The Cost of Solar Batteries

Solar panels can only provide electricity when the sun is shining, but you can offset this limitation by adding an energy storage system. Considering equipment and installation costs, a solar battery can cost upwards of $12,000 before incentives. In a large home with a high electricity consumption, the installed cost of a battery bank can exceed $20,000.

The potential savings and payback period of a battery can vary widely depending on local electric tariffs and regulations. Here we will discuss the typical costs of solar batteries in the U.S. and the cases where the equipment offers an attractive return on investment. We will also review the main incentive programs and financing options available for solar batteries and offer buying tips when comparing solar battery providers.

How Much Do Solar Batteries Cost?

The cost of solar batteries can vary widely depending on the manufacturer, battery chemistry and energy storage capacity. The National Renewable Energy Laboratory (NREL) analyzed the typical market price of an 8 kilowatt (kW) home solar system with and without batteries:

• According to the study, an 8 kW solar panel system without batteries costs $21,456.
• Alternatively, an 8 kW solar panel system with a 5 kW/12.5 kilowatt-hour (kWh) battery costs $37,616.

In the NREL cost analysis, the 12.5 kWh solar battery added $16,160 to the project budget. This means you can expect to pay around $1,293 per kilowatt-hour of a battery’s total energy storage capacity.

The NREL also analyzed how the market price of a typical home solar system is divided among solar photovoltaic (PV) panels, the battery bank, structural components, wiring, labor and other costs.

*Other costs include overhead, permitting, taxes, logistics, company profit, etc. 

Solar batteries have simple maintenance requirements since they do not have any moving parts exposed to mechanical wear. However, residential solar batteries have a typical lifespan of 10 to 15 years, while high-quality solar panels can last for 25 to 30 years. So if you install solar and want continuous battery power, you will have to purchase a replacement battery after 10 years.

Most home batteries in the market have a lithium-ion chemistry, which is ideal for frequent charging and discharging. You can also find lead-acid batteries, which are better suited for off-grid applications and backup power systems. Lead-acid batteries are more affordable, but only last for 500 to 100 recharging cycles. On the other hand, the best lithium-ion batteries can exceed 4,000 cycles.

Lead-acid batteries also suffer a drastic loss of performance when exposed to frequent charging and discharging, which is common in residential use.

Savings with Solar Batteries

There are two main scenarios where a solar battery can increase your energy savings, compared with a regular solar panel system without energy storage. These scenarios are:

• If you are charged a time-of-use tariff, which varies your electricity rate throughout the day.
• If your electric company does not offer net metering or solar buyback programs you cannot profit from excess solar energy production.

The exact savings achieved by a solar battery will vary widely depending on local electric tariffs and incentives. For this reason, we cannot provide a “typical” savings value and payback period. However, we can discuss how a battery saves money in the two scenarios above. Once you contact a solar battery provider, the company can calculate more accurate savings based on your home energy needs and local tariffs.

Time-Of-Use Tariffs

Many electric companies charge time-of-use (TOU) tariffs or increased prices at times of high demand, which is normally during the evening. For example, an electric company may charge a peak tariff of 40 cents per kWh between 5 p.m. and 9 p.m., but a lower tariff of 15 cents per kWh during the work day when people are less likely to be home. Here is a breakdown of how you can save money in this scenario: 

• Solar panels generate most of their electricity output around noon. Under the TOU tariff described above, electricity is worth 15 cents per kWh at this time of the day.
• If you store the solar electricity your panels produce in the afternoon in a battery and use it during peak evening hours, you can save 40 cents per kWh.
• In this example, you would save an additional 25 cents per kWh thanks to the battery. If your battery can store 12 kWh of energy, you can save an extra $3 per day and $1,095 per year.

In a few words, you can use a battery to store solar electricity and use it exactly when your electric company is charging the highest tariffs. However, this is only possible if your company charges a TOU tariff.

Lack of Net Metering

Many U.S. states offer some form of net metering — when your solar panels generate more electricity than what your home needs, you can sell the difference to your electric company for billing credits. However, some states do not have a net metering policy, meaning unused solar energy is wasted unless you store it in a battery.

You may also find net metering programs with unfavorable terms. For example, an electric company may charge 20 cents per kWh for consumption, while only paying 5 cents per kWh for excess solar energy. A solar battery is also recommended in this case since you can use it to save the full value of each kilowatt-hour of energy your panels produce. This recently happened in California when the state passed Net Energy Metering 3.0 (NEM 3.0), which drastically reduced solar export tariffs for homeowners.

Do I Need a Solar Battery?

