We recently got this question from a reader named Ellen:
The answer is actually pretty simple:
Most batteries receive energy from solar panels, store it in chemical form, then convert it back to electrical form to be used when you need it. That process of converting the energy back and forth (and sending it along the wires) causes some energy to be lost along the way, meaning you actually get to use less than what your panels produce.
If you live in a state with good net metering policies—meaning your electric company gives you full credit for the excess energy your panels send to the grid—you’re better off with as many panels as your roof can hold, as long as that size installation doesn’t produce more energy than you use in a year. The energy is recorded as it’s produced and sent through your two-way electricity meter.
Now, there are many other questions when it comes to solar and batteries for the home, like “what if you need protection when the power goes out?”
But Ellen’s question sparked our passion for the age-old debate: are batteries for a solar system worth the cost?
Whether solar batteries are “worth it” depends on a lot of factors. How you value the peace of mind that comes with knowing your house can still run in the event of a power outage is subjective; so is how you value the idea that you’re using all the solar energy for yourself, instead of shunting it onto the grid to mix with all the other electrons from traditional power sources.
But we can set up a few scenarios and apply some hard numbers to see if the pure financial calculation works out.
What we mean when we say “battery”
Traditional lead-acid batteries for home solar systems are big, bulky, maintenance-intensive and short-lived (replaced every few years). That said, they are still the most economical choice when it comes to long-term battery storage solution.
Newer lithium-based batteries like Tesla’s Powerwall are now becoming popular, because they’re smaller, lighter, simpler, and longer-lasting than the older designs. But cost is still a big problem with the new technology.
Still, as we look at “battery storage” for the rest of this piece, we’ll focus on the Powerwall, because it is the product most likely to be used in an average home, whereas the older battery technologies are mostly confined to the enthusiast market.
Here are the scenarios where adding batteries to your solar installation can work:
Battery incentives if you live in California
Right now, California is offering its Self-Generation Incentive Program (SGIP) for home energy storage solutions. At the current tier of incentives, you can earn $400 per kWh of batteries you install.
For Tesla’s Powerwall 2 home battery at 13.2 kWh, that means $5,280 in incentives. Given that the cost of the battery is $5,500, that’s a huge benefit. But there are other costs associated with the battery, too, including supporting hardware, installation fees, and permits and upgrades to your existing wiring.
Here’s a rundown of the costs and incentives, with a final total below:
|Tesla Powerwall 2||$5,500|
|California SGIP incentive||-$5,250|
The SGIP incentive is a huge boon, eliminating a huge portion of the costs. And the Tesla Powerwall is set to last 10 years, so if 10 years of blackout protection is worth $3,350 to you, this is the way to go.
“Customer Self-Supply” if you live in Hawaii
Hawaii is the best example of a place without net metering where batteries make sense. The electricity there is very expensive because much of it is generated from imported fossil fuels, and even though that’s changing as the islands transition to renewable forms of electricity, the savings can still be pretty large.
After net metering, HECO now allows folks to install solar only if they plan to use the electricity themselves. To do that, you need a solar panel system that’s designed to create as much energy as it can store, and no more. That can be a tricky proposition, but it’s possible to design a system that can still save you money on HECO’s high rates.
Sunrun offers what it calls “Brightbox,” which is a total solution for solar energy. You’ll still stay on the grid for when you need more power than your panels generated in a day, but if the system is designed well, you’ll be using minimal grid energy. Pricing isn’t currently available, but we’ve heard you can sign up for a full-service contract at around $.25/kWh, which is comparable to what HECO charges.
If you want to go off-grid, or if it’s too expensive to get power from the grid
Having grid power run to your property can be very expensive. Even with a main transformer a few hundred feet away, you could expect to pay $10,000 on average, and another $5,000-$10,000 for trench digging and other services.
Faced with $20,000 or more to run new electric lines, plus the next few decades of paying for electricity and utility fees, you might instead choose a solar+battery system that can produce all the energy you need and store the extra for when the sun isn’t shining.
The average home uses about 30 kWh of electricity per day. In California, an 8-kW solar installation combined with 2 13.2-kWh Powerwall 2 home batteries could meet you needs for about $45,000 after the SGIP incentive, or maybe $55,000 without the incentive. You’d need to replace the batteries after 10 years with whatever (much better) technology we have then, but hey, no once said taking civilization out into the woods was easy.
And keep in mind, the prices above are for the system before applicable tax credits. You could save up to 30% of the costs off your income tax bill, bringing the final cost down to between $31,500 and 38,500.
Last modified: March 4, 2019