Solar Battery Guide: Benefits, Features, and Cost

For some solar owners, pairing solar battery backup with their home solar panels can save money on energy bills and give them energy independence. Backup battery power can be used  at night when your solar panels aren’t producing. Or, backup power can be used for outages and emergencies. 

In this guide, we’ll go over when battery energy storage makes sense, and when it may not be a fit for your system. Here’s how solar batteries work and the potential benefits they have with home solar energy. 

How a Solar Battery Works

When your panels generate more electricity than your property is actively consuming, the electricity can be stored in solar batteries. The stored energy can be discharged through your home’s electrical system to run lights, appliances, and other electronics with clean and free solar power.

Consider your home's normal energy usage. Usually, you consume the most energy in the morning and night. Meanwhile, the most productive hours for solar power generation are midday into the afternoon.

Without a solar battery, excess power is fed into the grid. This can earn you net metering credits on your energy bills, at a value determined by your utility under state regulations.

With a battery, some or all of that excess electricity can be stored at home and used to run your home for free instead of purchasing utility company power.

Today, it is possible to go solar with or without battery storage while interconnected to the energy grid. According to the Solar Energy Industries Association (SEIA), 13% of residential solar projects installed in 2023 included battery storage. SEIA predicts that this frequency will double to 26% by 2028.

Off-grid vs. grid-connected solar systems

The vast majority of residential solar systems are connected to the grid. When you’re connected to the grid, you don’t have to worry about running out of electricity overnight or during a stretch of cloudy days. With the grid still as a power source for your home, you have more freedom in battery, battery capacity, and cost options. 

With a home solar battery, you can use more of the electricity your solar panels generate and have more control over how and when you do.

Solar batteries are essential in off-grid renewable energy systems. Since you won't have access to the grid, you'll need some source of energy after the sun goes down. When designing an off-grid system, you may need to oversize your battery storage to make it through multi-day stretches of bad weather.

Backup vs. arbitrage batteries

Backup solar batteries are what most solar owners have for energy storage. Backup batteries let you store power and send it to the grid or use it at home to save money or get through a blackout. 

Arbitrage batteries, also called consumption-only batteries, only store and sell power to the grid. They can’t be used for home backup power. With an arbitrage system you can store energy during free (solar generating) or low-priced times, then sell energy during high-rate, peak, or super-peak periods. Arbitrage batteries only make sense in some locations.

The Benefits of Adding a Solar Battery

Adding solar battery storage to a solar panel system delivers four key benefits: independence, savings, environmental friendliness, and energy resilience.

Energy independence

Adding a battery enables you to decide when your solar power is used, stored, and shared. This can help you keep the lights on, decrease utility bills, and minimize your carbon footprint.

Savings on utility bills

By drawing power from your battery, you can avoid using utility power outside of solar production hours. This is very important if you live in an area where electricity prices vary depending on the time of day. Batteries can help you avoid high utility electricity rates during peak billing hours.

Cleaner energy at home

By keeping and using more of your solar energy, you can avoid the carbon emissions associated with other energy sources. About 60% of grid energy in the US is generated by fossil fuel resources.

When you need backup or emergency power, solar batteries can be used instead of gas-powered generators. A solar battery reduces noise and air pollution compared to a generator.

Energy security during power outages

Backup batteries can improve your energy security and family’s safety by providing electricity through power outages. With solar panels, once the sun’s out, you have renewable energy to run your home and refill the batteries.

Credit: Climate Cental

Across the country, weather-related power outages are rising as the effects of climate change increase the frequency and intensity of flash floods, cyclones, extreme heat, wildfires, and other natural disasters.

For example, consider the February 2021 winter storm which caused power outages for over 4 million Texans. In addition to losing power, some customers were left with massive utility bills, because when access was restored, electricity rates rose more than 7,000% in a matter of days.

According to Climate Central, the number of weather-related power outages in the US in 2014-23 was approximately double the amount in 2000-09.

Solar Battery Costs: Are They Worth It?

Solar battery costs depend on many factors, but typically the bigger (more capacity) or more advanced the battery, the higher the cost, though lithium battery prices have dramatically lowered over the last 30 years.

