As electricity rates continue to rise and severe weather events become more common, a recent study from Stanford University suggests that installing solar panels paired with battery storage can help many U.S. households reduce their energy bills and better manage power outages.
The study, published August 1 in Nature Energy, found that about 60% of American families could cut their electricity costs by an average of 15% after accounting for the full annualized costs of purchasing and operating a solar-battery system. Additionally, around 63% of households could meet about half their electricity needs during blackouts using these systems, either saving money or avoiding increased costs. However, those who cannot afford or do not benefit economically from such systems are often the ones most affected by high utility bills and 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 Ram Rajagopal, associate professor of civil and environmental engineering and 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.”
Researchers conducted a detailed nationwide analysis covering over 500,000 U.S. households to assess access to solar photovoltaic (PV) panels and battery storage. The study also appeared as a policy brief in Nature Energy.
A key factor influencing the affordability of these systems is federal tax policy. The One Big Beautiful Bill Act will end residential clean energy tax credits—introduced under the Inflation Reduction Act of 2022—after this year. Currently, homeowners can deduct 30% of their investment in solar arrays and batteries from federal taxes—a $12,000 rebate on a $40,000 total investment.
“The bill does affect our analysis starting next year since our calculations include the 30% federal tax credit,” said Tao Sun, lead author of the study and 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.”
Although the current study did not account for the loss of direct tax credits after this year, Sun calculated that without them—and without considering indirect benefits—the share of households for whom solar-battery systems are financially worthwhile would drop from about 60% to roughly 32%. He added: “By 2033, though, the falling price of battery packs would have the figure back at 60% and rising.”
Changes in state policies also impact how much value homeowners receive from selling excess solar power back to utilities—a practice known as net metering—which has made owning battery packs more appealing in some regions than it was previously.
More than one-third of homes today are located in states where compensation for surplus electricity is based on what it saves utilities rather than paying homeowners at retail rates; this trend is increasing across states.
The research analyzed potential cost savings and backup power capabilities across all continental U.S. states plus Washington D.C., also measuring how electric bills strain household incomes alongside outage frequencies by state.
Findings showed that homes in areas with frequent outages typically see less improvement from solar-battery backups. Conversely, states where residents enjoy significant bill reductions tend also to achieve higher levels of affordable backup power with these systems.
“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 Sustainability and co-author on the paper. “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.”
Economic viability remains lower among disadvantaged communities regardless of local compensation rates or population density due to factors such as retail rate differences, technology costs specific to each area’s sunshine levels (“solar resource”), and blackout risk profiles.
“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,” Sun noted.
Rajagopal emphasized that ongoing changes—in technology prices as well as policy incentives—mean continued research will be important: “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 said. “Such innovations could make our energy system more affordable, sustainable, and resilient especially in neighborhoods currently with little access to clean energy.”
Other contributors included Chad Zanocco (Stanford research engineer), June Flora (senior research scholar), with funding support from organizations including Stanford’s Precourt Institute for Energy’s Bits & Watts Initiative; Precourt Pioneering Projects; Sustainability Accelerator within Stanford Doerr School; EARNEST Consortium funded by Department of Energy.
Majumdar holds faculty appointments across several departments including Energy Science & Engineering (Doerr School), Mechanical Science (School of Engineering), Photon Science (SLAC National Accelerator Laboratory), as well as senior fellow roles at both Precourt Institute for Energy and Woods Institute for Environment at Stanford. Rajagopal directs Bits & Watts Initiative at Precourt Institute.
This story was first published by Stanford Energy.
