Guide to Solar Batteries: Are They Worth It? (June 2023)

Solar panels can save you thousands of dollars in electric bills during their lifespan, but your panels will only generate power during daylight hours. Solar batteries remove this limitation, providing an energy storage system you can count on during cloudy days and nighttime.

Stand-alone solar panels are an excellent investment, but a battery bank improves their functionality. In this article, we at the Guides Home Team will cover everything you need to know about solar batteries, including different types and how they work, the cost and how to choose a battery for your solar system.

A solar battery is a device that stores electric charge in chemical form, and you can use that energy at any time, even when your solar panels are not generating power. Although the battery backup systems that are coupled with solar panels are often referred to as solar batteries, they can store charge from any electricity source. This means you can recharge a battery with grid power when solar panels have low productivity, or you can use other renewable sources such as wind turbines.

There are different types of battery chemistries, each with advantages and limitations. Some types of batteries are suitable for applications where you need a large amount of energy in a short time, while others work best when you need a steady output over a longer period. Some common chemistries used by solar batteries are lead-acid, lithium-ion, nickel-cadmium and redox flow.

When comparing solar batteries, you should consider both the rated power output (kilowatts or kW) and energy storage capacity (kilowatt hours or kWh). The rated power tells you the total electrical load you can connect to a battery, while the storage capacity tells you how much electricity a battery can hold. For example, if a solar battery has a rated power of 5 kW and a storage capacity of 10 kWh, you can assume:

It's important to note that the rated power of solar panels and battery storage systems are not the same. For example, you could have a 10 kW home solar system with a battery that has a rated power of 5 kW and 12 kWh storage bank.

You can expect to pay around $25,000 to $35,000 for a solar system and battery, depending on the size and other factors like your location, according to the U.S. Office of Energy Efficiency & Renewable Energy. It is typically cheaper (and easier) to install both your panels and battery at the same time — a battery alone can cost around $12,000 to $22,000 if you decide to purchase storage after you install solar panels.

In terms of performance, lithium-ion batteries are considered the best option for home applications where you need daily charging and discharging.

Thanks to the Inflation Reduction Act, which was passed in August 2022, solar batteries qualify for a 30% federal tax credit. This is a credit you can claim on your federal income taxes for the year you purchase your solar system. So for example, you can claim $3,000 as a tax deduction if you purchase a $10,000 unit. While you can only claim the credit once, you can roll it over to the next year if the taxes you owe are less than your credit amount.

The table below outlines the key features of four common types of solar batteries, along with the average cost of each when used in residential settings.

The National Renewable Energy Laboratory (NREL) publishes periodic reports with the latest cost data for solar and battery systems in residential, commercial and grid-scale projects. The Pacific Northwest National Laboratory (PNNL) keeps a similar database, which covers multiple battery technologies in megawatt-scale applications (larger than 1,000 kW).

All solar batteries have the same basic function, but each type is suited for different applications. Your solar battery will offer higher reliability and return on investment when its chemistry is suitable for the application at hand.

For example, some electricity consumers are subject to higher kWh prices at certain times of the day, or additional charges for sudden peaks in consumption. In this case, you need a battery bank capable of delivering large amounts of electricity in a short time. Lithium-ion batteries are suitable for this task, but not redox flow batteries.

Regardless of the battery type, you also need to consider the depth of discharge (DoD), which indicates a battery's usable capacity. The service life of a battery can be drastically shortened if you exceed the DoD, or you can even cause permanent damage. For example, using 70% of the stored energy is acceptable with a solar battery rated for 80% DoD, but not a 50% DoD battery.

Lead-acid batteries are an established technology, commonly used by off-grid solar energy systems in remote locations. Lead-acid batteries are affordable and have a well-established supply chain due to their popularity, so you can easily find vendors and technical support.

In spite of their low cost, lead-acid batteries have some technical limitations you should consider:

An absorbed glass mat or AGM battery is an improved version of the traditional lead-acid battery. They can charge faster while having a spill-proof design and more durability. You can also find AGM deep cycle batteries that are designed for 80% DoD.

Using lead-acid batteries along with solar panels requires charge controllers to sustain a suitable charging current. These batteries should not be wired directly to your solar array, or your system may be damaged by excessive current.

Lithium-ion batteries have become very popular in recent years since they can achieve synergy with solar panels and wind turbines. For example, the Tesla Powerwall and Enphase IQ are two types of lithium-ion batteries commonly used in home solar applications. You can also find smaller lithium batteries from brands like Renogy and WindyNation, which are portable and better suited for DIY solar projects.

