California has embraced moving toward renewable and clean energy sources and, as discussed in a previous article on Reach codes, this means all new homes are required to have solar panels. Many cities in Silicon Valley and beyond are also requiring homes to be all-electric.
But, with blackouts also more of a reality, especially during high wind events, severe winter storms, and wildfire season, all too many homeowners find themselves without power, sometimes for days on end.
Homes powered by solar panels also lose power during an outage unless they have a whole-house battery backup system. Battery backup systems also reduce electricity costs, providing power during the evening hours when a home would typically access electricity from PG&E. The stored electricity can help support the local utility company by providing power during peak periods or when needed.
Whole-home battery backup systems, such as Tesla’s Powerwall, provide electricity during evening hours to power even those most high-tech homes. During a blackout, backup battery storage systems will continue to contribute energy to essential needs, including refrigeration, lighting, communication, and entertainment devices.
It is important to note that these storage systems are not designed to fully power a home and all of its major systems, like central AC and EV chargers, during an extended power outage. Energy-hungry appliances quickly consume any remaining power, which is why adequately designed storage units target electricity to critical residential systems. And they can do so (almost) indefinitely if three criteria are met.
- Align the battery’s kilowatt-hour capacity and its output with your home’s energy requirements at night when the battery is partially charged
- Limit the number of circuits to prevent powering too many small devices or any large home systems
- The size of the installed solar panel system must be sufficient to partial recharge the battery on overcast winter days
Most battery backup systems will automatically shed extra energy demands during a blackout but if you’re considering a whole-home backup, ask upfront about these criteria.
California is leading the country in solar energy capacity, with six times more than runner-up Arizona. By the end of 2019, over 10,000 homes and businesses in California were equipped with solar and backup battery systems.
Over time, the costs will decline, and more and more homeowners will harness extra energy from their solar panels.
The federal government offers a solar tax credit, called the investment tax credit or ITC was established by the Energy Policy Act of 2005. This Act was due to expire in 2007 but has been extended multiple times and is available through 2021.
From 2020 through 2022, owners of residential (and commercial) solar can deduct 26% of the cost from their taxes. In 2023, that amount drops to 22%, and in 2024, it declines again to 10%.
To take the tax credit, you must own, not lease, your solar energy system. If your tax liability doesn’t enable you to claim the entire amount, the credit can be rolled to future years as long as the ITC remains in effect.
In many cases, this credit can also be applied to whole-home battery backups as well as solar panels. To qualify for the ITC, the battery must be charged onsite by renewable energy, not from the electrical grid.
Though the ITC guidelines assume battery storage and solar panels are installed congruously, the National Renewable Energy Laboratory (NREL) has stated that a storage system added to an existing solar panel system should qualify for the tax credit. Again, the homeowner must own the solar panels.
The California Public Utilities Commission also has a Self-Generation Incentive Program (SGIP), which provides rebates on qualifying energy technology, including energy storage systems. The program currently runs through 2025 and offers a generous incentive for installing battery storage systems.
If you qualify for the ITC and the SGIP incentive, your cost savings for installing a whole-home battery backup system add up to about 50%. As always, we recommend consulting your CPA or financial advisor determine if these incentives apply.
With incentives, tax credits, and reduced or eliminated reliance on local utilities, the transition to clean, safe, and effective renewable energy for homeowners is becoming even more economical.