Home solar batteries can cost $10,000-$15,000 to purchase and install, though smaller options may be cheaper. Tax credits can return some of that cost if you qualify. Exact solar battery costs vary by manufacturer, installer, and project, and whether things like an electric panel upgrade are required. Also, it's usually most cost-effective to include battery storage as part of installing a new solar system rather than adding to a system years later. 

Other factors affecting cost are how much of your home you want to back up during an outage and how often. Your own budget, your area’s net metering plan, and how adding a battery impacts your upfront costs and solar payback period will help you determine if a battery is worth it to you. 

Financial Incentives for Home Solar Batteries

To reduce and recoup the upfront costs of a solar battery, you may be eligible for several tax credits, rebates, or financing programs, depending on where you live and the equipment you install.

Tax credits

Solar batteries can qualify for the Residential Clean Energy Credit, also known as the federal solar tax credit. Worth up to 30% of total purchase and installation costs, the incentive is redeemed as a credit against your federal income taxes owed, with no limit on the total amount that can be claimed.

In addition to the federal tax credit, several states offer state income tax credits for solar panels and home energy storage systems. While eligibility and credit values vary, state income tax credits exist in Arizona, Massachusetts, New York, and several other states.

Rebates and battery sharing incentives

Besides programs like net metering, specific solar battery incentives in the US compensate participants for installing storage and/or sharing stored power with the grid. For example, California’s Self-Generation Incentive Program offers rebates worth up to 15-20% of battery costs, at a rate of $850 or $1,000 per kilowatt hour installed.

On the other coast in Massachusetts, Mass Save Battery Storage Program participants can earn over $1,000 annually for sharing stored power with the grid during periods of peak electricity demand.

Finding the Right Solar Battery

To decide which battery option is right for your needs, factors to consider include capacity, efficiency, and expected lifespan. Professional work is highly recommended with battery installation, for safety and potential legal requirements in your area.

Capacity

A solar battery’s capacity is how much electricity it can store, measured in kilowatt-hours, or kWh. Remember most solar batteries can be stacked to increase your system’s total storage capacity.

Power output

Measured in kilowatts, a solar battery’s power output rating references how much energy it can deliver in one load, whether to your home or the grid. In general, the higher the output rating, the more devices you can power at the same time.

A battery with a low capacity and a high power rating can run many appliances at once, but for a short period of time. On the other hand, a solar battery with a high capacity and a low power rating may only power a few high-demand appliances at once, but for an extended amount of time.

Depth of discharge (DoD)

A battery’s depth of discharge (DoD) is the maximum percentage of its capacity that can be used without the need to recharge. 

Draining a battery completely can damage it. The higher the DoD percentage, the more of your battery storage you can safely use.

Consider a 10 kWh capacity battery with a 90% depth of discharge rating. Here, you should use no more than 9 kWh (90% of 10 kWh) of the battery’s power before recharging.

Round-trip efficiency

Round-trip efficiency measures the percentage of energy you put into your battery that you can actually get out. Let’s say your solar panels send 10 kWh into your battery, but you can get 8 kWh back. In this example, your storage system has an 80% round-trip efficiency.

While some energy will always be lost in the electricity storage and use cycle, several of today’s top solar batteries have round-trip operating efficiencies of 90% or higher.

Lifespan and warranty

Solar batteries slowly lose charging capacity and efficiency over time and charging cycles (one cycle = one charge and discharge). In general, solar battery lifespans are 5-15 years. 

For example of expected lifespan and warranty terms, a battery may come with a 10-year, 5,000-cycle warranty at 70% capacity. In this instance, the battery should retain at least 70% of its original capacity for up to 10 years or 5,000 charging cycles.

Solar Battery Types and Materials 

In the US, lithium-ion batteries are the most common storage technology paired with home solar panels today. However, lithium systems are not the only PV storage technology on the market, and there are several other solar battery types to be aware of before finalizing your purchasing decisions.

