizes the benefits of a solar-plus-storage system in four ways.
- Around-the-clock power: Some homeowners take advantage of time-of-use rates that are essentially differing electricity rates depending on when it’s consumed. If you don’t have a solar-plus-storage energy system, your electricity on a summer evening is likely more expensive because of the higher demand on the grid. With battery storage, however, you can use electricity generated during the day later on, rather than relying on the utility for power during peak usage on the grid.
- Energy-use monitoring: Many solar-plus-storage systems, like the Schneider Home platform, provide additional energy monitoring that allows you to track your home’s energy production and consumption in real time. It basically serves as a window into your home’s energy usage.
- Energy self-sufficiency: Unlike a solar-only system, a solar-plus-storage system provides backup power when the grid goes down. If the power goes out in your neighborhood, your house will be the one with the lights on.
- Pocketbook protection: This is a big one for the battery vs. generator debate. Unlike a generator, there are several ways to earn money back over the life of your battery system.
- There are optional demand-response programs that pay you for throttling back your home’s power during hours of peak demand.
- With net-energy metering and virtual power plant programs, the utility pays you back over time if your solar-plus-battery system sends electricity back to the grid.
What’s net-energy metering, and why does it benefit solar battery owners?
Net-energy metering (NEM) is a nation-wide utility billing mechanism that allows consumers to receive net metering credit for any excess solar power they contribute back to the grid. Though net metering credits tend to be small, often less than $50 a month, they add up over time, and you will have the infrastructure in place for long-term gains.
Many states have different NEM programs. California’s recent NEM 3.0 policy is a big change. Although it shrinks prices for solar energy sold back to the grid, it does offer benefits to battery owners. These changes include:
- An earlier version, NEM 2.0, paid an attractive rate for solar-only electricity sent back to the grid — $0.30 per kWh. NEM 3.0 pays about 75% less — about $0.08 per kWh. That’s a big difference!
- However, electricity stored in your battery fetches a higher rate, which can vary based on grid demand. But EnergySage estimates that you would see an equal or faster payback overall for a solar-plus-storage system vs. a solar-only system, due to these rate changes — a big incentive to add a battery.
- Some experts estimate that you could see as high as a $3.32 per kWh payback for battery storage, but only during periods of peak demand — still, that’s 10x higher than NEM 2.0’s payback.
- You can still “grandfather” your NEM 2.0 rates for solar-only electricity if you hook up your system by April 14, 2023.
So, are solar batteries worth it?
The answer to the question of whether solar batteries are worth it depends on what you want from your home energy management system.
Many homeowners find that solar batteries are worth the investment in a solar-plus-storage system for energy savings, pocketbook protection, and convenience during an outage. Others may see value in the carbon reduction, clean air, and sustainability benefits of a solar-plus-storage system, compared to pollution-producing generators.
Let’s summarize the key ideas. Assuming you’re looking at battery storage because you want back-up power, your real question is: batteries or generators? For about $8,000 – $10,000, you can buy either a whole-home generator, which is a seamless, though carbon-intensive and noisy system. The big perk is that you can power your entire home for days, if not indefinitely. But consider, you might only really need its full capacity during that once-a-year big storm. That’s a lot of money for a once-a-year use case.
On the other hand, you could spend about the same on a battery storage system, which does have long-term outage limitations. But it offers seamless, quiet, and low-carbon backup power, along with continual net metering savings. Plus, you can offset the long-term outage risk through solar panels that recharge your battery and/or a cheap, portable generator, which will cover your essentials during a long-term outage. That’s what I prefer in my own home.
But every home and everyone is different. If you want to do a further analysis, EnergySage has great resources to help you determine if solar batteries are worth it, including:
- Types of batteries and storage and how they work
- Details on how energy storage works
- How batteries provide clean energy
And when you’re ready to design your own home energy management system, head over to Schneider Home. You’ll get a free recommendation of what energy technologies will work best for you, customized to your unique home.