Battery Storage vs. Grid-Tied Solar: Which One is Best for Your Home?

Photo Credit: DALL·E

With the increasing demand for renewable energy and the desire for greater energy independence, homeowners across the United States are turning to solar power as a viable solution to reduce their electricity bills and carbon footprint. Of all the decisions when anyone installs any solar power system, choosing whether to go for a grid-tied system or install a battery storage solution is one of the most critical decisions. Each option has its fair share of pros and cons; which is better for any particular application depends on energy requirements, location, expense, and personal comfort. Below, we consider the pros and each type of system, battery storage and grid-tied solar systems, as well as actual data and examples from the real world.

 

The most common option for U.S. homeowners is a grid-tied solar system. That's pretty simple: your house is connected to the local utility grid, and the solar panels feed electricity to both the residence and the grid. If your solar panels produce more energy than your home uses, it sends the excess power back to the grid, and you usually receive credits for that energy through net metering. On the other hand, when your solar panels are not producing enough power, during nighttime or overcast days, draw electricity from the grid.

 

One of the biggest positives of a grid-tie system is its simplicity. It is cheaper upfront, generally without batteries, out of the gate than a system with energy storage. According to the S.E.I.A., an average installed cost for a grid-tie solar system in the United States sat at about $2.95 per watt in 2023, placing the typical 6-kW system price at about $17,500 before incentives or rebates. Most homeowners qualify for the federal solar tax credit to take 30% off the cost, falling to around $12,000. That number decreases even further when additional state incentives and rebates are added. Grid-tied systems have become more affordable for many.

 

For example, California owners have taken flights to join due to the state's accommodating net metering policy. Due to attractive rates, residents in cities such as San Diego can return extra energy to the grid. An installed 5-kW system in 2021 for a homeowner in the San Diego area cut an annual electricity bill from $1,800 to just $240, saving around $1,500 annually. Due to the savings net metering provided, the system was paid for in just over six years.

 

The major downfall of grid-tied solar is that this system requires the utility grid. When the grid is down, power is out. Your photovoltaic panels won't produce electricity even though the sun shines brightly. Why? Most of the so-called grid-tied systems shut off when the grid goes down, in this case, because of concerns that utility workers might be working on repairing power lines. That can be a significant inconvenience for home individuals living in California or Texas, where blackouts are frequent.

 

That is where battery storage comes in. Solar storage batteries will come into play, enabling the homeowner to reserve excess energy generated from their solar panels for when the electricity might go out or later at night. Energy storage will further allow a house's energy independence and provide backup during grid failure. In contrast, such batteries, including Tesla Powerwall, can at least mitigate energy outages by giving smooth backups to keep some appliances and devices running in the house.

 

Of course, that comes with its price. The cost of a solar battery system available to them in the U.S. and available for 2024 varies between $10,000 and $15,000 with different brands and sizes. With this added to the solar panel system, the bottom line can quickly go as high as $25,000 to $30,000 or more. Still, the federal solar tax credit is available with battery storage, too, though the upfront investment is substantially more significant than for a grid-connected no-storage system.

 

In 2022, one homeowner installed a 7-kW solar system with two Tesla Powerwalls, and his system took $24,000 total after a 30% federal tax credit and extra perks courtesy of the state; in a state where weather is never predictable, grid outages are not unusual, and the advantages of having a Tesla Powerwall pay particularly well. However, with this system, while more expensive upfront, the peace of mind during winter storms and power outages was well worth the investment to the homeowner. In a significant snowstorm in 2023 that knocked the power out for two days in that area, the home could run on stored solar energy in those batteries.

 

Additional financial benefits flow back to the homeowner through particular advantages in some states due to battery storage. So, in Hawaii, the nation's highest shelf electricity price, 44 cents per kilowatt-hour in 2023-solar with batteries can dramatically cut the cord from the grid. A 6-kW solar installation in 2020 in one Honolulu homeowner was quoted to have reduced his annual electricity cost by 80%, down from $3,600 to only $720. Savings can exceed an impressive $60,000 over the 25-year life of the system and quickly make it more than worth the investment for areas with high electrical rates.

 

Another critical consideration when choosing between grid-tied solar and battery storage is its potential for long-term savings. A grid-tied system with net metering can have very respectable savings, particularly in states boasting favourable net metering policies, like California, New York, and New Jersey. In all likelihood, though, the financial advantages of a grid-tied system will decrease over time as more states review their net metering policies and utility companies continue to change their rates. In 2023, California implemented the new NEM 3.0 policy, where less money will be given to reimburse homeowners for excess solar energies fed onto the grid. That is why many homeowners increasingly pursue battery storage to maximize their solar investments and reduce dependency on an ever-changing landscape of net metering. All solar-powered homes in Texas take in time-of-use rates, improving their costs when electricity costs fluctuate daily.

 

This will significantly help reduce the overall energy cost by storing the excess energy produced in the daytime at low electricity rates and utilizing it during peak hours when the rates are higher. One Austin homeowner installed a 6.5-kW solar system with batteries in 2021 and said he could save an additional $400 a year using stored energy during peak pricing. Yet, other than all these positives, there are some downsides associated with battery storage, at least at present.

 

According to the data, one of the biggest concerns is the general lack of capacity in most residential batteries. According to the Energy Information Administration, the average American household uses about 877 kWh monthly electricity. A single Tesla Powerwall contains about 13.5 kWh of storage capacity, which should be sufficient for keeping most essential appliances running for a day or two in the case of grid failure. One will need more batteries for larger homes, more significant needs, or when the power outage extends; hence, this solution is expensive. Finally, it comes to decision-making on several aspects, from battery storage to grid-tied solar, budget, energy requirements, and geographical location.

 

Considering a grid-tie solar system's relatively low upfront cost, net metering can save thousands of dollars on utilities. They are quite a good option for many households dwelling in states with suitable policies. Those who want more energy independence, protection during power outages, or extra savings with time-of-use rates may find that a battery storage system will be a better investment over time despite the higher upfront cost. Which is going to work best for your house depends on your situation. Either way, both systems will pay you back money and eventually reduce your carbon footprint.