Explainer: Residential energy — a practical primer for teams that need to ship

In 2024, the United States residential battery storage market surged by 57% year-over-year, installing a record 1,250 megawatts of capacity—with Q4 alone contributing 380 MW, the highest quarterly figure ever recorded (Wood Mackenzie, 2025). Simultaneously, the attachment rate of batteries to new solar installations jumped from 12% in 2023 to 28% in 2024, signaling a fundamental shift in how homeowners conceptualize distributed energy resources. These numbers are not merely incremental gains; they represent a structural transformation in the residential energy landscape, one that carries profound implications for product teams, sustainability practitioners, and infrastructure planners alike.

This primer distills the essential knowledge needed to navigate residential energy deployments—covering the core economics, stakeholder dynamics, and implementation trade-offs that determine whether projects succeed or stall. Whether you're building software for home energy management, evaluating hardware partnerships, or advising on Scope 3 emissions reductions, understanding the residential energy ecosystem is now a prerequisite for meaningful impact.

Why It Matters

Residential buildings account for approximately 20% of total U.S. energy consumption and represent a significant but often overlooked component of organizational Scope 3 emissions—particularly for companies whose employees work from home or whose products are used in domestic settings. The decarbonization of residential energy is not a peripheral concern; it is central to achieving economy-wide net-zero targets.

Several converging forces make this moment uniquely consequential:

Regulatory momentum. California's NEM 3.0 policy, implemented in April 2023, fundamentally altered the economics of residential solar by reducing export compensation rates by 75%. The result? Battery attachment rates in California jumped to 72% post-implementation, as homeowners prioritized self-consumption over grid exports. Similar policy shifts are emerging in Arizona, Nevada, and Massachusetts, creating a regulatory environment that increasingly favors integrated solar-plus-storage systems.

Grid reliability concerns. Extreme weather events—from the 2021 Texas freeze to California's rolling blackouts—have elevated backup power from a luxury to a necessity for many homeowners. This demand driver is largely policy-agnostic and represents a durable tailwind for residential storage.

Cost deflation. Lithium-ion battery pack prices have declined 84% over the past decade, reaching $115/kWh globally in 2024. Residential battery systems now cost $999/kWh at the median—an all-time low—making payback periods increasingly attractive even without subsidies.

Electrification convergence. The simultaneous adoption of electric vehicles, heat pumps, and induction cooking is transforming homes into complex energy systems. Vehicle-to-home (V2H) technology, which enables EVs to serve as backup power sources, exemplifies this convergence and introduces new optimization opportunities.

Key Concepts

Net Metering and Its Discontents

Net metering policies allow residential solar owners to receive credit for excess electricity exported to the grid, typically at or near retail rates. Historically, this created favorable economics for solar adoption. However, as solar penetration increases, utilities argue that net metering creates cost-shifting to non-solar customers and exacerbates the "duck curve" problem—where solar generation peaks mid-day but demand peaks in the evening.

The shift toward "net billing" or time-of-use (TOU) rate structures represents a policy response to these dynamics. Under TOU rates, exported electricity is valued according to when it is produced, incentivizing battery storage to shift solar generation to high-value evening hours.

Additionality in Residential Context

Additionality—the principle that an intervention should cause emissions reductions that would not otherwise occur—is often discussed in the context of carbon offsets, but it applies equally to residential energy investments. A solar installation on a home in a grid dominated by hydropower (e.g., the Pacific Northwest) produces different climate benefits than one in a coal-heavy region. Teams evaluating residential energy solutions should consider marginal emissions rates rather than average grid intensity when calculating impact.

Capex vs. Operating Models

Residential energy deployment follows two primary financial structures:

Capex model: Homeowner purchases equipment outright (or with a loan). Typical costs: $10,000–$15,000 for a 10–15 kWh battery system before the 30% federal Investment Tax Credit (ITC). Net cost after ITC: $7,000–$10,500.
Third-party ownership (TPO): Includes leases and power purchase agreements (PPAs) where a provider owns the equipment and sells electricity or services to the homeowner. This model reduces upfront barriers but typically results in lower lifetime savings.

The choice between models affects everything from customer acquisition costs to software integration requirements. TPO models often involve complex billing relationships and may limit homeowner flexibility for future upgrades.

Vehicle-to-Home (V2H) Integration

V2H technology enables bidirectional power flow between electric vehicles and home electrical systems. A Ford F-150 Lightning, for example, can deliver 9.6 kW of power—sufficient to run a typical home for several days during an outage. The V2H market is projected to grow from $93.58 million in 2024 to $532.59 million by 2032, representing a 24.28% CAGR (Global Growth Insights, 2024).

