When is it sensible to consider battery storage?

When is it sensible to consider battery storage?

solar battery systems and energy storage
solar with battery systems and energy storage

Deep dive from a customer perspective …

Solar + Storage (battery) are starting to penetrate the residential markets throughout the USA.

Our intent in writing this article is to provide residential solar customers with guidelines as to what factors are important in considering best off grid solution or solar + battery.

Battery systems, or energy storage, can be installed on both off grid and grid connected systems. Both will be covered.

Common reasons to install energy storage in a grid connected solar system are:

  1. Backup power
  2. No Net metering offered by Utility.
  3. Time of use : Utility charges more for power during peak hours

This is where the details of your utility matter and terms like “net metering” and “time of use” come up, so it’s important to know what your specific utility policies are. More will be explained below, if you think you fit into one or more of these categories, then it might make financial or technical sense to get energy storage.

Back up power

In a typical net meter system, there are no batteries.  Hence when the grid is down, the solar array on your home roof is not producing power.

However, if you do have an energy storage system installed along with the net metered solar array, the solar generated power can be stored it for later use. Typically, back power storage will not be a whole home back up.  The cost for whole home backup could be cost prohibitive due to the large battery bank that may be required.  Hence pre-selected emergency appliances are the ones that will get power during a grid power down situation.  These pre-selected appliances will be placed in separate circuits so the battery system can power those specific circuits.  As batteries are expensive, it is important to identify the critical appliances only.

If your main reason is to have backup power during grid down, you’ll have to make decisions on battery capacity. The battery capacity size will determine the duration you can safely maintain backup power without grid power. You’ll need to consider things like how large your solar array is, and how many hypothetical cloudy days (snow days or rainy days) you may encounter to have power through them before running out of charge.

Backup power is a balance between 3 critical factors: (1) energy consumption, (2) energy storage and (3) solar energy generation.  Energy consumption is controlled by the number and size of appliance, energy storage is the size of battery and solar energy generation the size of the solar array.

solar array and battery size balance

Figure 1:  Consumption, battery size and solar array size must balanced for good backup power.

No Net metering offered by Utility.

If your utility does not allow net metering[1], then what generally happens is you will be compensated for the energy you send back. If the rate difference between the what you pay for energy use and what you send during excess solar generation is large, battery backup could be a financial benefit.  For example, if the rate at which you consume electricity is $0.20 per kWh and the rate for solar excess generation that the utility pays you is $0.04 per kWh, the difference is large enough to justify a battery storage since the difference will make up for the cost of the battery.  Besides when you do solar + storage, you are insulating yourself from utility rate hikes for the most part.

Overtime you might save money by investing upfront into energy storage rather than being compensated at a low amount for your excess electricity.

net metering difference

Figure 2:  $/kWh rate difference between net metering and no net metering.

Typically, almost all utilities in the US have net metering.  However, as grid connected solar becomes more and more prevalent, policies can change to reduce or eliminate net metering.  When net metering is absent solar + storage may be a good option so one can have independent power outside of the utility company.

Time of use

Figure 3:  Price difference exists for energy rates depending on time of day.  Evening & night are higher than daytime.

During certain periods of the day, usually in the late afternoon or peak demand periods, your electricity rates will be higher than other times of the day. Utilities do this to reduce strain on the grid during the busiest time of the day for electricity usage and to reduce the need to build more electricity generation to meet that peak demand. Unfortunately, that also means you will probably be using the most amount of electricity during when the rates are at their highest. This is one scenario where it might make financial sense to install energy storage.

To get around paying for those higher rates, you can store up your excess electricity you generated around noon through your solar array and use it during peak hours instead. This is also sometimes referred to as daily discharge. By storing this power and avoiding peak hours, you might save money over time by having an energy storage system.

Off grid

If your system is off grid then it’s often a simple question of do you need power when the sun is not out? If all you need is a simple fan when the sun is out and temperatures are hotter, than you may not need it. Most often it makes sense to have at least some limited amount of energy storage in off grid systems. Much like the back up scenario, you will need to consider how much battery capacity you need. This will again differ depending on how much energy you can generate, how much energy you consume, and if your local weather is generally cloudy or sunny.

There are also technical considerations as off grid energy storage systems are not bound by rules that utilities may impose and so you have more options in how they can be set up. Most of these considerations stem from the fact that your solar panels generate DC current while anything that plugs into a wall outlet is expecting AC current. Make sure to talk to your installer or research further on what might make sense for your specific situation.

If your property (home or business) requires extensive grid wiring, it may be a better option to have off grid solar + storage.  The cost of getting utility grid and still paying monthly services charges may not make sense.  Hence having off grid solar + storage may be more economical.

When Solar + Storage might not make sense

Now there are scenarios where it will not make sense to seek a battery. For instance, If your utility charges a flat fee for electricity no matter what time of day and it is not high enough to offset the cost of storage, or if they offer you net metering, or the cost of net metering is lower than solar + storage then it may not make sense to install energy storage. Details will also matter when considering the financial aspects. If you are on a time of use rate, but the electricity rates are still low, then it will take longer for you to make your money back on your battery. Likewise, if you are not net metered but the rate at which you are compensated for sending energy back is high, it will also take longer for you to break even.

Another scenario commonly seen that is not always practical to install energy storage for is to lower peak demand. This is different from time of use. The utility will sometimes charge an extra fee according to the maximum amount of electricity you drew in one time in a given month. This means that if you happen to run every appliance in your house at the same time that month, you will be charged extra for how fast you were consuming electricity. This is different from slowly using a large amount of energy over the entire month. This is according to how fast you were consuming energy, even if it was only for a moment. Whether it makes financial sense to use a battery to lessen the burden on the grid and lower your peak will be highly dependent on when your peaks occur and whether the sun happens to be out that day, both which can often be unpredictable.


There are many scenarios where getting energy storage with your solar array makes sense, but to tease out a clear financial picture will take some attention to detail. Make sure to keep in mind what your utilities specific policies are, and what electricity rates they are charging. If you have an off grid system or want back up power for your grid connected home, then energy storage can make strong practical sense to install. Whatever your reasons, energy storage is exciting technology and you’ll be hearing more and more about in the future.

[1] what is net metering? This is a state mandated policy that all utilities must allow you to bank your energy production for use later. How it works is if you generate excess solar power and it gets sent to the grid, your utility will track of how much electricity you have sent to them and credit it for use later.  The rates at which you buy and sell to the utility is the same in a net metered situation.

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