New battery technology can help you keep the lights on, support the power grid and save you money. Here’s how it works.
“Going solar” doesn’t just mean putting solar panels on your house anymore. Once seen as an afterthought for residential solar systems, a changing energy landscape is pushing home batteries into a lead role.
“It used to be that panels were what residential energy systems were,” Suleman Khan, CEO of Swell Energy, told CNET. “Now it’s the batteries are the nucleus of it and the panel is just the fuel.”
Batteries have always been all about backup power, keeping your home up and running during an outage or storing excess solar energy to be used to power your home at night. But in recent years, batteries have become capable of so much more. Virtual power plants and time-of-use algorithms give batteries a new function: Helping you save money every day.
Here’s how changing technology is revolutionizing how you can make your home battery work for you.
Backup power is getting smarter
While batteries are becoming more advanced and can support a variety of use cases, backup power isn’t going anywhere. Providing backup power for your home during outages still remains as the main function of most residential batteries on the US market. But some manufacturers have found a smarter way to provide backup power, using smart energy circuits.
For many homes, one battery isn’t going to be enough to power your entire home during an outage. Some newer battery systems, like Panasonic’s Evervolt, use smart energy circuits to prioritize power to specific circuits in your home. Appliances will likely have their own circuits, while lights and wall outlets usually share multiple circuits.
These smart circuits give you the freedom to choose exactly where you want the battery to push power to during an outage. Choosing a few specific circuits to back up, instead of attempting to power your entire home, can sustain your battery’s charge when the grid goes down and help you get more out of your battery’s capacity.
Saving money and the grid with virtual power plants
Some batteries are made to cooperate with virtual power plants. A VPP is essentially a network of small-scale distributed energy resources banded together to help support the power grid.
Your battery on its own isn’t enough to make a big difference in supporting your regional power grid. But if you and a bunch of your neighbors each had a battery, that changes things. It’s a power in numbers situation.
By participating in a VPP, your battery becomes (virtually) connected with others, almost like a cloud-based network of computers, but with batteries. During hours of peak demand, the power grid will draw energy from this battery network to help alleviate grid stress and keep up with the demand for power.
What’s in it for you? In many cases, you’re compensated for your participation. Some utilities will offer you money toward a battery in exchange for being able to use some of that stored energy. You might also get credits toward your electric bill.
“If you are generating your own energy at home, that is energy that, if you were to store it, is very valuable to a utility,” Khan said. “One way to afford a battery, to make the cost of ownership of a battery less, is to offer some of that energy to the utility when they need it the most.”
If you live in an area with higher solar adoption, your battery can also help by removing power from the grid. Solar is great, and it can help alleviate the stress of the power grid to keep up with the high demand for electricity during peak periods, such as the morning and evening. But when there’s too much solar feeding back to the grid during the day from homes, businesses and solar farms, it can start to cause some issues.
“You have all this solar being curtailed in the grid and you put stress on the transmission distribution system of having basically no home for those electrons,” said Blake Richetta, CEO of Sonnen USA, which makes home energy storage systems designed for VPPs. “So then in the evening, the peak period begins. And this is very stressful to the grid.”
This is where batteries work their magic again. VPP batteries can charge en masse to soak up all the excess solar energy, taking stress off the grid.
This is demand meeting supply instead of supply meeting demand — the theory behind how renewables could totally conquer the grid. You would need millions of batteries to do this, Richetta said.
Not every battery is right for VPPs. Batteries enrolled in a VPP network will most likely be cycled daily. They might even be cycled multiple times a day depending on the area you’re supporting. This means your battery will be heavily used. So you’ll want to get a battery that comes with a warranty supporting a high cycle life. We recommend looking for a battery with a warranty that will last at least 8,000 cycles. You’ll also get the most benefit from a VPP with a larger capacity battery.
Avoiding high electricity rates
Some utilities charge higher rates for electricity during hours of the day when the demand for electricity is at its peak. These are called time-of-use rates. Electricity demand is usually at its highest during morning and evenings, so you’ll likely be paying more for your electricity usage during these times.
“It used to be a couple of cents here and there. It used to go from, like, 6 cents to 9 cents. Now it’s like 12 cents to 40 cents,” said Jennifer Cahill, distributed energy solution and execution growth lead at the engineering firm Black & Veatch. “As that becomes more of a concern, that’s a business or a personal expense. That’s a big operating cost.”
Because of California’s new net metering policy, NEM 3.0, California residents are compensated significantly less for excess solar energy sold to the grid, making solar storage more appealing. Instead of selling your excess solar energy, it might be more beneficial to store it in a battery to be used during periods of peak electricity rates.
Batteries can help you combat expensive electricity rates with TOU algorithms designed to spend as little money as possible on electricity during hours of peak demand. These algorithms try to find the most efficient way to allocate your stored solar energy to be used in the right places at the right times. Things like charging your electric vehicle, running your dishwasher or doing laundry are best done using the free energy from your solar panels during periods of high electricity demand and higher rates, rather than paying for electricity from the grid when it’s at its most expensive.
Popular battery manufacturers like Tesla and Enphase already have these sorts of features, and they aren’t designed for any geographic region of the US in particular. However, Sonnen and SolarEdge recently announced new TOU rate algorithms for their battery software. These algorithms are specifically designed for the California energy market, ideal for assisting homeowners with TOU rates in a post-NEM 3.0 world. California alone contains about 36% of small-scale solar installed in the US, so it’s no surprise that manufacturers have set their sights on designing California-centric solar products.
These algorithms will generally take into account your home’s historical energy usage, your utility, solar set up and electricity rates to create predictions and logical decisions on the cheapest and most efficient ways to use your energy. The best part is that you don’t have to do anything.
“We have all these algorithms that are running on the cloud. It’s completely transparent to the homeowner,” Chris Thompson, vice president of product and technical marketing at SolarEdge, told CNET. “They don’t need to think about any of these things. We’ll manage all of it for them.”
Fitting batteries into your budget
There’s no need to sugar coat it — batteries are expensive, often costing as much as solar panels. The cost of a battery will generally cost $12,000 to $22,000, according to the US Department of Energy. But it’s definitely possible to find lower-capacity batteries for less than $10,000. The larger your home and the more loads you want to backup, the more expensive your energy storage needs will be.
The good news is that there are incentives available to help you out with battery costs. The most popular and easily accessible incentive is the federal solar tax credit. Any battery that can hold at least 3 kilowatt-hours of energy and is installed in 2023 or later qualifies for this federal tax credit. Most batteries on today’s market will meet the kWh requirement. You can also look into local incentives and rebates from your utility or state.