Key implementation considerations include charger compatibility (CHAdeMO vs. CCS), utility interconnection requirements, and battery degradation concerns. Current V2H-capable vehicles remain limited, but GM has committed to enabling V2H across its entire Ultium platform by 2026.

Sector-Specific KPIs

Metric	Definition	Typical Range (2024-2025)	Target
Battery attachment rate	% of new solar installs with storage	28%–79% (varies by state)	>50%
Self-consumption ratio	% of generated energy used on-site	30%–70%	>60%
Payback period	Years to recoup investment	5–12 years	<8 years
Levelized cost of storage (LCOS)	$/kWh over system lifetime	$0.10–$0.25/kWh	<$0.15/kWh
Grid services revenue	Annual income from VPP participation	$50–$300/year	>$150/year
System availability	% uptime during grid outages	95%–99%	>98%
Degradation rate	Annual capacity loss	1.5%–3%/year	<2%/year

What's Working

Integrated Solar-Plus-Storage Deployments

The combination of rooftop solar with battery storage has emerged as the dominant residential energy paradigm. This integration addresses the fundamental intermittency challenge of solar generation while providing backup power and enabling participation in grid services programs. California's 79% battery attachment rate (2025) demonstrates market maturation in favorable policy environments.

Virtual Power Plant (VPP) Programs

Utilities and aggregators are increasingly enrolling residential batteries in VPP programs, which dispatch stored energy during grid stress events. Tesla's Virtual Power Plant in California, Sunrun's partnerships with utilities, and Enphase's Grid Services programs all demonstrate viable models for monetizing distributed storage. Participants typically earn $50–$300 annually while contributing to grid stability.

Federal Incentive Alignment

The 30% Investment Tax Credit, extended through 2032 under the Inflation Reduction Act, has provided crucial market certainty. The ITC's applicability to standalone storage (not just solar-paired systems) since 2023 has expanded addressable market segments.

What's Not Working

Permitting and Interconnection Delays

Despite federal incentives, local permitting processes remain highly fragmented. Residential solar installations face average permitting timelines of 2–6 months, with significant variance by jurisdiction. Interconnection queues, while typically discussed in utility-scale contexts, also affect residential installations in high-adoption areas. San Diego Gas & Electric, for instance, has faced multi-month backlogs for interconnection approvals.

Installer Market Consolidation Risks

The 2024 bankruptcy of SunPower—once one of the largest residential solar companies—highlighted fragility in the installer ecosystem. High customer acquisition costs ($0.50–$1.00/watt), thin margins, and interest rate sensitivity have stressed mid-market installers. This consolidation may reduce competition and consumer choice in certain markets.

Battery Supply Chain Concentration

Approximately 70–80% of lithium-ion battery cell manufacturing remains concentrated in China. While this concentration has contributed to cost reductions, it introduces supply chain risks and has prompted policy responses including tariffs and domestic manufacturing incentives. The 2024-2025 tariff discussions have already contributed to modest price increases for some equipment categories.

Renter and Multifamily Exclusion

Current residential energy models predominantly serve single-family homeowners. Renters—comprising approximately 36% of U.S. households—and multifamily residents face structural barriers including split incentives, landlord approval requirements, and electrical infrastructure limitations. Community solar programs partially address this gap but remain limited in geographic availability.

Key Players

Established Leaders

Sunrun — The largest U.S. residential solar installer, Sunrun raised $300 million in September 2024 and has deployed over 900,000 systems. The company's integrated solar-plus-storage offering and VPP capabilities position it as a full-stack residential energy provider.

Tesla Energy — Tesla's Powerwall commands approximately 59% of the U.S. residential battery market (H1 2025), though this represents a decline from 63% in H2 2024. The company's software ecosystem, including the Tesla app and Autobidder, enables sophisticated energy management and grid services participation.

Enphase Energy — Dominating the microinverter market with over 90% share, Enphase has expanded into battery storage and EV chargers. The company's IQ Battery series and Grid Services programs demonstrate vertical integration across the residential energy stack.

SolarEdge Technologies — A leading provider of power optimizers and inverters, SolarEdge's Home Hub platform integrates solar, storage, and EV charging. The company's focus on DC-coupled systems offers efficiency advantages for new installations.

Emerging Startups

Span — Span's smart electrical panel serves as an intelligent hub for home energy management, providing circuit-level monitoring and control. The company's partnerships with solar installers and automakers position it at the intersection of electrification trends.

Lunar Energy — Backed by significant venture funding, Lunar Energy focuses on integrated solar-plus-storage systems with emphasis on installation simplicity. The company's Lander system combines inverter, battery, and energy management in a single unit.

