How Much Do Battery Storage Systems Costs?

How Much Do Battery Storage Systems Costs?

Solar energy systems are great at powering homes during the day. But if you want to be able to continue using solar power at night, you need a way to store some of the energy that your panels make during the day. Solar batteries are one of the most popular ways to do this.

If you plan on adding a solar battery (or several) to your home, then cost will be a big factor to consider while you shop. That’s why we’ve put together the following article. Keep reading to learn everything that you need to know about solar battery cost.

Solar battery cost: overview

Your solar battery storage price could be as low as $200 or as high as $15,000 per battery. The amount that you pay will vary based on the chemistry of the battery and its features.

There can be quite a bit of variability in solar batteries’ prices. We’ll dive into many of the factors that can impact how much you pay in the following sections.

For now, as a general rule of thumb, just know that you should expect to pay around $1,000 per kWh of power that a battery offers. The average residential solar battery costs between $7,000 and $14,000.

Factors that can impact solar batteries’ prices

Battery quality

Solar battery storage prices are similar to anything else: you get what you pay for. Batteries that have been rigorously tested and engineered with the best materials tend to cost more than those with more lax manufacturing standards.

Battery quantity

Some homeowners choose to add multiple solar batteries to their homes. If you decide to do this, your total costs will obviously go up for each additional batter that you add.

However, many companies will offer you a discount if you buy in bulk. For example, you might pay $10,000 to add one battery to your home but $18,000 for two and $36,000 for three.

Inverter or no inverter

Some solar batteries feature built-in inverters, which convert electricity from DC to a usable AC form. If your battery has its own inverter, it will usually cost more because of it. But if your solar battery doesn’t have an inverter, then you will need to have one elsewhere in your solar energy system.

Battery chemistry

Most solar batteries are made out of some type of lithium-ion chemistry. Two of the most common types of lithium-ion batteries are nickel manganese cobalt (NMC) and lithium iron phosphate (LFP).

LFP batteries tend to last longer than NMC batteries, which is why they usually cost between 30 and 50% more.

Brand reputation

The brand that makes your solar batteries can also have a big impact on the price that you pay for them. Brands that have solid reputations and those that are known for providing high-quality results are able to charge more for the batteries they make.

Warranties and guarantees

Your solar battery cost could also be influenced by the quality of warranties and other guarantees that you get from the company that makes the battery. For example, a company may offer you a great deal on a solar energy storage battery but without giving you any assurances about how long it will last in the form of a warranty.

Additional charges for solar batteries

Your costs for a solar battery will extend beyond the battery itself. You will also have to pay extra for installation, and possibly additional materials. Here’s an overview of those two charges.

Installation

Installation is by far the biggest additional charge when it comes to solar batteries. The amount that you have to pay to have your batteries installed will fluctuate a lot depending on the company that you hire.

Another factor that can influence your installation charges is whether you’re installing your battery independently or alongside a full solar panel system. You will save money by installing everything at once since you will reduce the number of trips that an electrician has to make to your home.

Additional materials

It is also possible that your installer asks you to purchase supportive materials alongside your solar battery. For example, you might have to pay extra for the material that the installer wants to use to secure the battery in place. This will add to your overall price for solar batteries.

Many solar batteries qualify for federal tax incentives

If you already have solar panels, then you are likely familiar with the Federal Investment Tax Credit (ITC) that is offered to homeowners with solar panels. If you don’t know, the ITC is a tax credit that gives you a percentage of the money that you spend on solar panels back. The tax credit currently sits at 26%.

The good news is that many types of solar batteries qualify for this incentive. In order to qualify, your solar battery just needs to derive 100% of its power from an onsite solar array. That means as long as your solar battery is only charged with power generated by your solar panels, you will qualify for the federal tax credit.

This means that you may be able to deduct a percentage of the purchase price for a new solar battery, which could make adding one to your home more affordable.

Best solar battery options

Now that we’ve covered the basics of solar batteries costs, let’s look at a few options that provide a nice blend of power and affordability. Here are three of our favorite solar battery options.

Sungrow SBP4K8

The Sungrow SBP4K8 is one of the best small solar energy batteries on the market. It’s sized at 4.8 kWh and has a maximum power output of 4kW. But the best part about this solar batter is its price. You can buy a Sungrow SBP4K8 for just about $4,000 -- and that doesn’t even take into account any tax incentives that you could qualify for after buying one.

LG Chem RESU 10

The LG Chem RESU 10 is one of the most popular solar batteries on the market. It features high-performing NMC cells and is sized at 9.8 kWh with 90% usable capacity. The battery also has a maximum power output of 7 kW and comes with a 10-year warranty.

The LG Chem RESU 10 is also priced reasonably well. You can pick up the 48V version for about $7,200 of the 400V version for about $8,200.

Tesla Powerwall

Tesla’s Powerwall is another super popular home solar storage battery solution. It’s the priciest battery on this list, coming in at around $8,500 to $10,000. However, it offers a ton of functionality, which will make it an ideal solution for some solar panel owners.

For example, Tesla’s Powerwall is sized at 13.5 kWh and features a 7kW power output peak. It also is compatible with any solar inverter and has a cycle life of approximately 3,500 cycles.

