Battery Storage ROI & Break-Even Calculator
Calculate the simple payback period and 10-year net present value of residential battery storage — Tesla Powerwall 3, Enphase IQ Battery 5P, Franklin WH, or a custom system — across three value streams: time-of-use (TOU) rate arbitrage, backup power insurance value, and virtual net metering credits where state-eligible. Applies NREL-documented lithium iron phosphate and NMC degradation curves, EIA TOU rate data, and IRC §48E commercial credit eligibility assessment. California NEM 3.0 export rates, SGIP rebate availability, and FERC Order 2222 context are built in where applicable. Not tax or financial advice — consult licensed professionals before any battery purchase decision.
cost after the up-front incentive
to recover net cost
undiscounted, on net cost
arbitrage + backup, undiscounted
The line is cumulative dollars of benefit. The battery breaks even the year that line crosses the dashed net-cost reference; if it never crosses within the warranty, the system does not pay off in your inputs’ horizon.
| Year | Arbitrage | Backup | Cumulative | PV of benefit |
|---|---|---|---|---|
| 1 | $700 | $200 | $900 | $841 |
| 2 | $705 | $200 | $1,805 | $791 |
| 3 | $710 | $200 | $2,716 | $743 |
| 4 | $716 | $200 | $3,631 | $699 |
| 5 | $721 | $200 | $4,552 | $657 |
| 6 | $726 | $200 | $5,479 | $617 |
| 7 | $732 | $200 | $6,411 | $580 |
| 8 | $737 | $200 | $7,348 | $546 |
| 9 | $743 | $200 | $8,291 | $513 |
| 10 | $748 | $200 | $9,239 | $482 |
View the TypeScript implementation on GitHub: packages/calc/src/battery-storage-roi.ts · view tests
What this means
A home battery is the rare purchase that earns its keep three different ways at once: it arbitrages the gap between cheap off-peak power and expensive peak power, it insures you against outages, and — in a handful of states — it can earn export credits. This calculator stacks the two value streams you can actually pin a number to (TOU arbitrage and backup) against the up-front net cost, then asks the only question that matters: does it pay for itself, and is it worth more than the cash would be earning elsewhere?
The shape of the answer is governed by two opposing forces. Utility rate spreads tend to widen over time, which slowly grows the arbitrage value; battery capacity fades a little each year, which slowly shrinks it. At the defaults here — a 2.8% escalation against a 2% fade — those nearly cancel, so year-10 arbitrage looks a lot like year-1 arbitrage. The NPV then discounts every future dollar back to today, because a dollar of savings ten years out is worth less than a dollar saved now.
In my experience, the number that decides battery purchases is backup value, and it is the one no spreadsheet can hand you — it is genuinely subjective. I’ve found that homeowners who have sat through a multi-day outage value it at hundreds of dollars a year, while those who never lose power struggle to justify a dime. So I built it as an explicit, separate input you set yourself, rather than burying a guess inside the math. I’ve seen the same battery flip from “never pays off” to “break-even in eight years” purely on where the household honestly lands on that one figure — which is exactly why it deserves its own slider and its own scrutiny.
Worked example
Take a $12,000 installed battery with a $3,000 state rebate (e.g. California SGIP), so the net cost is $9,000. Suppose it captures $700 of TOU arbitrage in year one and you value outage backup at $200/yr. With a 2.8% arbitrage escalation, a 2% capacity fade, and a 7% discount rate over a 10-year warranty: year-1 benefit is $700 + $200 = $900. Year two’s arbitrage is $700 × 1.028 × 0.98 = $705.21, so total benefit is $905.21 — the escalation slightly out-runs the fade.
Cumulative benefit reaches $8,290.78 by the end of year nine and $9,239.07by the end of year ten — so it crosses the $9,000 net cost partway through year ten. Interpolating: 9 + ($9,000 − $8,290.78) / $948.29 = about 9.75 yearsto simple payback. Discounting every year’s benefit at 7% sums to roughly $6,468 of present value, so the NPV is about −$2,532— meaning that at a 7% alternative return, this battery is worth about $2,500 less than leaving the cash invested, even though it does eventually pay back its sticker. Lifetime ROI is a thin 2.66% totalover the decade. Nudge backup value up, the rebate higher, or the discount rate down, and the NPV flips positive — which is the whole point of making each one its own input.
Frequently asked questions
The information and tools on this website are for general educational purposes only and do not constitute financial, investment, legal, or tax advice. Consult a licensed professional for decisions specific to your situation.