Is Solar Battery Storage Worth It?

Solar energy combined with battery storage is one of the fastest growing technologies in the United States. According to the Solar Energy Industries Association (Solar Industry Research Data), solar accounts for nearly half of all new electric capacity added to the U.S. grid, with solar-plus-storage seeing particularly rapid growth. In fact, Wood Mackenzie reports that 12% of all distributed solar installations in 2022 included battery storage, a significant increase from previous years (Distributed solar-plus-storage holds much promise, but challenges remain). As costs continue to decline and more homeowners seek energy resilience, adoption of solar paired with batteries is poised to accelerate even further.

What is Solar Battery Storage?

Solar battery storage refers to batteries that store energy from solar panels for use when the sun isn’t shining. This allows homes and businesses with solar panels to make use of solar energy during nighttime hours or when sunlight is limited. Solar batteries work by charging up when the solar panels produce excess energy, and then discharging to provide electricity when needed (Treehugger).

Some key components of a solar battery storage system include the solar panels, a charge controller, an inverter, and the batteries themselves. The solar panels charge the batteries during the day. The charge controller regulates the power from the solar panels to avoid overcharging the batteries. The inverter converts the DC electricity stored in the batteries into usable AC electricity for the home. The batteries store energy for use when solar production is low (Linkedin).

Solar battery storage provides a backup source of power and increases energy independence and resiliency for homes and businesses with solar panels. It allows solar panel owners to store solar energy for use at night or during power outages when grid power is not available.

Benefits of Solar Battery Storage

Some of the major benefits of adding battery storage to a solar system include reduced electricity bills, increased energy independence, and backup power during outages.

Having a solar battery allows households to store excess solar energy produced during the day to use at night. This increases self-consumption and reduces the amount of electricity that needs to be pulled from the grid, lowering monthly utility bills (Source: https://blog.gogreensolar.com/benefits-of-solar-battery-storage). With enough storage capacity, solar battery systems can make homes completely energy independent.

Solar batteries also provide backup power during grid outages. The battery kicks in automatically, so there is no interruption to powering critical loads. This gives homeowners peace of mind that they will have electricity even when the grid goes down (Source: https://sandbarsc.com/news/benefits-solar-battery-storage/).

Costs of Solar Battery Storage

The upfront cost of installing a solar battery storage system can range from $8,000 to $20,000 depending on the size of the battery and other factors. According to Sunrun, the average cost of their Brightbox solar battery is around $11,000 for a 13kWh battery. Tesla Powerwall batteries cost around $10,000 for a 14kWh battery. Prices have been steadily falling in recent years as technology improves.

Ongoing maintenance costs for solar battery systems are relatively low. Most solar batteries come with 10-year warranties or longer covering defects and performance. Basic maintenance involves keeping the batteries at moderate temperatures and routinely inspecting the system. Replacement of solar batteries may be needed after 10-15 years of use depending on the cycles.

Return on Investment

There are a few key factors to consider when calculating the return on investment (ROI) for a home solar battery system: the upfront cost, electricity bill savings, and incentives or rebates. The payback period refers to how long it takes for the savings and revenues from solar storage to outweigh the upfront costs. This varies significantly based on the size of the system, electricity rates, and available incentives.

According to one analysis, the average payback period for a solar battery system in Australia ranges from 6 to 11 years (https://sonnen.com.au/blog/calculate-return-investment-home-batteries-sonnen/). The lifetime savings also depend on the system size and your electricity usage patterns. One source estimates $15,000 to $30,000 in lifetime savings for a 10kWh solar battery system (https://zecar.com/resources/do-home-battery-storage-systems-make-financial-sense).

Overall, the ROI for solar batteries can be favorable but depends heavily on your specific energy costs, consumption, incentives, and desired backup capabilities. Carefully evaluating all these factors is key to determining if solar storage is a worthy investment.

Factors That Impact ROI

There are several key factors that determine the return on investment for solar battery storage systems.

One major factor is electricity rates. Places with high electricity costs will see larger savings from solar + storage compared to places with lower utility rates. Storing solar energy when rates are high and using it later offsets expensive electricity purchases (Source).

