Cost of Solar Batteries
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Cost Of Solar Battery: Is It Worth Buying a Battery in 2024?
As power grid interruptions become more common across the country, American homeowners are increasingly interested in the benefits of clean, silent, and immediate backup power from batteries. However, one significant obstacle to broad adoption remains: the cost of solar batteries. Even with a 30% tax credit and prices trending downward, the upfront expense of lithium-ion solar batteries can be off-putting for many homeowners, despite the obvious long-term advantages of savings and increased security. In this article, we will delve into the nuances of home battery pricing and examine six key factors that impact the cost of a battery installation.
Solar Battery Pricing Trends for 2024
According to the latest data from the National Renewable Energy Laboratory (NREL), the average expense for a fully installed standalone 12.5 kWh solar battery is estimated at $18,791. This cost is reduced to $13,154 after applying the 30% tax credit. When the battery is installed concurrently with a solar system, the cost falls to approximately $15,000 or $10,500 with the tax credit, due to shared expenses in labor, setup, and permitting.
The NREL data, dating back to early 2022, reflects a period when lithium prices were at record highs—nearly double today's rates. However, lithium-ion battery costs have since decreased in 2023 as lithium prices have fallen. This trend of declining prices is expected to persist (further discussed later).
Price per kWh for Solar Batteries
Consequently, the price per kWh for a complete 12.5 kWh solar battery installation ranges between $840 and $1,050, depending on whether the system includes solar panel installation or not. This translates to fully-installed solar battery projects costing between $5,000 and $19,000, based on the project's scale and specifications.
It is important to recognize that battery costs can fluctuate due to factors such as the specific equipment required, market availability, and regional factors. According to the NREL's analysis, the direct costs of the equipment, including the battery, inverter, and other system components, account for approximately $7,400, which represents 39% of the total expense of an independent project. On the other hand, soft costs such as supply chain expenses, installation labor, taxes, permitting, inspection, interconnection (PII), customer acquisition, and operational overhead make up the remaining 61% of the total cost.
In theory, two identical Enphase IQ 10 batteries might have the same price when leaving the factory, but the final installation cost for homeowners can differ due to varying soft costs linked to their specific installer and region.
Solar batteries are available in a variety of designs, capacities, and chemical compositions, but a select few have stood out as the top choices for 2024 and are highly favored by homeowners.
The table below shows the average retail price, estimated project cost after the 30% tax credit, and cost per kWh for some of the most popular solar batteries.
Remember, these are general averages and estimates. Solar battery prices can fluctuate due to several factors!
2024 Pricing Overview for Top Solar Batteries
Several factors affect the cost of solar batteries, with one of the primary reasons being their novelty; residential-scale batteries are a recent innovation and, as with most new technologies, they come with high initial costs that decrease over time as the market evolves. For instance, the price of a 60-inch 4K TV was roughly $9,000 in 2012, but you can now purchase a 65-inch 4K TV for less than $400 at a major retailer. Similarly, the cost of lithium-ion batteries has followed a comparable trend, with a 97% decrease in the price per kWh of battery cells from 1991 to 2018.
The High Cost of Solar Batteries
Comparing Expenses: Solar & Battery Systems vs. Grid Electricity
Consider Pacific Gas & Electric (PG&E), the largest utility provider in the U.S., which supplies power to over 5 million households across California and is often in the news due to scheduled and unscheduled grid outages. PG&E's current average electricity rate stands at 38 cents per kWh. With a modest annual increase of 3%, the average PG&E customer could end up spending close to $92,000 on electricity over the next two decades.
Six Key Elements That Determine the Price of Solar Batteries
The price trajectory of solar batteries mirrors that of 4K TVs; however, implementing a battery project involves far more complexity than simply installing a TV.
In addition to the battery's cost, several other factors come into play:
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Skilled labor for engineering and installation,
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Local government permitting and inspection,
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Coordination with your utility provider for interconnection,
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Marketing an emerging technology.
