Home Battery Payback: Buy vs Third-Party-Owned Calculator (2026)

A bought battery gets $0 federal credit in 2026; a third-party-owned one carries the 30% §48E — the year buying overtakes, from your prices and payments.

Updated September 2026 · Source: EIA Electric Power Monthly Table 5.6.A (July 2026 data) · next EIA update ~Oct 23

By SolarCostData Data Desk · Reviewed September 2026 · Corrections log

On this page: CalculatorTableHow we calculatedSources

Why the two values must be kept apart

Adding arbitrage and backup into one “annual savings” number is the single most common way battery math misleads people, and it misleads in both directions.

Arbitrage is verifiable. It comes out of your utility’s published rate schedule. If your peak rate is 42¢ and your export credit is 8¢, every kWh you store and use yourself is worth 34¢, and you can check that against a bill. Two people with the same battery and the same tariff should get the same answer.

Backup is not verifiable, because it is not a market price. There is no exchange where you can sell an hour of kept power. What an outage hour is worth depends on whether you work from home, whether you have a well pump, whether the last one lasted three hours or three days, and how much you personally dislike the experience. It is a real value. It is just your value, and no calculator should assign it for you.

So the tool asks. And then it runs the question backwards, which is more useful: given your rates and your purchase price, what would an hour of backup have to be worth for this to break even? If the answer is $2, the battery is easy. If the answer is $60, you have learned something a “savings” figure would have hidden.

The split also protects you from the opposite error. Under full-retail net metering, arbitrage is close to zero — the tool will say so plainly — and a lumped figure would make the whole purchase look irrational. It isn’t. It’s just an insurance purchase wearing an investment’s clothes, and it should be priced that way.

The arithmetic, in full

Arbitrage

Every kWh you store and self-consume is worth the gap between what you would have paid for it and what you would have been credited for exporting it — never the full retail rate:

Arbitrage, year 1 = E × C × (peak rate − export credit)

where E is the energy actually shifted per day and C is full cycles per year. The important constraint is on E, because it is where optimistic quotes cheat:

E ≤ capacity × depth of discharge × round-trip efficiency

A 13.5 kWh pack at 90% depth of discharge and 90% round-trip efficiency delivers about 10.9 kWh a day, not 13.5. If you enter more, the tool caps it and tells you it did. Round-trip losses are applied on the delivered side here, which is the conservative reading — you pay for the losses either way, and this way the same ceiling governs both value streams.

Over the horizon, each year’s arbitrage is faded by your degradation assumption and grown by your rate-escalation assumption:

Arbitrage in year y = Arbitrage₁ × (1 − fade)^(y−1) × (1 + rate growth)^(y−1)

Those two forces pull against each other and roughly cancel at 2% fade and 3% rate growth, which is why the tool exposes both instead of burying a net assumption.

Backup

Backup value has three terms, and one of them is physics rather than preference:

Backup, year 1 = N × min(T, h) × V

N is outages per year, T is the average outage length, and V is your dollar value of an hour. h is the runtime the pack can actually deliver, and it is the term everyone skips. With a critical load L in kW and usable energy U in kWh:

h = U ÷ L

A 10.9 kWh usable pack carrying a 0.7 kW critical load runs about 15.6 hours. Carrying a 3 kW load — because someone left the air conditioning on the backed-up circuit — it runs about 3.6 hours. This is why min(T, h) matters: if your outages average 30 hours and your pack runs 15, you are buying half of each outage, not all of it, and a calculator that ignores runtime will overstate backup value by a factor of two.

If your inverter can island and keep charging from solar during an outage, the pack recharges by R kWh per day while discharging, and the runtime stretches:

L × h = U + R × (h ÷ 24) → h = U ÷ (L − R ÷ 24)

When R ÷ 24 ≥ L — daily solar recharge exceeds the critical load’s daily draw — the denominator goes non-positive and runtime is unbounded: you ride out the outage indefinitely, weather permitting. The tool reports that case as “runs indefinitely” rather than printing an absurd number. Two cautions: not every inverter can charge from solar while islanded, and R is a fair-weather figure. The storm that took your power out is not usually a sunny day.

Present value

A lump sum today and twenty years of monthly payments are not the same money, so both routes are discounted at a rate you set:

PV = Σ (cash flow in year y) ÷ (1 + d)^y, for y = 1 … horizon

The purchase price sits at year zero and is not discounted. Lease fees compound by the contract escalator and are then discounted. Value streams are discounted the same way, so the comparison is symmetric.

Pick d by asking what the money would otherwise do. If the alternative to a $14,000 battery is a savings account, use the savings rate. If it is paying down a 6.5% mortgage, use 6.5%. The default of 5% is a placeholder, not a recommendation, and the answer moves noticeably when you change it — which is the point.

Who actually gets the 30%

Three sentences that resolve most of the confusion:

1. §25D, the residential clean energy credit, is the one homeowners claimed themselves. It covered solar and qualifying batteries at 30%, and it ended for property placed in service after 31 December 2025. No phase-down, no grace period for purchases. A 2026 cash or loan buyer gets $0.
2. §48E, the clean electricity investment credit, is a business credit. It is claimed by whoever owns the equipment and places it in service. It never applied to a homeowner buying their own battery and still doesn’t.
3. Storage survives on the business side much longer than solar does. The 2025 law pulled wind and solar termination dates sharply forward; energy storage was treated separately, and its phase-out keys to when construction starts, not beginning to step down until construction starts in the mid-2030s under current law.

