Payback guide · tariffs checked October 30, 2026
Does a home battery pay for itself on time-of-use rates?
Short answer: on most standard time-of-use plans, savings alone don't pay back a battery within its 10-year warranty. The math only works when the gap between peak and charging prices is wide. With one 13.5 kWh battery cycled daily at a typical installed price of $13,473 (EnergySage), we get about $986 a year (14 years payback) on PG&E EV2-A, $1,012 (13 years) on SCE TOU-D-PRIME, $751 (18 years) on SCE TOU-D-4-9PM, $480 (28 years) on DTE Overnight Savers, and only $121 a year on PG&E's default E-TOU-C. The strongest case is a California solar home on the Net Billing Tariff, where storing midday solar instead of exporting it is worth about $1,684 a year (8 years) if exports earn 5 cents. Backup power during outages is a separate benefit that none of these numbers count.
This page does the payback math with real 2026 tariff prices, shows every step so you can redo it with your own bill, and lists the assumptions that move the answer most. To size a battery for outages instead, see how much battery storage do I need.
How time-of-use arbitrage works
A time-of-use (TOU) rate charges more per kWh in an evening peak window, usually 4 to 9 p.m. in California and 3 to 7 p.m. on weekdays at DTE in Michigan. A battery charges when energy is cheap, then runs the house during the peak so you buy less at the high price. Two numbers set the savings:
- The spread. Every kWh you shift saves the peak price minus what it cost to put that kWh in the battery.
- Round-trip losses. Tesla rates Powerwall 3 at 89% solar-to-battery-to-home efficiency (datasheet). To deliver 13.5 kWh you have to put in about 15.2 kWh, so the real charging cost is the off-peak price ÷ 0.89.
Savings per kWh shifted = peak price − charging price ÷ 0.89.
Example, PG&E EV2-A in summer: 53.8¢ − 22.6¢ ÷ 0.89 = 28.5¢. One 13.5 kWh cycle a day for 122 summer days saves 13.5 × 0.2846 × 122 = $469. Winter adds 13.5 × 0.1575 × 243 = $517. Total: about $986 a year.
If the spread is smaller than the 11% loss, the battery loses money on every cycle. That is the case on PG&E E-TOU-C in winter (39.8¢ peak vs 36.8¢ off-peak, so charging really costs 41.3¢) and on DTE's default D1.11 rate in winter. A sensible controller simply doesn't cycle on those days.
The payback table
Prices below are per-kWh energy rates from each utility's current tariff or rate card. Payback is the installed price ÷ annual savings, with no interest, rate changes or degradation (more on those below). We show two prices: EnergySage's $13,473 typical Powerwall installed before incentives (review, May 2026) and its $15,647 typical for a 13.5 kWh system (cost guide).
| Rate plan | Savings per kWh shifted | Per year | Payback at $13,473 | At $15,647 |
|---|---|---|---|---|
| PG&E E-TOU-C Default residential TOU. Peak 4–9 p.m. every day; charge from off-peak. | Summer, every day: 52.2¢ − 39.9¢/0.89 = 7.4¢ Winter, every day: 39.8¢ − 36.8¢/0.89 = -1.5¢ (loses money; don't cycle) | $121 | over 100 years | over 100 years |
| PG&E EV2-A EV owners, heat-pump homes, or a capped battery-only pilot. Peak 4–9 p.m.; charge midnight–3 p.m. off-peak. | Summer, every day: 53.8¢ − 22.6¢/0.89 = 28.5¢ Winter, every day: 41.1¢ − 22.6¢/0.89 = 15.8¢ | $986 | 14 years | 16 years |
| SCE TOU-D-4-9PM Default residential TOU. Weekday 4–9 p.m. on-peak; winter charge from 8 a.m.–4 p.m. super-off-peak. | Summer weekdays: 59.0¢ − 33.0¢/0.89 = 21.9¢ Summer weekends: 44.0¢ − 33.0¢/0.89 = 6.9¢ Winter, every day: 50.0¢ − 32.0¢/0.89 = 14.0¢ | $751 | 18 years | 21 years |
| SCE TOU-D-PRIME EV, battery or heat-pump owners. Same windows; lower off-peak, no baseline credit. | Summer weekdays: 61.0¢ − 26.0¢/0.89 = 31.8¢ Summer weekends: 39.0¢ − 26.0¢/0.89 = 9.8¢ Winter, every day: 45.0¢ − 24.0¢/0.89 = 18.0¢ | $1,012 | 13 years | 15 years |
| DTE D1.11 Time of Day Michigan default TOU. Peak 3–7 p.m. weekdays; charge off-peak. | Summer weekdays: 24.1¢ − 18.4¢/0.89 = 3.4¢ | $40 | over 100 years | over 100 years |
| DTE D1.13 Overnight Savers Opt-in. Peak 3–7 p.m. weekdays; charge 1–7 a.m. super off-peak. | Summer weekdays: 35.6¢ − 11.7¢/0.89 = 22.4¢ Summer weekends (off-peak): 25.5¢ − 11.7¢/0.89 = 12.3¢ Winter weekdays: 19.1¢ − 11.7¢/0.89 = 5.9¢ Winter weekends (off-peak): 15.6¢ − 11.7¢/0.89 = 2.4¢ | $480 | 28 years | 33 years |