These multiple layers of involvement mean a variety of stakeholders are part of any single project, some of which are outside your control. Nevertheless, here are six actionable areas where you can influence the cost of your battery project.
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Solar Battery Price Factor 1: Your battery capacity
The primary element that influences the cost of a solar battery is its storage capacity, which refers to the total energy it can hold. Home batteries typically offer a storage range between 10 and 20 kWh. Although larger batteries are more expensive, they offer a more cost-effective price per kWh of usable capacity.
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Solar Battery Price Factor 2: DC vs AC
DC batteries, such as those from LG Chem, are typically more affordable than AC batteries because they involve simpler configurations. However, adding DC batteries to existing solar systems can be challenging, and some solar setups may not support them. In contrast, AC batteries like the Tesla Powerwall can be easily integrated into both new and existing solar systems without significant difficulty.
Solar Battery Price Factor: Impact of Balance of System (BOS) Components
Installing a solar battery involves more than just attaching a battery to the wall and connecting it to your home's electrical system. To enable the home battery to effectively provide backup power, several essential pieces of equipment must be included.
The type and complexity of these additional components, collectively known as the balance of system, can significantly affect the overall cost of your installation.
Backup Gateway The backup gateway plays a vital role by detecting power outages and disconnecting the home from the electric grid. Similar in function to a generator transfer switch, this device is essential for ensuring the solar battery can offer reliable backup power without inadvertently feeding electricity back into the grid.
Whole-home backups are possible with batteries, although doing so will require multiple batteries, as sufficient battery power is required for even the highest-amperage, most energy-intensive applications in the home. As a result, the majority of homeowners opt for a critical loads backup to save the cost of multiple batteries.
Solar Battery Pricing: The Impact of Installation Services
After investing a significant amount in a solar battery, it’s crucial to ensure that the installation is carried out correctly, fully authorized, and operates efficiently throughout its lifespan. Therefore, engaging a reputable and seasoned company with expertise in these systems is vital. Although choosing a professional installer may require a higher initial expense, it ultimately saves time and resources by preventing potential errors down the road. If you're going to do it, do it right!
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Solar Battery Price Factor 5: Incentives
Incentives play a crucial role in reducing the overall cost of a solar battery system. The most common incentive is the federal investment tax credit, offering a 30% deduction on the total cost of the system. While this incentive is traditionally associated with solar installations, it now extends to stand-alone home batteries as of 2023. Additionally, various states provide local incentives such as California’s SGIP program, Maryland's 30% state tax credit, and Duke Energy's PowerPair rebate in North Carolina. These incentives can significantly decrease the upfront costs and encourage more widespread adoption of solar battery systems.
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ISolar Battery Price Factor 6: Cost-Efficient Financing
Similar to purchasing a home or a vehicle, home batteries can be financed to distribute the upfront cost across a longer payment period. If you're considering both solar panels and a battery, you can combine them into a single financing arrangement. Alternatively, you can find financing options specifically for purchasing a battery independently.
Financing allows you to enjoy the advantages of solar power and/or battery storage without an initial outlay, provided you meet the loan requirements. However, interest accumulates on the loan over time, raising the total cost of the system.
For instance, if you finance a 7.9 kW solar system and 12.5 kWh battery with a 20-year loan and no upfront payment, the total cost would be nearly $47,000, compared to around $30,000 if you were to pay in cash.
Evaluating the Return on Investment: Are Solar Batteries a Smart Choice?
Deciding whether solar battery storage is worth the cost in 2024 depends on your energy needs and circumstances. If you encounter frequent or prolonged power outages, having battery storage can significantly enhance your safety, productivity, and comfort, while also protecting your perishable goods.
Moreover, batteries can offer cost savings in areas with strict net metering policies, such as California’s NEM 3.0 solar billing. In these cases, the initial investment in battery storage can lead to substantial monthly bill reductions.
If investing in battery storage isn't feasible right now, it's wise to monitor prices in the future. Solar battery costs are projected to continue declining rapidly as the industry advances and new technologies develop.