What would a battery save your facility?
Your facility and system
Advanced assumptions
Year-1 results and 10-year returns
Cumulative cash flow, years 0–10
| Year | Usable kWh | Demand savings | TOU arbitrage | O&M | ITC | Net cash flow | Cumulative |
|---|
Go deeper: storage, grids and long-duration technology
Methodology and sources
- Usable energy in year n = nameplate kWh × depth of discharge × (1 − fade)n−1.
- Demand reduction = the smaller of power rating and usable energy ÷ peak duration, capped at facility peak, × capture rate. Demand savings = reduction × demand charge × 12.
- TOU arbitrage per cycle = discharged kWh × on-peak price − (discharged kWh ÷ round-trip efficiency) × off-peak price. On-peak price = off-peak price + premium. This mirrors the peak-shaving and price-arbitrage dispatch options in NREL’s System Advisor Model (SAM), simplified to one cycle a day.
- O&M escalates 2.5% a year. Net CapEx = installed cost × nameplate kWh − §48E credit. Simple payback = net CapEx ÷ year-1 net benefit. IRR uses cash flows for years 0–10, with tariffs escalating each year. Depreciation, financing, demand-response payments and wholesale market revenue (enabled by FERC Order 841 for front-of-meter storage) are not included.
| Technology preset | Installed cost | Round-trip efficiency | Usable DoD | Fade | Basis |
|---|---|---|---|---|---|
| Lithium-ion (LFP) | $480/kWh | 90% | 90% | 2.0%/yr | Lazard LCOS v10.0 (June 2025), C&I standalone 1 MW / 2 MWh: DC $238–445/kWh + EPC $56–168/kWh + AC $40–80/kW, efficiency 88–92%, 90% DoD; O&M $7.3–9.1/kWh-yr |
| Vanadium redox flow | $550/kWh | 65% | 100% | 0.3%/yr | PNNL 2022 Grid Energy Storage Cost and Performance Assessment: AC-AC efficiency 65%; 10 MW, 4 h components imply roughly $450/kWh by 2030; smaller C&I systems cost more |
| Thermal / other LDES | $420/kWh | 50% | 100% | 0.5%/yr | PNNL 2022: thermal electricity-to-electricity efficiency 35–60%; costs vary widely by duration and design. Best suited to long, infrequent discharges, not daily arbitrage |
- §48E credit (2026): energy storage qualifies under the technology-neutral clean electricity investment credit (old §48 ended for projects starting construction after 2024). Base 6%, or 30% with prevailing wage and apprenticeship or a system under 1 MW AC. Domestic content and energy community bonuses add 10 points each (2 points without the 30% rate). The One Big Beautiful Bill Act (July 2025) left storage out of the accelerated 2027 cut-off for wind and solar, but storage starting construction after 31 December 2025 loses the credit if it fails the prohibited-foreign-entity material-assistance test (55% non-PFE cost ratio for 2026 starts). Sources: IRS Clean Electricity Investment Credit guidance; Plante Moran (October 2026).
- Demand charges: NREL (McLaren et al., 2017) found that more than a quarter of the 18 million US commercial customers could take service under tariffs with demand charges above $15/kW.
- Results are screening estimates, not an investment recommendation. Interval meter data, your exact tariff and a tax adviser are needed before committing capital.
Sustainability Awakening · last checked 24 October 2026. All calculations run in your browser; nothing you enter is stored.
Frequently asked questions
Does battery storage still get a federal tax credit in 2026?
Yes. Energy storage now qualifies under the Section 48E clean electricity investment credit, which replaced Section 48 for projects starting construction after 2024. The base rate is 6%, or 30% if prevailing wage and apprenticeship rules are met or the system is under 1 MW AC, with up to 10 extra points each for domestic content and energy communities. The July 2025 One Big Beautiful Bill Act kept storage eligible, but projects starting construction after 2025 must pass the prohibited-foreign-entity sourcing test.
How does a battery reduce demand charges?
Commercial tariffs often charge for the highest 15- or 30-minute demand in each month. A battery discharges during those peaks so the meter sees a lower maximum. The saving is the kW removed from the monthly peak multiplied by the demand charge, so a 300 kW reduction at $20/kW-month is worth about $72,000 a year.
How is the simple payback of a commercial battery calculated?
Simple payback is the net installed cost after the tax credit divided by the first-year net benefit, which is demand-charge savings plus time-of-use arbitrage minus operations and maintenance. The calculator also reports a 10-year internal rate of return and a year-by-year cumulative cash flow that includes battery degradation and tariff escalation.
Which is better for a commercial site: lithium-ion, flow or thermal storage?
Lithium iron phosphate batteries usually suit 2 to 4 hour peak shaving because they are about 90% efficient and the lowest cost per kWh at commercial scale. Vanadium flow batteries degrade very little and suit 4 to 10 hour duties, but at about 65% efficiency they earn less from daily arbitrage. Thermal and other long-duration systems are best for long, infrequent discharges.