| PG&E E-ELEC + solar Battery stores midday solar that would otherwise export at 0.0¢/kWh (our assumption) | Summer peak 55.2¢, winter peak 32.1¢, minus 0.0¢/0.89 | $1,961 | 7 years | 8 years |
| PG&E E-ELEC + solar Battery stores midday solar that would otherwise export at 5.0¢/kWh (our assumption) | Summer peak 55.2¢, winter peak 32.1¢, minus 5.0¢/0.89 | $1,684 | 8 years | 9 years |
| PG&E E-ELEC + solar Battery stores midday solar that would otherwise export at 10.0¢/kWh (our assumption) | Summer peak 55.2¢, winter peak 32.1¢, minus 10.0¢/0.89 | $1,408 | 10 years | 11 years |
PG&E rates effective March 1, 2026 (E-TOU-C, EV2-A, E-ELEC); summer June 1–September 30. SCE prices as listed on its time-of-use plans page, before the 9¢ baseline credit (TOU-D-4-9PM) and excluding the $0.79/day Base Services Charge, which a battery doesn't change. DTE base rates from its residential rate card (power supply + distribution, excluding surcharges such as PSCR); D1.11 winter and D1.13 periods per the card. Weekday counts ignore holidays. Solar rows: export value is our assumption, not a tariff number.
What the numbers say
- Default TOU plans are weak for batteries. PG&E E-TOU-C's summer spread of 12.3¢ shrinks to 7.4¢ after losses, and winter is negative: about $121 a year. DTE D1.11 is similar at about $40 a year, summer weekdays only.
- Plans with a cheap overnight price change the picture. PG&E EV2-A's 22.6¢ off-peak price makes every day of the year profitable. SCE TOU-D-PRIME (24–26¢ off-peak) does the same. Both have eligibility rules: EV2-A is for EV owners, heat-pump homes, or battery-only customers in a pilot capped at 30,000 customers (tariff, Special Condition 8); TOU-D-PRIME requires you to own or lease an EV, battery or heat pump (SCE).
- SCE's default plan works in winter because of the midday price. TOU-D-4-9PM has a 32¢ super-off-peak from 8 a.m. to 4 p.m. in winter, right before the 50¢ mid-peak window: 14.0¢ per kWh every winter day.
- Michigan's Overnight Savers is a summer play. DTE D1.13's 11.7¢ super off-peak (1–7 a.m.) against a 35.6¢ summer peak gives 22.4¢ per kWh on summer weekdays, but winter peaks are only 19.1¢. Total about $480 a year, a 28 years payback.
- Solar storage beats grid arbitrage in California. Under the Net Billing Tariff, export credits are usually below retail rates, and the CPUC says batteries maximize NBT savings (CPUC). A battery that soaks up midday solar avoids the full evening price on PG&E's E-ELEC electrification rate (55.2¢ summer peak, 32.1¢ winter), giving $1,961 to $1,408 a year across 0–10¢ export values.
Redo it with your own bill
- Find your peak and charging prices. Use the total per-kWh energy charge on your rate schedule (delivery plus generation). If a community choice aggregator supplies your generation, its prices replace the utility's generation part.
- Find your evening kWh. Download hourly or 15-minute data from your utility account and add up the peak window. The table assumes you use at least 13.5 kWh in that window every day. If you use 8 kWh, scale the savings by 8 ÷ 13.5 ≈ 0.59; for EV2-A that's about $584 a year and a 23 years payback.
- Check the power limit. Powerwall 3 delivers 11.5 kW continuous, so it can cover a typical evening load, but it charges at 5 kW alone (8 kW with expansions) (Tesla). Refilling 15.2 kWh takes about 3.0 hours at 5 kW, which fits inside each plan's cheap window.
- Use your net price. Subtract state or utility incentives (DSIRE). There's no federal credit: the IRS says the Section 25D credit isn't available for property placed in service after December 31, 2025 (IRS).
- Divide price by annual savings. Compare the result with the warranty: Tesla's is 10 years (datasheet).
What the simple payback leaves out
- Degradation. EnergySage reports Powerwall's warranty guarantees 70% of capacity at 10 years (EnergySage). If usable capacity averages 85% of new (our illustration), savings fall about 15%.
- Rate changes. Utilities revise TOU prices and windows; a narrower spread lengthens payback, a wider one shortens it. These tariffs changed this year (PG&E's on March 1, 2026).
