Home energy storage can reduce a dwelling’s reliance on the power grid, whether tethered to a solar panel or used as a grid-connected standalone, allowing homeowners to lower the climate impact of their energy use and have more control of their electricity. Fueled by concern over weather events and rising utility bills—and intrigued by deal-sweetening state and federal incentives—more people are interested in installing a battery backup than ever before. According to Fortune Business Insights, the global residential backup market could nearly double by 2032.1
“For homeowners who have high utility rates or tiered rates based on time of day, discharging your batteries during peak rate times to power your home can significantly reduce your utility bills ” says Sequoya Cross, Vice President of Energy Storage at Briggs & Stratton Energy Solutions, adding that these systems create even more savings when coupled with solar. “For those in outage-prone areas, having energy security and resilience is a major benefit.”
But is a home energy storage system right for you? The real answer is “it depends.” There are many factors to consider, including where you live, what your utility rates are, whether you’re also installing (or currently have) solar panels, and how much you’re willing to spend. It’s also absolutely crucial to find a trustworthy installer who can work with you to find the system that fits your exact needs and walk you through every step of the process. If you’re looking to fuel yourself up with some knowledge on the systems, here’s what to know.
What is home energy storage?
To put it simply, home energy storage systems capture and hold electricity for later use. The term commonly refers to a solar battery, which stores surplus electricity generated by solar panels to provide auxiliary power to a home. It can also refer to a standalone home battery system that’s charged directly by the grid and used to provide backup power or capture more affordable electricity.
Solar batteries
Solar panels free homeowners from complete dependence on the electrical grid. With a battery attached, they can bank surplus energy generated by the panels during the day then tap into that stored electricity at night, on a cloudy day, or whenever they need it—greatly lowering the need to draw power from the grid. If the battery is full, any excess can be sent back to the grid.
While adding a backup battery system considerably ups the price of the already costly solar array, its presence means the goal of going totally off-grid is much more in reach. Without battery power, panel-owners could be limiting the potential of their investment, says Dave Roberts, Managing Director of the UK-based energy storage specialist GivEnergy. He points to a 2021 study published in the journal Applied Energy, which compared homeowners with solar panels and no batteries with those who have a solar plus battery storage. “The former only used around 30-40% of energy generated,” he says. “The latter reduced electricity imports from the grid by up to 84%.”2
Standalone home energy systems
Standalone home energy systems, by comparison, are not tethered to a renewable source of energy. These installations, which are available in everything from wheeled portable versions to full-sized units hard-lined into your home, are juiced up via a connection to the grid. They act like generators, and have two main uses: As backup systems that kick on and keep power going during an outage, and a means of cutting high utility costs by storing electricity during times when it’s cheaper and discharging it when rates are higher.
Is a home energy storage system right for you?
While there are certainly many benefits to investing in a home energy storage system, the answer depends on several factors—and we’ll get into those in more detail later on. But, according to Emily Walker, Senior Researcher of Solar & Storage at the solar energy resource and marketplace EnergySage, there are four big questions to ask yourself to determine if investing in a system is worth it.
Are power outages a common occurrence for you?
If you live in an area where losing electricity is a frequent occurrence, or, in a spot that takes a while to come back online when power outages occur, socking away some energy could be a good call. “If they are, you might consider a battery for backup power,” she says. “Power outages can wind up costing you a lot of money in damage.”
Does your utility’s net metering deal stink?
True 1:1 net metering means that you make an equal trade with the utility company for the excess electricity generated by solar panels that you send to the grid. That means, for every kilowatt hour you send to the utility, you can then draw a kilowatt hour back. If that’s not the case, solar owners might consider a battery for self-consumption. “That way, you can avoid sending and pulling electricity from the grid, instead producing and consuming most—sometimes even all—of your electricity on-site,” says Walker.
Are you subject to time-of-use rates or demand charges from your utility?
If the cost of electricity in your area varies greatly depending on the time of day (peak hours tend to be much more expensive), Walker says, you might consider a battery for electricity bill savings. “Many battery systems include software so you can strategically use your battery to avoid pulling electricity from the grid when it’s most expensive.”
Are there any local incentive programs available to you?
If there’s money on the table to help pay for home energy storage, you might consider a battery for futureproofing. “Incentives can significantly bring down the cost of batteries, but they won’t be around forever,” she says. “Now could be the time to get a battery if you had good incentives available to you.”
If the answer to any—or all—of these questions is “yes,” it might be worth it to consider investing in home energy storage. So let’s get into the finer print:
Do you need a battery if you have solar panels?
Whether or not to store surplus electricity depends largely on how resilient the homeowner wants their solar setup to be—and also on what kind of deal they can strike up with their local utility.