Understanding the federal tax credit for battery storage

The federal investment tax credit (ITC) is the most commonly used tax credit by U.S. residents that invest in solar panels. But many people don’t realize that it can also be claimed for a purchase of a solar battery.

For 2021 and 2022, the ITC offers a 26% credit on eligible purchases. That drops to 22% in 2023 and zero in 2024, though the government may vote to renew the ITC before that happens.

That means if you spent $10,000 on a solar battery, you could save $2,600 with this tax credit alone. But in order to do so, you need to make sure that you qualify.

Eligibility criteria for the federal tax credit for battery storage

The biggest eligibility factor for the energy storage ITC is how you charge the battery that you buy. It needs to be charged with a renewable resource, like solar panels.

As long as you only charge the battery with a renewable source of energy like a residential solar system, you meet this qualification rule and you should qualify for the ITC.

Commercial qualification rules

The eligibility criteria for commercial energy storage customers are a bit different. If your solar battery is used in a commercial setting, you only need to charge it with renewable sources of power at least 75% of the time.

The amount of ITC credit that you qualify for will be proportional to the percentage of renewable energy that you use to charge the battery. For example, if you charge the battery with renewable energy 75% of the time, you will qualify for 75% of the ITC. If you always charge the battery with renewable energy, you will qualify for 100% of the ITC.

When the ITC doesn’t apply

The key to qualifying for the ITC for energy storage is pairing the solar battery with a source of renewable power. You won’t qualify for the ITC if you purchase a solar battery but charge it directly from the utility grid.

Every state has its own policies towards battery rebates and battery storage tax credits. That’s why it’s important to do some research about the tax incentives that are available for solar batteries in your state before buying.

More specifically, you should be looking into the eligibility requirements for each incentive that you’d like to qualify before you purchase a solar battery. Doing so will allow you to adjust your purchasing decision to make sure that you enjoy as large of savings as you can.

In this section, we’ll review four of the most popular state-based incentives for solar energy storage.

California Self-Generation Incentive Program (SGIP)

The SGIP is a California tax incentive that was first established in 2001. It was recently expanded to include impressive savings opportunities for homeowners that purchase solar batteries.

The program gives eligible California residents a tax incentive that can be as much as $200 per kilowatt-hour when they install a home battery. To qualify, you need to be a customer of SCE, SCG, SDG&E, or PG&E. The per-kilowatt-hour savings will go down as more people take advantage of the SGIP so it’ll pay to be an early adopter.

California residents who take advantage of this program alongside the ITC could cover the bulk of their battery purchase. For example, if you bought a solar battery with 10 kWh of capacity, you could save as much as $2,000 on it through this program.

Solar Massachusetts Renewable Target Program (SMART)

The SMART program was created by the state of Massachusetts to push the territory closer to its renewable energy targets. The program uses a complex formula to calculate savings, which takes into account factors like location, technology, and utility company, among others.

SMART has an incentive called the Energy Storage Adder for people who add solar batteries to their homes. This pays out a rate of between $0.0247 and $0.0763 depending on the specific battery that you install.

New York Energy Storage Rewards

New York residents who add solar batteries to their homes can take advantage of the state’s Energy Storage Rewards program. This program is similar to the SGIP in that it pays out based on the capacity of the solar battery that you purchase and will scale down over time as more people take advantage of the program.

Currently, New York residents can earn an incentive of $250 per kWh of storage capacity. That means you could save as much as $2,500 if you purchased a battery with 10 kWh of capacity.

Nevada Residential Energy Storage Incentive

This program can be an excellent source of savings for residents of Nevada. The incentive rate varies based on the power output of your battery instead of its capacity.

The exact rate that you qualify for will vary based on whether you have a time-of-use rate with NV Energy or not. If you do have one, then you can expect to save about $0.22 per watt-hour after you install a qualifying battery. If you don’t have one, then you can expect to save $0.11 per watt-hour.

Likelihood of future solar storage savings

Nothing is certain, but there is an excellent chance that solar batteries will cost less in the future than they do now. A recent study published by MIT shows that lithium-ion battery costs are plummeting. The steep decrease in cost parallels what’s happened in the past just before the cost of renewable energy went down significantly.

The study suggests that we could see a big drop in solar battery prices sometime soon. It doesn’t guarantee that price drops will occur. But it does suggest that, based on the historical evidence, we should see some price reductions for solar batteries within the next few years.

With that in mind, if you’re on the fence about purchasing a solar battery, it may make sense for you to wait. Just keep in mind that if you do decide to wait, you may not be able to save as much through tax incentives as they are set up to decline year-over-year both federally and in most states.

The bottom line on battery rebates and battery storage tax credits

Programs like the federal tax credit for battery storage and other state-based battery rebates make solar batteries much more affordable.

For example, if you live in a state like California, you could qualify for a 26% discount through the federal ITC and another $2,000 through California’s SGIP. Together, these tax incentives could save you more than half of what you paid for a solar battery.

But the exact amount that you can save through battery storage tax credits depends on the state that you live in and their policies. So be sure to do your research before buying.

Last Reviewed By: Matt Hope
Published: 2022-05-25