Study: Most US homes can save money and affordably weather blackouts with solar plus storage

(Press-News.org) Most U.S. households could reduce their electricity costs and endure power outages by installing rooftop solar panels and battery packs, according to a new Stanford University study, though people may need to buy the equipment by Dec. 31.

About 60% of families could reduce their electricity costs by 15% on average by installing a solar-battery system. That’s after accounting for annualized capital and operating costs of the equipment. Some 63% of U.S households could also weather local or regional blackouts with such systems, able to meet about half their electricity needs on average. These households would either save money on electricity or at least see no rise in costs. However, the remaining households for which solar-battery systems are not economically viable tend to be relatively more burdened by high utility bills and power outages.

“With electricity rates now rising in most states, shaving utility bills can help people quite a bit, but the ability to ride out local or regional blackouts is becoming very important to many families,” said the study’s senior author, Ram Rajagopal, associate professor of civil and environmental engineering and of electrical engineering at Stanford. “That’s because U.S. electricity infrastructure is old and getting replaced slowly, while the extreme weather events like hurricanes and heat waves that cause blackouts are becoming more frequent, intense, and longer lasting.”

The authors of the study, published August 1 in Nature Energy, performed a high-resolution nationwide assessment of more than 500,000 U.S. households’ access to solar PV and battery storage. The reseaerchers also published a policy brief on the subject in the same issue of Nature Energy.

Federal tax credits

The One Big Beautiful Bill Act signed into law on July 4 discontinues – at the end of this year – the residential clean energy tax credits from the Inflation Reduction Act of 2022. Homeowners investing in residential renewable energy, including solar panels and batteries, can deduct 30% of the investment costs from their federal taxes. For a $30,000 solar array and $10,000 for residential battery packs, that is for now a $12,000 rebate.

“The bill does affect our analysis starting next year since our calculations include the 30% federal tax credit,” said the study’s lead author, Tao Sun, a postdoctoral scholar in Rajagopal’s lab. “However, homeowners can still access tax credits indirectly after 2025 through leasing arrangements or power purchase agreements. These indirect benefits will continue until 2027 for solar and 2033 for batteries.”

The study does not include the impact of the loss of the tax credit, but Sun calculated that the loss alone – ignoring indirect ways to get a tax benefit – would reduce the percentage of households for which solar-battery systems are economically viable from 60% to about 32%.

“By 2033, though, the falling price of battery packs would have the figure back at 60% and rising,” Sun added.

Declining utility payments

A second trend is also making battery packs more viable financially. Many U.S. states are lowering how much homeowners who buy solar panels will get paid for selling excess electricity to their local utilities, mostly during the afternoon. The higher payments had negated the economic benefits of buying a residential battery for most households, as a Stanford study showed in 2019.

That has changed. Now, people with battery packs can save their electricity for their own use when the sun is not shining, rather than selling power to their utilities at wholesale prices only to buy electricity at night at retail prices. More than one-third of homes today are in states that pay residential solar owners based on how much their electricity saves the local utility, which is almost always less than paying homeowners their full electricity rate. The number of states adopting this policy is rising.

Non-economic areas

Across the 48 continental states and Washington, D.C., the researchers quantified potential electricity cost savings and economically viable blackout resilience. They also quantified the burden electric bills placed on household incomes and how much homes in each state suffered from power outages.

Homes in states where outages are relatively more frequent would generally see lower backup improvements from solar-battery systems, they found. Also, many households burdened relatively highly by electricity bills would see only moderate savings on average from such systems. On the flipside, states where people benefit from relatively large cost reductions also tend to get higher levels of affordable backup power. These state patterns were true at county and even household levels, the study found.

“The solar-battery benefits often fail to align with the areas that need them most, like in certain high-outage-risk states where only one-fourth of households can get affordable backup power from solar-battery systems,” said Arun Majumdar, dean of the Stanford Doerr School of Electricity and co-author of the study. “As weather extremes like heat waves intensify the frequency and severity of power outages, ensuring affordable, secure, and sustainable backup power is increasingly critical for at-risk homes.”

The move to lower payments to homes selling electricity into the grid reduces the economic viability of solar-battery systems in states yet to make the move, like Iowa, Idaho, and Washington. Homes in disadvantaged communities and less-populated areas consistently have lower economic viability for solar-battery systems, regardless of the rates at which utilities pay them for their excess electricity. Both outcomes result from a mix of local retail rates, solar-battery technology costs, how much the sun shines, and outage risks.

“Economic incentives, financing mechanisms, and community-based deployment programs that target areas with high financial and reliability needs but low economic viability of solar-battery systems could help families that need such systems the most,” said Sun, who earned his PhD earlier this year in the Department of Civil & Environmental Engineering, which is a joint department of Stanford’s School of Engineering and Doerr School of Sustainability.

The situation and its economic outcomes are dynamic. With technology costs declining, electricity rates rising, and U.S. federal tax incentives and rates paid to families selling excess solar power changing, further research and analysis will be crucial for informing policymakers, said Rajagopal.

“For example, future work could look at the viability of mobile energy storage that can move into neighborhoods when needed to supply backup power beyond the household level,” he added. “Such innovations could make our energy system more affordable, sustainable, and resilient, especially in neighborhoods currently with little access to clean energy.”

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Majumdar is also a faculty member in the departments of Energy Science & Engineering in the Doerr School, of Mechanical Science in the School of Engineering, and of Photon Science at SLAC National Accelerator Laboratory, as well as a senior fellow at Stanford’s Precourt Institute for Energy and Woods Institute for the Environment. Rajagopal is also director of the Precourt Institute’s Bits & Watts Initiative and a senior fellow at the Precourt Institute.

 

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