Battery Storage: How Much does it Cost?

Understanding solar battery prices

The costs and benefits of solar batteries will determine whether or not you should install a solar panel system that includes energy storage. With a standard solar energy system, the economics are fairly easy to understand: if you have high electricity bills, installing solar panels to produce your own power is an investment that will pay off in just a few years. Once you add a solar battery to the mix, the economics become more complex.

How much do solar batteries cost?

Before you can determine if installing a solar battery makes sense, you’ll need to know the price. Like solar, you can think of the costs as both a gross price and a price per relative capacity. Solar batteries range from $5,000 to $7,000 and from $400 dollars per kilowatt-hour (kWh) to $750/kWh.

Home solar batteries are a new technology. panels, the list price of solar batteries is largely dependent on the materials that they are made of and how much power they can give you. Installing a battery that can operate off-grid typically also costs more than installing a battery designed to operate while connected to the grid. Much like solar panel systems prices have fallen dramatically in the past few years, experts predict that solar batteries will become less expensive in the years to come. As a benchmark, here are the 2016 list prices for two of the leading solar battery products:

  • The 13.5-kilowatt-hour (kWh) Tesla Powerwall 2.0 has a list price of $5,500, which includes a built-in inverter.
  • Sonnen, another leading energy storage company, announced a 4-kWh system in 2016 that includes an inverter and a “smart energy manager,” priced at $5,950.

List prices for solar batteries are only part of the story. Unless your battery comes with a built-in inverter, it needs to be installed with a specialized inverter that is capable of managing the flow of electricity to and from a battery. (Note that when you pair a solar battery with solar panels, you will only need to install one inverter.) Additionally, solar batteries need to be installed by a licensed electrician.

Is installing a solar battery worth it for you?

Understanding how your utility charges you for your electricity is the first step to determining whether or not the economics of solar-plus-storage make sense for you. If you pay the same per-kWh rate regardless of time of day or total monthly use, and your utility offers standard net metering, the only additional value you will get from adding a battery to your solar panel system is the availability of backup power in case of power outages.

However, as more utilities change the way that they charge customers for electricity, installing a solar battery will start to make more sense.  Consider the following scenarios:

Time-of-use (TOU) rates

If your utility has TOU rates, you’ll pay more per kWh for the electricity that you use during hours of peak electricity demand. Peak TOU rates can be as much as double the off-peak rate. For example, in 2016, TOU rates for some California solar homeowners reached $0.46/kWh during peak summer hours.

Energy storage can reduce the amount of electricity you buy during peak hours. If you install a battery as part of your solar panel system, you can store extra solar energy during the day and use it in the afternoon and evening when the TOU rates you would otherwise pay are higher.

Demand charges

If your utility has demand charges, you’ll pay a fee that is based on your total electricity use. Demand charges are typically determined by the amount of electricity you buy during peak hours, or by the total amount of electricity you buy in a given month. If you install a battery with your solar panel system, you can use it to minimize the amount of electricity you buy from the grid and ensure that your demand charges stay low.


Other technologies that help you save on electricity bills

Solar batteries aren’t the only way to reduce your electricity use during peak hours. Smart energy technologies, like smart thermostats and smart water heaters, can help you shift electricity-intensive heating and cooling processes to times when electricity prices are lower. A bonus: these technologies come at a lower price than most solar battery technologies.

Reduced or no net metering

In addition to TOU rates and demand charges, there’s another situation where you might consider a solar battery: if your utility doesn’t offer full net metering credits.

If your utility offers credits at the “wholesale” rate for the solar electricity you send back to the grid, your solar electricity is more valuable if you can use it at home. A solar battery makes it possible for you to store your excess solar energy instead of sending it back to the electric grid for a reduced credit on your electricity bill. You’ll also reduce the amount of electricity you need to buy from your utility at the retail rate.

There are some situations where installing a battery as part of your solar energy system makes sense. However, the technology is still evolving, and costs aren’t low enough for storage to make sense for everyone. The best way to understand whether solar-plus-storage is a smart investment for your home is to talk to are qualified solar installer who offers energy storage solutions.

Want to install solar batteries later? Ensure your solar PV system is ready today

Home energy storage is a relatively new technology, and for many homeowners, the economics don’t yet make sense. That doesn’t mean you have to wait to go solar, however. Just ask your solar installer to design a system with an inverter that works with solar batteries so you can turn your solar panel system into a solar-plus-storage system later on.

How should you finance your solar-plus-storage system?

The financing options available for a solar-plus-storage system are effectively the same as those for a standard solar energy system: you can choose to buy or lease your solar battery.

In certain markets, solar companies are offering leases for solar energy systems that include a battery. For example, Tesla’s Powerwall battery is available through SolarCity in Hawaii as part of its “Smart Energy Home” offering. Vermont utility Green Mountain Power is also offering the Powerwall to its customers, both through leases and cash purchases.

Can you use the solar tax credit for batteries?

The federal investment tax credit (ITC) for solar is a major financial incentive for homeowners that install solar. The ITC reduces the cost of a solar panel system by 30 percent, with no upper limit. If you choose to install a battery as part of your solar energy system, it is also eligible for the ITC. Some states, local governments, and utilities also offer an additional incentive for residential energy storage.


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