Should I install a solar battery now or later?

Energy storage is the rising star of renewable energy. And with this popularity comes an increasingly common question: Should I install a battery with my solar panel system now? Or should I wait and add one later on? In this article, we'll dive into some of the most important factors to consider when making that decision.

Before deciding whether you want to install a battery now or in the future, ask yourself: Why do I want a battery? Do I need one?

A battery is a big purchase – one that typically adds more than $10,000 to your overall cost to go solar. And in some areas of the country, you may not see a financial return on that upfront investment.

A solar battery can help you save money if your utility has demand charges, time-of-use rates, or doesn't offer net metering. By storing solar electricity onsite in a battery, you can avoid pulling expensive electricity from the grid when your solar panel system isn't generating enough power to meet your needs (like at night).

Resiliency is another good reason to add a battery to your solar panel system. If you experience frequent power outages and want to keep your lights on when the grid goes dark, a battery can help you do just that. Installing a solar battery for home backup may not save you money in the long run, but that doesn't mean it's not worth it: After all, you can't put a price on peace of mind, right?

If none of these reasons jump out at you as compelling enough to add a battery, that's okay! It probably means you shouldn't install one right now. But if you know you want a battery, just need an answer on timing, read on.

Battery costs continue to fall, and quite rapidly – in fact, between 2010 and 2019, lithium-ion battery pack prices dropped 87 percent! We don't have a crystal ball, but it's fair to assume that a storage system you buy right now will likely have a higher price tag than a comparable technology a few years down the road. However, that's not necessarily a reason to wait, especially if you can take advantage of incentives that won't be available down the line.

Solar batteries and the federal ITC

Perhaps the best case to make for buying a battery now instead of later is the federal investment tax credit (ITC). If you install a battery with your solar panel system today, you can claim up to 26 percent of those costs as a credit on your federal taxes, which means a credit of around $4,000 for the average battery system. However, the ITC will step down to 22 percent in 2023 and expire for homeowners in 2024.

Waiting too long to install a battery will mean missing out on this lucrative incentive and potentially paying more for your battery than you would have with the credit in place. (Note: standalone storage systems are not currently eligible for the ITC; you need to charge your battery with an onsite renewable energy resource–like solar–to claim this credit.)

Also, when considering incentives, keep an eye out for more than just the ITC: many states or utility companies currently have limited-time incentive programs in place to promote solar-plus-storage adoption. Popular examples of this today include:

• The SMART incentive in Massachusetts

• ConnectedSolutions program in Massachusetts, New Hampshire, Rhode Island, and Connecticut

• Self-Generation Incentive Program (SGIP) in California

• Energy storage tax credit in Maryland

• Long Island's storage incentive

• And more!

So before you decide whether to install a battery now or later, make sure to learn more about the current incentive opportunities in your area – and the date when they'll no longer be available.

When you buy a solar-plus-storage system, you're paying for more than just hardware – you're also paying for the cost of the installation, including labor and permitting.

Installing your solar panel system and battery at the same is certainly more efficient for your installation company: doing it all at once means fewer truck rolls and hours of work. Because of this, installing your solar-plus-storage system at the same time rather than in separate stages is often less expensive from a labor perspective.

Another cost-saving consideration? Permitting and interconnection costs. These days, most local jurisdictions require installers to pull electrical and/or solar-specific permits before working on your property, and they bake this cost into the turnkey price of your solar installation. The same is true for interconnection to the grid – your installer will work with your utility company directly to apply for interconnection and include that fee in your total system cost.

Permitting requirements vary by area, and there's a chance your installer may only need one all-encompassing permit and interconnection application for their electrical work on a solar-plus-storage system. If that's the case, then filing a permit for a solar-plus-storage system will likely be less expensive (and take less time!) than filing a solar permit and going back later to obtain another for your battery installation.

And while we're on the topic of installation fees, you have more to consider than truck rolls, permits, and interconnection fees as far as costs are concerned:

Adding a battery to an existing solar panel system doesn't have to be complicated, but it certainly can be. The difficulty of connecting a battery–and the additional cost it adds to your installation–heavily depends on the configuration of your solar panel system and your existing hardware.

Going back and adding a battery later isn't always an easy "plug and play" process – depending on the circumstance, upgrading to a solar-plus-storage system may involve swapping certain solar panel system components for new, battery-friendly alternatives. Plus, some batteries are much easier to retrofit onto a solar panel system than others.

Most of this complexity is due to your inverter setup and whether the battery is a DC-coupled or AC-coupled solution. The majority of retrofit battery installations are AC-coupled. Because solar panel systems already include an inverter, it's more cost-effective to keep it exactly where it is and install a separate inverter to handle the alternating current (AC) to direct current (DC) inversion for the battery.

That said, DC-coupled systems–which only require one inverter for the battery and solar panel system–are more efficient, giving you more bang for your buck (or rather, energy output for energy input).

If you want to install a DC-coupled battery system, we highly recommend installing your solar panel systems and battery at the same time – the complications of adding a DC-coupled storage system to an existing solar panel array will be extra costly. But if you're mostly interested in AC-coupled battery solutions, you have more flexibility on your timeline.

When it comes down to it, whether you should install a solar battery now or plan for a retrofit installation depends on your priorities, budget, and specific situation...we know, probably not the straightforward now-or-later answer you were looking for! Above all, if you decide to wait and see, remember to ask your installer to build a storage-ready solar panel system – this will save you from a lot of headaches down the road.

Ready to explore your solar-plus-storage options? Sign up on the EnergySage Marketplace to receive free custom solar quotes from local installers.