What rebates can you get for a home solar battery?

Home energy storage is a small but rapidly growing market. While the upfront cost is high, there are significant rebates that bring the cost down.

Photo of a Telsa Powerwall home battery

Solar panel systems generate electricity that is used immediately. They can’t save that electricity for later use unless they’re paired with an energy storage system. These days, that usually means a big lithium ion battery.

While there are significant benefits to battery systems, such as providing backup power and being able to shift your grid electricity use to cheaper off-peak rates, the high cost of batteries has prevented home batteries from being deployed very widely.

That’s starting to change now. Planned grid blackouts are becoming a fact of life in California, causing a surge in interest in backup power. And the price curve of lithium ion batteries, helped by increasing usage in portable devices, electric cars, and electric grid storage, is dropping incredibly fast: Price of lithium-ion battery prices from 2010 to 2019.

This rapid price drop for lithium ion batteries looks an awful lot like the decline in solar panel prices over the past decade. Given the explosive growth in solar, this could mean that a similar revolution in energy storage for utility companies, homes, and electric cars is coming soon.

Saving money on a home battery system: list of available rebates

If you’re curious about home batteries but you’re not sure if you can afford it, you’ll be happy to know that there are a number of rebates available across the United States. These include the federal tax credit for renewable energy (also known as the ITC), as well as some state and utility rebates.

However, there are some technical eligibility requirements to be aware of, especially with the federal tax credit. These are explained below.

Federal tax credits for home solar batteries

The federal solar tax credit is the most significant solar tax incentive in the United States. It’s often called the Investment Tax Credit (ITC), but technically that’s the name of the credit for businesses. For residential taxes, the credit is called the Residential Energy Efficient Property Credit.

In either case, the credit is worth 30% of the total cost of a solar energy system, though that will shortly be stepped down to 26% in 2020.

If you read the instructions for the tax credit, you’ll notice that they specify that “qualified solar electric property costs” are covered, but battery systems are ambiguously not mentioned.

Fortunately, this was clarified by the IRS in a note published in 2018.

The note is five pages of dry IRS language, but the upshot of their decision is that batteries installed alongside solar photovoltaic systems are eligible for the federal tax credit only if they are 100% charged with power from your solar panels. If the panels are sometimes charged using grid power, they are disqualified for the credit.

Claiming partial tax credits for partial solar charging

You might find information on the internet stating that you can claim a partial tax credit if you charge your battery a minimum of 75% of the time with solar. However, this is in reference to the business tax credit (ITC), not the residential tax credit. Homeowners must charge their battery 100% of the time with solar power to be eligible for the credit.

If you read the document - which is an IRS ruling on one taxpayer’s request that their AC-coupled battery (most likely a Tesla Powerwall) be covered by the tax credit - one interesting thing that stands out is that a configuration of the battery’s software is the only thing that determines whether it’s charged using grid power.

The Tesla Powerwall has software that lets you program how it should be used: whether you want to stay topped up all the time in case of emergencies, whether you want it to charge using solar power and discharge at night so that you don’t need to use grid power, or whether you want the battery to charge using cheap off-peak power and supplement solar panel output during the home’s peak usage.

This means that technically this homeowner could easily program their Powerwall any time in a way that circumvents the intent of the IRS ruling. But given that there’s no practical way for the IRS to enforce this, the ruling basically means that solar batteries are covered by the tax credit.

California: Self-Generation Incentive Program (SGIP)

The California Public Utilities Commission, which regulates privately owned electric utilities in California, operates the Self-Generation Incentive Program (SGIP). This program provides incentives on distributed energy resources to businesses and homeowners. Interestingly, the incentive covers technologies such as fuel cells, wind turbines, and waste-to-heat, but not photovoltaics.

Nonetheless, the SGIP can be useful to solar homeowners because it provides incentives for battery storage. This means popular products such as the Tesla Powerwall, the LG Chem, and lead acid batteries can qualify for a significant discount.

How the SGIP program works

The SGIP is a step-based program where the incentive drops over time as the budget is allocated. Each utility company in the program (PG&E, SCE, CSE, SoCalGas) operates their budget independently.

In operation since 2015, the budget for the small residential storage is currently on step five (the last step of the program), and the budget is now fully reserved at all four utilities.

However, depending on your utility company, you might still be able to apply to the program and be waitlisted. Sometimes, applicants will cancel their program, allowing those on the waitlist to obtain funding.

Because the program is allocated according to utility, you should check with your utility on its SGIP status or visit this CPUC website and select your utility company under the button labelled “Select the PA Territory”.

SGIP program budget still available for low-income and disadvantaged areas

An important part of the SGIP program is a separate budget allocation for low-income households and those living in disadvantaged communities. This is called the Equity budget, and it allocates 25% of the energy storage program budget to help low income households and environmentally burdened communities. At the moment, the Equity program is still on Step 3 (out of 5), which means that there is still budget available.

To find out if you live in a disadvantaged (SB 535) or low-income (AB 1550) community, check this map and check the current budget on this page, under the section “Residential Storage Equity”.

To learn more, visit the SGIP homepage.

Massachusetts: Solar Massachusetts Renewable Target Program

The SMART program is Massachusetts in a major program that provides incentives for a wide variety of green technologies designed to help the state reach its renewable energy targets. Technologies that can qualify for the program include solar photovoltaics, solar thermal, wind power, and energy storage.

