Do home solar batteries pay off?

A home battery stores electricity for later. Paired with solar panels, it lets you keep power your panels make at midday and use it in the evening, instead of sending it to the grid. Whether that is worth paying for comes down to one question: how much is the stored electricity worth compared with what you would have got for it otherwise? This guide shows how to answer that question for your own home, using the same model as our calculator, and points out the things a simple model cannot capture.

Where a battery’s savings come from

Solar panels produce most of their power in the middle of the day. Many households use most of their electricity in the morning and evening. The mismatch means that, without a battery, some of the solar output is used as it is made and the rest goes to the grid. Later the same day, the household buys electricity back from the grid.

A battery captures some of that midday surplus and supplies it in the evening. Each kWh it supplies is a kWh you do not buy. So the battery’s value depends on the gap between two prices: what you pay to buy a kWh, and what you get for exporting one. If your utility gives you full retail value for exported power, a battery saves you very little on your bill, because the grid is already acting like a free battery. If exports earn little or nothing, every stored kWh is worth close to the full retail price.

Our calculator takes the second view: exported electricity is valued at zero. That keeps solar estimates conservative, but it is the most favorable setting for a battery. If your utility pays something for exports, a battery is worth less to you than the figures below suggest.

How the calculator models a battery

The calculator starts by splitting each year’s solar output:

used directly = min(output × share used directly, annual use)

surplus = output − used directly

The battery then supplies the smallest of three limits:

from battery = min(surplus × round-trip efficiency, capacity × 365 × round-trip efficiency, annual use − used directly)

In plain terms, a battery cannot supply more than:

• the surplus it can capture, minus the energy lost charging and discharging;
• one full charge a day, every day of the year; or
• the electricity your home still needs after using solar directly.

Round-trip efficiency is the share of the energy you put in that you get back out. It is on the battery’s datasheet, and the calculator does not assume a value: you enter it.

A worked example

Take the household from our payback guide: US average use and price, in Dallas, TX, with panels sized to cover the year’s use. Now suppose the home is empty for much of the day, so only half of the solar output is used as it is made. That leaves 5,394 kWh of surplus in the first year. For the battery we use a round-trip efficiency of 90%, an illustrative value; check the datasheet of the battery you are considering.

The table shows how much each battery size would shift in year one and how much extra it would save. The last three columns are the most useful: they are the most the battery could cost and still pay for itself within 10, 15 or 25 years in this model. We call that the break-even price.

The break-even rises with battery size, but not in a straight line. Once a battery is big enough to soak up most of the surplus, extra capacity has nothing left to store. In this example the 15 kWh battery already captures 100% of the surplus the model allows after round-trip losses, so going larger would add cost with little or no extra savings.

When the household already uses most of its solar

Now suppose the same home uses 80% of its solar output directly, perhaps because someone is home during the day. The surplus shrinks to 2,158 kWh a year, and so does the battery’s value:

With less surplus, the bigger batteries hit the ceiling quickly. A 10 kWh battery shifts 1,942 kWh in the first year here, against 3,285 kWh in the first example.

And if every kWh of solar is already used at home, a battery adds nothing in this model: the 25-year extra savings for a 10 kWh battery come to $0. That is why the calculator’s battery option only changes the result when you set “Used directly at home” below 100%.

Read the break-even against the warranty

Our calculator assumes the battery lasts the full 25 years without losing capacity and without replacement. Real batteries lose capacity as they age, and their warranties are often limited by years, by the total energy cycled through them, or both. Check the warranty on the battery you are quoted, and compare its price with the break-even for that period, not the 25-year figure. In the first example above, the difference between the 10-year and 25-year break-even for the same battery is large. A battery that only pays off if it lasts 25 years is a much riskier purchase than one that pays off within its warranty.

Why these numbers are optimistic

The model is deliberately simple, and several simplifications favor the battery:

• Yearly totals, not daily ones. The model compares annual surplus with annual battery capacity. Real batteries work day by day. On a cloudy winter day there may be no surplus to store; on a long summer day there may be more than the battery can hold. Both mean the real amount shifted is lower than the model shows, sometimes by a lot.
• No aging. As explained above, usable capacity declines over time.
• Zero value for exports. If you are paid anything for exported power, the battery’s value drops by that amount for every kWh it shifts.
• No standby use. Batteries and their electronics use a little power even when idle.

So treat the break-even prices here as an upper limit. A battery quoted near the break-even is unlikely to pay off.

What the numbers leave out

Some benefits of a battery are real but do not show up as bill savings in a simple model:

• Backup power. With the right setup, a battery can keep essential circuits running during a grid outage. How much that is worth depends on how often your power goes out and what you need to keep running. It is a personal judgment, not a calculation.
• Time-of-use rates. If your utility charges more in the late afternoon and evening, every kWh the battery supplies at peak is worth more than the average price. The calculator uses a single price, so it does not capture this. If you are on a time-of-use plan, use your peak price as a rough upper bound.
• Future changes. If your utility changes how it pays for exports, or you add an electric vehicle that charges in the evening, the value of a battery changes too.

So, do batteries pay off?

On bill savings alone, a battery pays off when three things are true: a large share of your solar output would otherwise be exported, exports earn much less than the retail price, and the battery costs well under the break-even for its warranty period. If any of those is not true, the battery is mostly paying for something other than savings, such as backup power, and that can still be a reasonable choice as long as you make it knowingly.

To check your own case:

1. Run the calculator for solar alone with your quote.
2. Lower “Used directly at home” to match your household. Without monitoring data, try a few values: daytime use is often well below 100% for homes that are empty during working hours.
3. Add the battery’s usable capacity, price and round-trip efficiency from its datasheet and quote.
4. Compare payback with and without the battery, and check the year-by-year table against the battery warranty.

If the battery lengthens payback a lot, ask your installer for the system price without it. Panels on their own often pay back sooner, and a battery can usually be added later if your situation or your utility’s rules change.