Lithium-ion

Like your smartphone, laptop, or electric vehicle, solar energy systems can be powered by lithium-ion batteries. Specifically, many battery manufacturers are favoring lithium iron phosphate (LFP) technology for solar energy applications. Compared to non-lithium products, LFP and similar battery types typically come with increased upfront costs, longer lifespans, greater round-trip efficiency, and the best long-term value.

Lead-acid

Similar to batteries in gas-powered vehicles, lead-acid systems are less efficient for storing and using solar electricity. Lead-acid batteries generally aren’t worth it for home solar when compared to lithium-ion alternatives.

Saltwater

Saltwater-based systems known as “flow batteries” are emerging on the solar storage market, though primarily for large-scale, commercial, and utility applications.

How Home Solar Batteries Work With the Energy Grid 

Home storage batteries can help solve the duck curve, a problem associated with solar energy capacity and the electricity grid. The solar duck curve is a representation of how grid electricity supplies fluctuate through the day, based on local demand and solar power generation.

Without integrated battery storage, solar duck curves may get worse throughout the US. Here’s how they work:

• Energy demand is typically highest during the morning and evening, while solar power generation peaks from midday until the late afternoon.
• In the afternoon, too much solar power on the grid can lead to energy oversupplies and net losses.
• After solar-producing hours, utilities must ramp up energy production to meet higher electricity demand in the evening.

Here, solar batteries can mitigate grid stress in two ways: by capturing excess solar power generation in the afternoon and offsetting utility energy consumption throughout the evening and overnight. Increased battery-stored energy in use during peak periods of demand can flatten the curve and balance power supplies.

Mitigating the need to build additional electricity generation facilities, solar battery storage sharing programs are often nicknamed virtual power plants.

Solar Battery Savings: Net Metering and Time-of-Use Rates

When your solar power system sends excess electricity to the grid, your utility may add credit to your energy bills through a net metering or net billing program. The value of this bill credit will vary depending on where you live and will rarely be equal to retail energy rates.

For example, a utility might charge $0.12 per kWh for power drawn from the grid, but your net billing credits may be worth only $0.05 per kWh. If you’re exporting solar energy to the grid, you may be compensated at a rate less than what you’ll pay for electricity later that evening.

In this scenario, battery storage could save you money with the ability to capture and use more of the electricity you generate in place of utility power.

Many utility companies have time-of-use (TOU) rates, in which the price of grid electricity depends on the time of day it is consumed. Time-of-use rates are usually highest when demand is higher, in the early morning and late afternoon-evening when people are home and using power.

While TOU prices affect electricity rates for all utility customers, they can also influence the value of your solar net metering credits throughout the day. In areas with TOU rates, you can maximize the economic benefits of your renewable energy system by storing, using, and sharing your solar electricity from your battery strategically in line with grid electricity rates.

How to Get a Solar Battery

Getting a home battery, whether paired with solar panels or not, is a process that will likely require professional help. Unless your battery is off-grid, you’ll likely need permission from your utility and permits from your city. A reputable installer should help you navigate those steps, as well as get your battery installed safely. Since improper installation can lead to an ineffective battery or a dangerous one, you’ll want to have it installed right.

Palmetto can provide a free estimate based on your current utility bills, available incentives in your area, and the unique features of your property. A solar advisor can walk you through your purchase, lease, or financing options and see if your home is a good fit for solar and storage. To get started, use our free solar savings calculator.

FAQs

How much energy can a solar battery store?

Solar energy storage is measured in kilowatt-hours (kWh), with typical residential sizes being 5-20 kWh. To increase a system’s capacity, most solar batteries can be installed in banks.

Can solar batteries be recycled?

Yes, many materials in solar batteries are recyclable. Proper disposal is critical for the technology’s overall sustainability and environmental impact. Solar equipment recycling centers are present in most major US cities and becoming more common.

Where can I get the best solar battery?

A reputable solar company should work with you to get the best solar battery and the best overall system design for your home and energy needs. By having a professional supply and install your battery, you can guarantee warranties and complete local and utility legal requirements easier. Reach out to Palmetto to see how a battery could work for you.

Disclaimer: This content is for educational purposes only. Palmetto does not provide tax, legal, or accounting advice. Please consult your own tax, legal, and accounting advisors.