Installing a solar battery is recommended if it can increase the power bill savings achieved by solar panels. This normally happens under the scenarios described above — when you have a TOU tariff or no net metering. You can also consider a battery bank if you have access to net metering with low solar export tariffs, like in California. 

A solar battery is also helpful if you live in an area with frequent power outages. Solar panels alone cannot provide backup power since they have a variable electricity output while your home appliances need a stable supply. On the other hand, you can use a charged solar battery when the grid is down. For instance, you can use a home battery to keep your power on if you live in southern Florida, where power outages due to hurricanes are fairly common.

In general, a solar battery is not recommended if you have access to a favorable net metering program or live in an area with a stable grid and very few blackouts. In this case, a battery system offers minimal benefits compared to the cost.

How To Save Money on Solar Batteries

As with solar panels, purchasing a solar battery represents a large upfront investment. Here are some ways to save money on solar batteries. 

Install a Battery with Solar Panels

You can install home batteries alone or with solar panels. However, you can only charge stand-alone batteries with grid electricity, which counts towards your monthly power bill. Combining solar panels and batteries makes more sense financially since you can generate your own electricity for recharging. By installing both systems together, you may also lower some upfront installation costs such as wiring and permitting.

In October 2023, the MarketWatch Guides team conducted a nationwide solar cost survey of 1,000 homeowners with installed solar panels. Based on the results, 49% of respondents had installed a battery along with their solar panels, which suggests energy storage is growing in popularity.

Use Federal and State Tax Credits, Incentives and Rebates

Solar panels and battery systems are both eligible for the 30% federal tax credit, officially called the Investment Tax Credit (ITC). This national program lets you claim 30% of your total solar system cost, including the battery, as a federal tax credit. You can use the credit to lower your federal income tax burden. 

As a quick example, assume you buy a 6 kW solar panel system for $17,100 and a 10 kWh home battery for $13,000. In this case, you could claim $5,130 for the solar panel system and $3,900 for the solar battery. The combined cost of this solar and battery system is $30,100 but would get a total tax credit of $9,030. In other words, the net cost of the project drops to $21,070.

The federal tax credit is the only nationwide incentive available for solar panels and batteries. Depending on your location, you may also qualify for state tax incentives or rebates. Here are five of the largest battery incentive programs you can find in the U.S.:

Note: You can combine all of the above solar battery incentives with the 30% federal tax credit.

Get Quotes from Multiple Installers

Regardless of your location and the battery size needed for your home, we recommend you compare offers from multiple providers. Ideally, look for a solar company that also installs battery systems so you do not have to deal with two separate providers. The best solar installers are certified by leading battery manufacturers such as Tesla and Enphase.

Solar Battery Financing

In general, home battery systems have fewer financing options than solar panels. In most cases, you will have two payment options. You can pay for the solar battery upfront in cash or apply for an energy storage loan and pay for the equipment over time.

When you buy solar panels, you have the option of a cash purchase or solar loan plus two additional payment options:

• Solar lease: You pay a monthly fee to use solar panels, which remain under the installer’s ownership. Your provider is responsible for system operation and maintenance during the lease term, which can last up to 25 years.
• Power purchase agreement (PPA): Similar to a lease, but with a PPA you pay for the electricity generated instead of a fixed rental fee. Installers typically set PPA prices lower than local electric tariffs so you can still save on power bills.

In rare cases, you may find battery leasing options. However, battery PPAs are not possible because a battery is a storage system — not an energy generation system.

We recommend a solar loan or cash purchase as the first option since you will own the panels and batteries directly. As the legal owner of a renewable energy system, you can also claim the federal tax credit and other incentives. If you choose a solar lease or PPA, only the system provider can claim and keep the incentives.

Also, watch for companies that offer “free solar panels”. These offers are not necessarily scams, but are misleading — in some cases, companies will use this wording to advertise a lease or PPA. While most solar leases have zero upfront cost, you are still committing to monthly payments for up to 25 years, with penalties for early termination. A professional solar company will provide a clear explanation of what it is offering without using deceptive terms such as “free solar panels”.

Selecting the Right Solar Battery

The Tesla Powerwall is arguably the most popular home battery. However, many other battery manufacturers also offer top quality. The following are some of the best solar batteries in the U.S. market:

• Tesla Powerwall
• sonnenCore
• Enphase IQ
• Generac PWRcell
• LG Energy Solution RESU
• SunPower SunVault

High-quality solar batteries have a typical installed cost of over $12,000, but the actual price can vary depending on your location and provider. Just like when comparing solar panel offers, take the time to review multiple battery options. If you live in a state with energy storage incentives and want to claim tax credits or rebates, make sure you choose an eligible battery model.