You can read more in our overview of the SMART program. One thing to know about this program is that the value of the incentive payments are calculated according to a complex formula that takes into account your utlity company, location, the technology used, and more. You can learn more at the SMART website and download an Excel spreadsheet that you can use to calculate your incentive amount - or you can work with your solar installer to find out your incentive.

If you are interested in adding batteries to your home solar system, the relevant incentive is called the Energy Storage Adder. It’s called an “adder” because its added on top of other incentives you may receive, such as the incentive for your solar panels. The value of this adder varies between $0.0247 and $0.0763, depending on the storage capacity of the battery and size of the connected PV system.

Technical requirements for the SMART program

The design of the SMART program, in general, is pretty complicated and designed to incentivize the development of renewable energy resources in the places where they will do the most good. Because of this, there are several requirements that a battery system must meet in order to qualify for the Energy Storage Adder:

  • The output capacity of the battery must be at least 25% of the theoretical output of the photovoltaic system. For example, if you have a 10 kW solar array, the battery must have an output of at least 2.5 kW. Note that this is the output capacity, and not the storage capacity.
  • The storage capacity of the battery, referred to as the nominal useful energy capacity, must be at least two hours. This means that the storage unit must be able to run at its full output capacity for two hours. For example, if your battery has a maximum output of 2 kW, it must have a storage capacity of at least 4 kWh. The maximum incentive alloted will be for a unit with 6 hours runtime.
  • The minimum efficiency of the storage unit must be 65% round-trip. This requirement will not be a concern for lithium ion batteries, which have a round-trip efficiency around 95%. Lead acid batteries are worse at 80% efficiency, but still qualify easily.
  • Operational data must be provided to the MA Department of Energy. For solar homeowners, this basically means granting them access to the data that you receive via the smartphone app provided with the battery. The guidelines state that you must make available “historical 15-minute interval performance data … for the first year of operation and upon request for the first five years of operation”.
  • Usage requirements ensure that the storage system can’t be purchased just for emergency use by the homeowner, but to provide energy storage useful to the electric grid. Specfically, the storage system must be fully discharged and recharged once per week, or 52 times per year. If the unit is decommissioned or non-functional for more than 15% of the time, you might be disqualified for the incentive.

SMART is definitely one of the most complicated incentive programs in the nation, but one of its big benefits is that it provides ongoing financial incentives for the homeowner, as long as they operate their system (and the program remains funded). Read more about it in our article on Massachusetts solar rebates.

New York (Long Island): Energy Storage Rewards

New York State Energy Research and Development Authority (NYSERDA) offers energy storage incentives to customers of PSEG Long Island. This is the only residential energy storage incentive available in New York at the moment.

The current incentive is $250 per kWh of storage capacity, but that will step down over time as the program budget is spent. For context, a Tesla Powerwall has a capacity of 14.5 kWh, which works out to a total rebate of $3,625. Given that the total equipment cost of a Powerwall is $7,600, that’s a pretty sizable discount. (Note: that price doesn’t include installation.)

How the Energy Storage Program works

This program requires that your battery be internet connected so that PSEG can call upon your system to provide electricity to the grid during times of high demand. In other words, your battery will become part of a virtual power plant.

According to PSEG, your battery system might be called upon during the spring and summer months, up to ten times in total:

During the Energy Storage Rewards Program period from May 1st to September 30th, if we forecast that the following day’s power needs will be near the grid’s peak capacity, we may schedule an “event” to make use of the clean, renewable power produced by solar PV customers. There is a maximum 10 events per season but, typically there are fewer and each event only lasts a few hours.

To learn more, read the PSEG program page and check the NYSERDA program dashboard to see the current funding status (scroll to the bottom of the page).

NV Energy: Residential Energy Storage Incentive

NV Energy, a public utility that serves Nevada including Las Vegas, offers an incentive on battery storage systems ranging in size from 4 kW to 100 kW in power output. Note that this isn’t the storage capacity of the battery, but the power output. For example the Tesla Powerwall, which has a 14.5 kWh capacity, has a maximum sustained power output of 5 kW, which means that it will qualify for this rebate.

The incentive level depends on whether you have a time-of-use rate with NV Energy. If you have TOU, you will qualify for a $0.22 per watt-hour incentive, or $0.11 per watt-hour if you do not.

In either case, the maximum rebate is $3,000 or 50% of equipment costs - whichever is less.

The only other big requirement to aware of is that you must have a photovoltaic system installed. To learn more, read the program FAQs.

Salt River Project: Battery Storage Incentive

SRP provides electricity to about 2 million customers in central Arizona. Their Battery Storage Incentive provides an incentive up $300 per kWh, up to a maximum of $3,600. A 12 kWh or larger battery, such as the Telsa Powerwall, would qualify for the full rebate. The battery must use lithium ion technology to qualify.

This rebate is somewhat unique because it doesn’t require that the homeowner have a photovoltaic system, or participate in a virtual power plant program (like New York’s program does). It does require you to potentially paricipate in a research study that will look into how customers use their batteries and how they perform in a desert environment.

Those are pretty minimal requirements. The program will be open until May 1, 2021 or until 4,500 customers have siged up, whichever comes first. At the moment, there are 3,710 reservations remaining so the program has plenty of life left in it. Read the program page to learn more.

Save 30% or more on home solar with current incentives

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