Homeowners are more interested than ever in maintaining access to reliable power supplies should their utility’s grid go dark. Today’s concerns go beyond worrying about what’s in the freezer and work-from-home fears of losing an internet connection. While standby generators have long been the go-to choice for consumers, especially where natural gas connections are available, today’s buyers also can opt for battery-based storage systems. Electrical contractors are an important resource in aiding these purchase decisions, so understanding the benefits and trade-offs of each approach can be a boon to boosting their backup power business.

The market for residential generators is strong and growing. Fortune Business Insights (FBI) anticipates 2023’s $6.1 billion sales total will grow to $10.26 billion by 2032, or about 6% per year. Residential battery storage systems are starting from a lower sales figure—just over $1 billion in 2023 and expected to hit $4.7 billion by 2030, according to FBI—but that translates to almost 22% growth per year during that period. 

Battery storage systems grow

In short, many consumers are feeling less secure about their power connections and more interested in backup solutions. And while most battery buyers are connecting their equipment to rooftop solar panels, electric utility incentives are also beginning to drive standalone purchases. This shift is shaking up the industry, with leading generator manufacturers buying their own battery companies to cover all their bases. Some large electrical contracting firms are establishing separate divisions to focus on solar and battery installation, with growing interest in standalone storage systems.

Generac, Waukesha, Wis., is one of the generator makers expanding to include battery storage systems in its residential product portfolios, acquiring Pika Energy, Westbrook, Maine, in 2019. 

“As we see how the market’s evolving, there’s room for both technologies,” said Rex Liu, Generac’s vice president of product management, clean energy. He sees climate issues driving growth in both categories. 

“Obviously, [2024 was] particularly challenging for certain areas of the country. When they experience an outage, especially an extended outage, that’s when a lot of homeowners start thinking about how they can prevent power loss from happening again. And it’s not just the weather—the grid, in general, across the country is becoming less stable,” he said.

But battery purchases aren’t always based solely on a desire for greater energy security. Standalone batteries, without connected solar panels, might be a backup option where generators won’t work, but also, as Liu noted, utility incentive programs can provide a potentially valuable second use case beyond offering backup power. 

“You can install battery storage where you can’t always install a generator. Just for an example, I live in a homeowners’ association in California, and I’m not allowed to install a generator, so I’m getting a storage system installed instead,” he said, adding that he already has solar panels. “You also have the benefit of offsetting your energy cost because you can reduce your consumption of energy from the grid and export power to the grid. That gives you a benefit of reducing your electricity bill, even when you’re not in an outage situation.”

Some utilities are incentivizing home storage, even for customers without solar panels, to aid in their own grid-balancing efforts. Vermont’s largest utility, Green Mountain Power (GMP), is a pioneer in these efforts. The company offers customers the choice to lease two Tesla Powerwall batteries for $55/month or receive an incentive of up to $10,500 to buy their own units. In return, customers agree to share stored energy with the utility during peak demand periods. 

During grid outages—which have become more frequent thanks to a number of severe weather events the last few years—customers can use their batteries to keep their homes up and running. Initially, state regulators capped program participation at 500 customers or 5 megawatts (MW) of stored energy per year, and a wait-list soon grew. In 2023, the cap was eliminated. GMP now sees energy storage as a key component of its initiative to eliminate customer outages by 2030, along with undergrounding lines and other measures.

Getting the best of both worlds

Liu said higher-end customers now are more frequently considering the belt-and-­suspenders dependability of combining battery and generator systems, even where solar panels are recharging batteries. This ensures the power stays running. 

“In situations like the Texas ice storm from a couple years ago, solar wasn’t turning on and recharging the battery because it was covered in ice,” he said. “In that situation, you only have the capacity of the battery. If you pair it with a generator, you get the best of both worlds, and you get some of that return on investment for the battery and solar.” 

Though an outage-based switch to battery power is unnoticeable, transitioning to the generator still can result in a 20- to 30-second power outage before the generator syncs to the home panel. However, smarter inverters and other connected equipment are changing that. For example, Generac recently introduced its updated PWRcell2 system that incorporates batteries and a smart inverter that enables outage-free generator operation, allowing the generator to charge a battery and run home operations simultaneously.

“We actually control the generator from the energy storage system with a single switch,” Liu said. “There are technologies being developed that really drive this integration to provide that kind of seamless experience for the homeowner.”

Briggs & Stratton SimpliPhi 6.6 batteries, shown in the middle of the installation process, have helped displaced Rancho Palos Verde residents return to their homes as officials work to address post-landslide reconstruction.

ECs answer the call

Like rooftop solar, battery adoption has been highly regional so far, with California and Texas leading other states. However, the expansion of tax credits for installed residential solar panels to also include battery systems—with or without attached solar—is a boost to nationwide adoption efforts. So, the experience of electrical contractors in California could help others understand the business opportunities that could be coming their way.

Baker Home Energy, a subsidiary of Escondido, Calif.-based Baker Electric Inc., offers one example. The company began operations as a residential solar installer and now also includes battery installation among its services. Andy Gallagher, the company’s product innovation manager, said California’s recent incentive changes have boosted battery sales in the state dramatically. Benefits have decreased significantly for new solar-only installations and increased for those able to use their own batteries to reduce grid dependence during peak-demand periods. Gallagher said this shift has had big impacts for his company’s solar installation business.

“We were attaching batteries at a rate of between 15%–25% before the switch—since then, our attachment rate with batteries has gone to, basically, 95%–100%,” Gallagher said. “So, everything we currently sell has batteries.”

Since the rules changed, Gallagher said the company is seeing interest in standalone battery systems. 

“We’ve piloted a few sites where we have a battery not paired with solar, so it charges in the middle of the night when energy is cheap and then it discharges to the home when energy is expensive,” he said. 

The company also has established a partnership with Sonnen, a German battery manufacturer and virtual power plant (VPP) developer, that offers even more financial incentives. Baker Home Energy has dubbed this package ChargeOn, but, Gallagher said, it’s really an extension of Sonnen’s sonnenConnect program, which is also available through some utilities in Utah and Florida. 

Pairing storage with rooftop solar panels is the new normal in California. These systems provide homeowners both backup security and bill-saving opportunities.

This VPP incorporates what Sonnen calls “Optimized TOU” (time of use), a type of utility billing plan with rates that vary during the course of a day. 

“Sonnen can aggregate the capacity of batteries connected to its system on a day-ahead basis, analyze potential weather effects on solar generation, and charge and operate batteries to optimize grid support and potential backup power needs. Beyond demand reduction, Sonnen also is able to deploy customers’ batteries for other grid-support needs, including frequency and voltage regulation.

“What the customer gets is ongoing participation of their battery into a variety of grid services, and the customers, themselves, monetize those grid services directly,” Gallagher said. “So, the customer is able to have Sonnen, at their behalf, bid their energy into the California Independent System Operator, and the customer then receives a quarterly check from Sonnen directly for however much they’ve been able to monetize their batteries.”

Soon, electric vehicle owners might be able to participate in these energy-­shifting markets, as well, as automakers such as Ford and GM refine their vehicle-to-home and vehicle-to-grid designs. Gallagher noted that EV battery systems have much greater capacity than those designed for home use, with a typical difference of 15 kilowatt-hours (kWh) for a home system and 100 kWh in an EV. 

“The use case could be, I want to augment my existing 10-kWh home battery, so I need to bring in maybe 40 kWh more from my car battery,” he suggested. “But you’re going to need to ensure that you’re remaining within the constraints of your car’s warranty.”

briggs & Stratton, nakarin / stock.adobe.com | KanawatTH / stock.adobe.com