Lithium iron phosphate or LFP batteries are a subtype of lithium batteries, characterized by a superior service life. The best LFP batteries offer a service life of over 4,000 cycles at 80% DoD, which means they can last for over 10 years on a daily charging cycle. This makes LFP batteries the ideal complement to solar installations. Unlike lead-acid batteries, which need separate charge controllers, many of the lithium battery models that are commercially available come with built-in chargers and controls.

The main drawback of lithium-ion batteries is the high price, but this could change in the near future — the U.S. Department of Energy is targeting a 90% energy storage cost reduction by 2030. Lithium batteries can also suffer a phenomenon called thermal runaway when used at high temperatures, which causes them to catch fire. You can prevent thermal runaway by making sure your batteries are high-quality and installed by qualified electricians.

Nickel-cadmium batteries are characterized by their durability, tolerance to high temperatures and simple maintenance needs. Thanks to these performance features, nickel-cadmium batteries are popular in industrial and utility applications. Unfortunately, cadmium is highly toxic to humans, so nickel-cadmium batteries are not recommended in homes.

Flow batteries store energy by separating positive and negative electrical charges in chemical solutions, which are stored in separate tanks. When these two solutions interact, they undergo a reduction-oxidation reaction (redox) and the battery releases energy. This battery technology is also referred to as "redox flow" for this reason.

The main disadvantage of redox flow batteries is their space requirement, and they are not cost-effective for small-scale projects. Even a small redox flow battery system can be the size of a shipping container, so using flow batteries in home solar systems is not viable.

The first step to choosing a solar battery is to understand your energy needs. The average annual electricity consumption for a U.S. resident was 10,632 kWh in 2021, which averages out to around 886 kWh per month, according to the U.S. Energy Information Administration. Knowing your average energy consumption can help you better determine important factors like your ideal battery capacity, or how much energy a battery can store.

Lithium-ion batteries are recommended for home solar systems since their long service life is suitable for a daily charge cycle. However, lead-acid batteries are viable as backup power systems that are used occasionally, or as part of an off-grid system.

Home batteries can be classified based on how they interact with solar panels:

You can only use DC-coupled batteries if you have a hybrid inverter, which is designed to manage solar panels and energy storage simultaneously. If your solar panels have a traditional inverter that cannot handle energy storage, you need an AC-coupled battery with a dedicated inverter.

If you intend to use your battery as a backup power source, check its specifications to make sure it can operate off-grid. Not all solar batteries are designed to be used during power outages, and many models can only operate when synchronized with the grid.

In general, installing a solar battery is worth it when you can achieve higher savings than the cost of ownership. A home battery can add over $10,000 to the cost of a solar panel system, but there are several scenarios in which you can take advantage of energy storage, including:

You cannot use solar panels alone as a backup power source during blackouts or suboptimal conditions, due to their variable output, but a charged battery can keep your appliances running. Plus, if the local electric company charges higher rates during certain hours, you can avoid costs by switching to a solar battery.

A solar battery is also useful if your local power company does not offer net metering. While you won't get credit for sending excess solar power to the grid, a battery will still let you use that extra energy. However, this only makes financial sense if the cost of battery ownership is less than what you would pay to use the grid normally at night.

Keep in mind that the 30% federal tax credit is not only available for solar panels, but also for home batteries. This tax credit can be combined with any solar incentives offered by local governments and utility companies. The financial return offered by a solar battery system improves when you combine incentives from several programs.

Lithium-ion batteries are considered the best option for home solar power systems since they can achieve a long service life even under a daily charging cycle.

Solar batteries are expensive but useful in several applications. The following are some cases where solar battery storage can make sense financially for residential users:

The case for installing a solar battery also improves when you factor in incentive programs from the local government or your utility company. The U.S. provides a 30% federal tax credit for home battery systems with an energy storage capacity of at least 3 kWh. Depending on where you live, you can also take advantage of local incentives to lower your overall cost.

The price varies depending on the brand and model, but the average price is around $800 to $1,000 per kWh of battery capacity. For example, the Tesla Powerwall has an energy storage capacity of 13.5 kWh and it sells for around $11,500.

Solar batteries have pros and cons like any renewable energy technology. Some of the main limitations of solar batteries include:

Durability should not be an issue when you use a high-quality battery installed by solar professionals. The best solar batteries now come with a 10-year product warranty.

Leonardo David is an electromechanical engineer, MBA, energy consultant and technical writer. His energy-efficiency and solar consulting experience covers sectors including banking, textile manufacturing, plastics processing, pharmaceutics, education, food processing, real estate and retail. He has also been writing articles about energy and engineering topics since 2015.

Tori Addison is an editor who has worked in the digital marketing industry for over five years. Her experience includes communications and marketing work in the nonprofit, governmental and academic sectors. A journalist by trade, she started her career covering politics and news in New York's Hudson Valley. Her work included coverage of local and state budgets, federal financial regulations and health care legislation.