If a rooftop solar system without a battery component generates more electricity than a home needs during the day—a common scenario—that excess electricity can be sent back to the utility company in exchange for a credit in a net-metering agreement. In theory these agreements, which are currently available in 38 states plus Washington D.C. and Puerto Rico, create a symbiotic relationship between utility provider and customer: The utility can use what would be excess energy to bolster the grid, and panel users can pull energy from the grid at a discounted rate when they need it.
Whether energy storage makes sense comes down to cost analysis and what plans are available in your area. If your utility company provides panel owners with 1:1 net metering—which means the utility company offers users 1 kilowatt hour (kWh) of drawn electricity at no cost for every 1 kWh of electricity they’ve fed into the grid—then a home battery might not be worth the investment. “Not everyone needs a home battery,” says Walker of EnergySage. “But in areas where they make sense, they can save you a lot of money. If you don’t have access to 1:1 net metering, batteries are an essential component of a home solar panel system to ensure savings.”
Another factor is how often outages occur. When one happens, panels go offline due to safety reasons. Homes with a solar battery system can stay up and running via their stored electricity.
How much can home energy storage cut utility bills?
Potentially a lot. But, again, it depends on a range of factors, and there’s not really a surefire cost savings figure to point to.
First let’s look at standalone systems. It’s important to remember that batteries don’t just enable homeowners to bank electricity from the grid; they allow them to bank cheaper electricity. Say you have a standalone battery storage system and live in an area subject to time-of-use utility rates, which might charge as much as 2x for the electricity you use during peak hours. The unit’s monitoring system sends an alert when electricity costs are lower than normal so you can charge your battery with that more affordable power. Switch over to that backup power when energy costs are higher—during evenings or a heatwave, for example—and you’re saving money. If homeowners use a standalone battery system to store energy when it’s more affordable, they may be able to reduce their bill by 40% or more, estimates Cross of Briggs & Stratton Energy Solutions.
For solar panel plus battery–equipped homeowners, the savings are realized in much starker terms. As they don’t need to tap into the electrical grid and buy electricity nearly as often, their bills can shrink significantly. “Homeowners with a battery storage system plus renewables, usually solar PV panels, can maximize the amount of renewable energy they use to power their homes,” says GivEnergy’s Roberts. “This means they draw less electricity from the grid, and therefore, pay less in electricity bills.” He says that internal data from GivEnergy customers suggests that the drop in bills could be up to 85% a year.
Remember, the savings fluctuate depending on such factors as a system’s size, how much power a solar array generates, and how regularly someone takes advantage of cheaper electricity rates. “Homeowners should keep in mind what they want to get out of the system, understand their utility bill and work with their installer to realize those benefits,” says Cross.
How do home energy storage systems help the environment?
The less a homeowner needs to rely on the grid, the more they stand to lower emissions, particularly if they’ve got solar panels. “Greater use of clean renewables means less electricity—potentially from carbon-emitting fossil fuels—is drawn from the grid,” says Roberts.
Those who have a standalone home energy storage system and regularly pull in cheaper energy to tap into during heavy-use hours are also reducing their impact—just not as much. “By drawing less from the grid during peak hours, homeowners can reduce strain,” says Roberts. “In turn, this makes it less likely that grid operators need to resort to burning more carbon-emitting fossil fuels to keep the lights on.”
Home energy storage systems are also a much cleaner solution during power outages when compared to traditional backup generators that run on fossil fuels. A 2021 study by the public policy group M.Cubed found a “proliferation” of backup generators around California, and 90% were diesel-powered. They posed “significant obstacles to achieving greenhouse gas reduction targets and driving nearly $136 million in annual health costs.” Per that report, diesel generators in the South Coast and Bay area of California produce about 20 metric tons of fine particulate matter, 62 of VOCs and almost 1,000 MT of haze-inducing NOx every year.3
What size home energy storage system do you need?
There’s no one-size-fits-all answer for this because everyone’s needs are different. Battery size depends on a large list of variables including a home’s square footage, the amount of people living in it, what systems a homeowner wants covered, and overall energy habits.
The average home in the U.S. uses more than 10,000 kWh of electricity per year, which breaks down to about 30 kWh per day. To run some critical systems through the night, that likely means a homeowner will need something with a 6-10 kWh capacity. According to EnergySage, the average size of a home energy storage system purchased through their site is about 10 kWh.
For systems attached to solar panels, the appropriate size of a battery capacity, per Roberts, should depend on the capacity of the solar array. To determine this, homeowners need to know their panels’ kilowatt-peak (kWp), which is a measure of how much energy can be generated during ideal conditions. Find a battery that can store at least the amount gathered during peak production hours. “That means, in theory, no solar energy will be wasted under ideal solar-generation conditions,” he says.