Available solar incentives also impact ROI. Federal, state, and local incentives like tax credits or rebates help reduce the upfront costs of solar + storage installations, increasing the returns. More generous incentives lead to better ROI (Source).

Finally, the overall installation and equipment costs affect the ROI equation. Lower component and labor costs mean less money paid upfront, resulting in faster payback periods and better ROI.

Case Studies

Real-world examples can provide insight into the costs, savings, and return on investment of solar battery storage. Let’s examine some case studies of homeowners who installed solar battery storage:

John and Mary in Los Angeles, California installed a 10kW solar array with two Powerwall batteries in 2016 (SimplySolar, n.d.). Their system cost $35,000 upfront. With net metering and the 30% federal tax credit, their out-of-pocket cost was around $17,500. They save $120 per month on electricity and expect the system to pay for itself in 10-12 years. The batteries provide backup power during blackouts.

Russel and Carolyn in Novato, California installed solar in 2011. In 2016, they added two Powerwall batteries for $7,000 after incentives (SimplySolar, n.d.). With the batteries, they save an additional $30-60 per month on time-of-use rates and have experienced no power outages since installing them. The batteries increased self-consumption of solar power from 66% to 86%.

These cases show solar battery storage can provide bill savings, power resilience, and maximize solar self-consumption. Payback periods range from 7-12 years. Key factors are utility rates, incentives, solar array size, and frequency of outages.

New Developments

The technology behind solar battery storage systems is rapidly improving while costs are declining. Lithium-ion batteries, which are used in many home solar systems, have seen major advancements in recent years. The energy density of lithium-ion batteries has doubled since 2010, meaning more storage capacity can fit into a smaller space.1 New chemistries like lithium iron phosphate are also extending battery life and improving safety.

Manufacturing improvements are driving down costs as well. Between 2010 and 2019, lithium-ion battery pack prices fell nearly 90%. Experts predict battery prices will fall another 50-60% by 2030.2 As batteries get cheaper, payback periods for solar storage systems will shrink.

Innovations in solar panel efficiency, power electronics, and smart energy management are also making solar+storage systems more powerful and cost-effective. Companies are introducing integrated systems that optimize solar generation and battery usage. New performance standards and testing protocols are improving product quality as well.

The outlook for solar battery technology and economics looks very promising. Rapid tech advancements and cost declines should continue to improve the value proposition of adding energy storage to home solar systems.

Is it Right for You?

Deciding if solar battery storage is worth it depends on your specific circumstances and priorities. Here are some key considerations:

How much do power outages impact you? – If your power goes out frequently or for long periods, having battery backup can provide valuable resilience and peace of mind.

What are your electric rates and net metering policies? – Batteries become more cost-effective if you pay high electric rates, lack net metering, or are subject to demand charges.

Do you want energy independence? – Pairing solar with batteries allows you to disconnect from the grid in an outage and provides energy autonomy.

Are there incentives or savings? – Look into state/local rebates and tax credits. Time-of-use rate plans may also make batteries more worthwhile.

How long do you plan to stay in your home? – Due to upfront costs, it may take 5-10 years to fully recoup your investment. Best if staying put.

What is your budget? – Assess if you can accommodate the $10,000 to $20,000 cost for a typical home battery backup system.

Analyze your specific tax situation, energy needs, risk tolerance and motivations to determine if solar battery storage pencils out financially and aligns with your goals.

Conclusion

Based on the analysis, solar battery storage can provide significant benefits but also has substantial costs. The return on investment depends on several key factors like energy usage, electricity rates, solar resource, and battery prices. While solar battery storage makes sense for some homes and businesses, especially those with high energy use or time-of-use rates, it may not provide a positive ROI for others.

In the end, carefully evaluating your specific situation is crucial. Consider doing an energy audit and financial projections to determine if solar battery storage is a smart investment for you. Storage technology and incentives are also continually evolving, so stay informed. With the right conditions, solar batteries can be worth the investment today and may become even more beneficial in the future.