That asymmetry is why a salesperson can say “storage still gets 30%” and be telling the truth about a tax position that is not yours.

A few details that decide how much of it actually exists:

• 30% is not automatic. §48E’s base rate is 6%. The five-times multiplier that takes it to 30% requires either a facility under 1 MW — which every home battery comfortably is — or compliance with prevailing-wage and apprenticeship rules. Home storage clears this on size alone.
• The credit is not the owner’s only benefit. A business owner also depreciates the asset. Whether the combined value shows up in your monthly fee is a pricing decision the provider makes, not something the tax code guarantees you.
• Sourcing rules now apply. The 2025 law layered restrictions tied to foreign-entity ownership and to the origin of materials onto projects starting construction after 2025. How they land on residential storage portfolios is still being worked out, and it can affect what a provider is able to price. Ask; don’t assume.

So there are exactly two ways a household touches that 30% in 2026: you don’t own the battery, or your state helps. On the second, be careful which state programs you are counting — California’s SGIP is closed, its storage budget exhausted, and any quote still subtracting an SGIP rebate is subtracting a number that no longer exists. Check DSIRE for what is genuinely open where you live, and see the 2026 energy tax credit guide for the full federal picture.

What the monthly fee doesn’t show you

If the present-value comparison pushes you toward third-party ownership, price the terms that aren’t in the payment:

• The escalator compounds quietly. A $95 fee rising 2.9% a year is $95 today, about $124 in year ten, and about $165 in year twenty. Enter the contract’s real escalator, not the one on the sales sheet — they are not always the same number.
• Dispatch rights. Most provider-owned batteries come with the provider’s right to discharge them during grid events. That is the trade, and it is usually fine, but it means some of the arbitrage you modeled belongs to them. The “arbitrage you keep” input exists for exactly this; if the contract lets them call the battery on the evenings you would have used it, that number is not 100.
• Backup during dispatch. Ask specifically whether the contract guarantees a reserve for your own backup, and how much. A battery drained for a grid event at 6 p.m. is not a battery that helps you at 8 p.m.
• Selling the house. Transferring or buying out a long-term contract is a routine friction point in home sales. Ask how it works before you sign, not when you list.
• Buyout and termination pricing. Rarely volunteered, always worth reading.

None of this makes third-party ownership a bad route. For a household with no tax appetite — which, since §25D died, is every household on a battery purchase — and no appetite for $14,000 upfront, it is often the only route. It just isn’t the free money that “you still get the 30%” implies.

What this deliberately leaves out

• Battery replacement. The horizon caps at 25 years, but a purchased pack may need replacing before then while a lease contract typically doesn’t shift that cost to you. If you set the horizon past your warranty term, the buy column is flattering itself. Compare at your warranty term first.
• Whole-home versus critical-load backup. The model assumes a critical-load panel. Backing up the whole house draws far more, cuts runtime hard, and often needs different hardware.
• Rate structure changes. Peak rates, export credits and net-billing rules will all move over a battery’s life, and several states are actively rewriting theirs. The escalation input is a blunt instrument for a genuinely uncertain thing. If you are in California, read NEM 3.0 explained before trusting any long-run export assumption.
• Demand charges and tariff switching. Some households can only capture the spread by moving onto a different TOU plan, which changes what they pay for everything else.
• Weather correlation. Outages and cloudy days arrive together. The solar-recharge input assumes a normal production day, which a storm is not.
• The pathological case. If someone in the house depends on powered medical equipment, none of this arithmetic applies. That is not an economic decision and should not be modeled as one.

Sources

• §25D expiry and §48E status — IRS, Residential Clean Energy Credit and Clean Electricity Investment Credit ; statutory text at 26 U.S.C. §48E ; Public Law 119-21 (2025).
• California SGIP status — CPUC, Self-Generation Incentive Program , and the program administrator’s site at selfgenca.com .
• California net billing (NEM 3.0) — CPUC, net energy metering .
• Outage frequency and duration — U.S. Energy Information Administration, Form EIA-861 detailed data , which publishes utility-level SAIDI and SAIFI reliability metrics. Use your own utility’s line rather than a national average, and note that the figures with and without major event days differ enormously.
• Electricity rates — EIA, average price by state . Your TOU peak is not your state average; take it from your own tariff sheet.
• State and utility programs — DSIRE , NC Clean Energy Technology Center.

Every figure in the calculator is an input you control, with defaults chosen to be modest rather than flattering. Nothing here is a quote, and nothing here is tax advice — confirm your own position with a licensed tax professional and your own utility’s tariff.

Related

For the shorter version of this question — payback on a purchase versus a lease, without the backup model — use the home battery calculator . For what survived into 2026 across every federal energy credit, see the 2026 energy tax credit guide . If you are in California, the export rate that drives your whole arbitrage number is explained in NEM 3.0 explained , and the broader case is in is solar worth it in 2026 .

Frequently asked questions

Sources: U.S. Energy Information Administration (EIA) electricity rates · DSIRE incentive records · public IRS/OBBBA guidance. Figures are modeled estimates, not quotes or tax advice. See our methodology.

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