Can home energy storage power everything in a home?
Yes, you can run an entire home on stored energy, but most systems only provide electricity to run some of a home’s critical systems: lights, certain outlets, Wi-Fi, and HVAC. This is commonly known as partial home backup and is a common choice because storing and discharging the energy required to run a suite of demanding appliances is costlier. Whole-home backup systems simply require additional batteries and equipment to meet and sustain a home’s exact energy requirements, which equals a much higher expense.
How much does a home energy storage system cost?
The exact cost of a home energy storage system depends on such factors as battery size, your home’s electricity use, what incentives are available to you, whether you have net-metering or time-of-use policies, and where you live. But expect to pay a decent chunk of change.
According to data by EnergySage, the median battery cost is $1,339 per kWh. To provide a general idea of market prices, a 10 kWh home storage system costs $13,308 in New York State. After tax credit, that price is knocked down to $9,127. In Missouri, the cost for the same system is $14,385 or $10,069 after the incentive. In California, it’s $10,750 or $7,525 once credits kick in.
It’s good to keep in mind that a home energy storage system is a long-term purchase, and that should be factored into the cost. Much like solar panel systems, home energy storage systems are viewed in terms of their payback period, or the amount of time it takes for you to earn what you spent on the system through savings on utility bills. This varies, but those with solar plus storage often have much faster payback periods than those who have standalone systems because they have a greater savings potential. The average payback period for a residential home with solar plus battery storage is, per the National Renewable Energy Laboratory, about 11 years. Going by the 15-20 year lifespan of most lithium ion based home batteries, the next nine or so years pay for themself.
Are there tax incentives for buying a home energy storage system?
Quite a few. Anyone who installs an energy storage system that has a capacity rating of 3 kilowatt-hours (kWh) or more can receive 30% off under the federal residential energy credit. It lasts until 2032; in 2033, the credit drops to 26%. There is no maximum amount that can be claimed. Your state may also offer additional incentives. These could range from additional tax credits and sales tax exemptions to low-interest loans and net-metering policies. The Database of State Incentives for Renewables & Efficiency (DSIRE) offers a list of options.
What should you pay attention to when shopping for home energy storage?
There are several varieties of battery to choose from. But expert consensus is that lithium-ion is the best option for the large majority of home energy storage purposes. While they have a higher upfront cost, per EnergySage’s Walker, lithium-ion batteries are typically better due to their longer lifespan, higher efficiency, and greater energy density than the once-common lead-acid battery. Although she says the latter does have its uses. “When it comes to home batteries, the real debate is more about what kind of lithium-ion battery chemistry we should use,” says Roberts. This is a point worth digging into more with your installer.
Beyond your battery chemistry, there are quite a few terms to know, but a good installer will help you figure out what best fits your needs. Still, it’s helpful to have a sense of what words might be thrown your way. Energy Sage’s Walker supplied a helpful rundown.
- Battery chemistry
- Solar compatibility
- Inverter requirements: Does the battery include an inverter or need a separate one? If so, is it compatible with your solar system?
- Storage capacity
- Power output: What is the battery’s power rating, including peak and continuous power?
- Performance efficiency: Can it handle your appliances and devices?
- Lifespan and warranty: Is there coverage specificized for cycles, capacity and potential repairs?
- Energy management: Iis it compatible with energy management systems?
- Warranty: You want at least 10 years
- Country of origin: Batteries made domestically tend to have better customer support.
What should you look for in an installer?
Talk to multiple companies and consult trustworthy websites like EnergySage to find and compare offers from vetted installers in your area. You’ll know an installer is right for you, per Cross, if they take the time to evaluate your needs and really listen. Be careful not to rush the process. Give the installer time to gain a sense of your needs. “Don’t expect them to provide a figure or system cost based on your home’s square footage right out of the gate,” Cross adds. “Everyone uses energy differently.”
Navigating the red tape of the installation process takes time as well, and a good installer will make sure none of the installation details or delays come as a surprise. “An installer should be knowledgeable about the timelines and effectively communicate with you each step of the way,” says Cross.
Above all else, take the time to learn and ask questions. As Cross says, “an installer who isn’t actively engaged in your journey isn’t actively engaged with you.”
- Residential Backup Power Market Size, Share & Industry Analysis, By Technology (Generator, Battery, and Fuel Cells), and Regional Forecast, 2024-2032, Fortune Business Insights, Aug. 2024 ↩︎
- New Study Investigates Policies to Encourage Use of Solar Photovoltaics and Battery Storage in Homes, UCL Institute for Sustainable Resources, Apr. 2021 ↩︎
- Diesel Back-Up Generator Population Grows Rapidly in the Bay Area and Southern California, M.Cubed ↩︎