- Baseline credits and fixed charges. Baseline credits such as SCE's 9¢ per kWh apply to usage up to your monthly allocation in every period, so they barely change the peak/off-peak spread. Daily fixed charges don't change with a battery.
- Backup value. A battery that keeps the fridge, sump pump and Wi-Fi running in an outage has value that a payback table can't price. Our battery sizing guide covers that. If someone in the home depends on powered medical equipment, plan with their doctor and supplier rather than on savings math; this page is not medical advice.
- Demand-response programs. Some utilities pay battery owners to discharge during grid events. Those payments can shorten payback but vary by program and year, so we leave them out.
Bottom line by situation
- California, no solar, on E-TOU-C: savings won't justify a battery. If you qualify for EV2-A, payback is about 14 years.
- California with solar on NBT: the best case here, about 8 years at a 5¢ export value. Get quotes that model your actual hourly exports.
- SCE customers: 18 years on TOU-D-4-9PM, 13 years on TOU-D-PRIME if eligible.
- Michigan (DTE): roughly 28 years on Overnight Savers; buy for backup, not savings.
Want to see what solar alone would produce first? Run the SolarSized calculator or see the California and Michigan state pages, and read grid-tie vs battery backup for how a battery changes an existing system.
Measure your peak-window use first
A battery quote is only as good as your evening load estimate. A whole-home energy monitor on your panel shows kWh by hour, so you can check the 4–9 p.m. total before buying. A plug-in watt meter shows which appliances drive it.
Whole-home energy monitors on Amazon Plug-in watt meters on Amazon
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Questions
Does a home battery pay for itself with time-of-use rates?
Sometimes, and it depends almost entirely on the gap between your peak and off-peak prices. With one 13.5 kWh battery cycled daily and a typical installed price of $13,473 (EnergySage), our math gives about $986 a year and a 14 years payback on PG&E EV2-A, $751 and 18 years on SCE TOU-D-4-9PM, but only about $121 a year on PG&E E-TOU-C. The best case is a solar home that stores midday output instead of exporting it: about $1,684 a year if exports are worth 5 cents.
What is the minimum peak/off-peak gap for battery arbitrage to make money?
Because about 11% of the energy is lost in a round trip (Tesla rates Powerwall 3 at 89%), the peak price must be more than the charging price divided by 0.89. At a 30-cent charging price, peak has to exceed about 33.7 cents just to break even, before you recover the hardware cost. PG&E E-TOU-C in winter and DTE D1.11 in winter fall short.
Which utility rate is best for a home battery?
The plans with cheap overnight or midday energy: PG&E EV2-A (22.6 cents off-peak) and SCE TOU-D-PRIME (24 to 26 cents off-peak), which both admit battery owners under conditions. In Michigan, DTE D1.13 Overnight Savers has an 11.7-cent super off-peak price that makes a big summer gap. Check eligibility before switching: PG&E's battery-only path onto EV2-A is a capped pilot.
Should I size a battery for time-of-use savings or for outages?
For savings, size to the kWh your home actually uses in the peak window; a bigger battery sits partly unused. For outages, size to the loads and days you want covered. Our battery storage guide covers the outage side. Many households end up with one battery that does both.
How does solar change battery payback in California?
Under the Net Billing Tariff, export credits are usually lower than retail rates, so storing midday solar for the evening is worth more than exporting it. The CPUC notes that customers can maximize NBT bill savings with battery storage, and that export values, usually below retail, can rise above retail on late-summer evenings. The exact value depends on your hourly export prices, so our table shows 0, 5 and 10 cent assumptions.
Is there a federal tax credit for a home battery in 2026?
Not under Section 25D: the IRS says the Residential Clean Energy Credit is not available for property placed in service after December 31, 2025. State, local and utility incentives can still cut the price; search your ZIP code in DSIRE and recompute payback with your net cost.
Does battery degradation change the payback?
Yes. Tesla warrants Powerwall 3 for 10 years, and EnergySage reports a 70% capacity-retention guarantee at 10 years. If usable capacity averages 85% of new over that time (our illustration), annual savings drop about 15% and payback stretches by about the same share.
Sources
- PG&E tariffs, effective March 1, 2026: Schedule E-TOU-C, Schedule EV2, Schedule E-ELEC
- SCE, Time-of-use residential rate plans (TOU-D-4-9PM and TOU-D-PRIME prices), checked October 30, 2026
- DTE Energy, Residential electric rate card and residential pricing options
- Tesla, Powerwall 3 datasheet (13.5 kWh, 11.5 kW, 89% efficiency, 5 kW charge, 10-year warranty)
- EnergySage, Tesla Powerwall review (updated May 15, 2026) and home battery cost guide
- CPUC, Net Energy Metering and Net Billing; IRS, Residential Clean Energy Credit; DSIRE