Wallbox — A leader in bidirectional EV charging, Wallbox received $2.2 million from the California Energy Commission in 2024 to accelerate V2H deployments. The company's Quasar 2 charger enables residential V2H applications with 11.5 kW output capacity.

FranklinWH — Emerging as a challenger to Tesla Powerwall, FranklinWH's aPower system emphasizes modularity and grid services capabilities. The company has gained market share among installers seeking alternatives to dominant brands.

Key Investors & Funders

Breakthrough Energy Ventures — Bill Gates-backed climate-focused fund with investments across the energy storage value chain, including Form Energy and QuantumScape.

Energy Impact Partners — Utility-backed venture fund investing in grid modernization technologies, with portfolio companies including Sense and AutoGrid.

California Energy Commission — State agency providing grants and incentives for residential energy innovation, including the Self-Generation Incentive Program (SGIP) which has deployed over $2 billion in storage incentives.

The U.S. Department of Energy — Through programs like the Loan Programs Office and ARPA-E, DOE provides funding and loan guarantees for residential energy technologies and manufacturing capacity.

Examples

1. Sunnova's Adaptive Home Program

Sunnova, a major residential solar and storage provider, launched its Adaptive Home program to integrate solar, battery storage, and EV charging into a unified offering. The program demonstrates how bundled solutions can simplify customer decision-making while increasing average system value. Sunnova reported that customers adopting the full Adaptive Home package achieve 40–60% higher self-consumption ratios compared to solar-only installations. The company's financing options—including $0-down leases—have expanded accessibility beyond traditional homeowner demographics.

2. Green Mountain Power's Home Battery Program

Vermont utility Green Mountain Power pioneered a utility-led residential battery program, offering customers Tesla Powerwalls at subsidized rates ($5,500 for a $15,000+ system) in exchange for the utility's ability to dispatch stored energy during peak demand. The program has enrolled over 4,000 participants and demonstrated measurable grid benefits, including 2 MW of peak demand reduction during the July 2024 heat wave. This model illustrates how utilities can align customer value (backup power, bill savings) with grid reliability objectives.

3. Octopus Energy's Intelligent Tariffs

UK-based Octopus Energy, now expanding to the United States, has developed time-of-use tariffs that integrate with residential batteries and EVs. The company's "Intelligent Octopus" tariff uses API connections to customer devices to optimize charging and discharging around grid conditions and wholesale prices. Early adopters report 30–50% reductions in electricity costs compared to flat-rate tariffs. Octopus's approach demonstrates how software-first energy retailers can create value without owning physical assets.

Action Checklist

Assess baseline energy consumption — Obtain 12 months of utility data to understand load profiles, peak demand periods, and seasonal variations before sizing solar or storage systems.
Evaluate local policy landscape — Research net metering policies, interconnection requirements, and available incentives (federal ITC, state rebates, utility programs) in target markets.
Model self-consumption economics — Calculate payback periods under both net metering and self-consumption scenarios; prioritize storage in markets with unfavorable export rates or high TOU differentials.
Conduct site assessment — Evaluate roof orientation, shading, electrical panel capacity, and potential V2H compatibility before committing to equipment specifications.
Select installer and equipment carefully — Prioritize installers with strong track records and equipment from financially stable manufacturers; consider warranty terms and service availability.
Plan for future electrification — Size electrical infrastructure to accommodate anticipated EV charging and heat pump loads; consider panel upgrades proactively.
Explore grid services opportunities — Investigate VPP programs and demand response incentives that can generate ongoing revenue from storage investments.
Document for Scope 3 reporting — Establish measurement protocols for residential energy interventions to support corporate sustainability disclosures.

FAQ

Q: What is the typical payback period for residential solar-plus-storage in 2025? A: Payback periods vary significantly by location, utility rates, and incentive availability. In high-electricity-cost markets like California and Hawaii, payback periods of 5–7 years are common. In moderate-cost markets with strong net metering, 7–10 years is typical. After the 30% federal ITC, a representative 10 kWh battery system costing $12,000 would have a net cost of approximately $8,400. With annual bill savings of $800–$1,200 and potential grid services revenue of $100–$200, payback occurs within 6–9 years for most installations.

Q: How does V2H differ from traditional backup generators, and is it ready for mainstream adoption? A: V2H systems use an electric vehicle's battery to power home circuits during outages, offering several advantages over generators: zero on-site emissions, silent operation, and dual-use economics (the EV battery serves both transportation and backup roles). However, V2H faces adoption barriers including limited vehicle compatibility (currently Ford F-150 Lightning, Nissan Leaf with CHAdeMO, and select GM Ultium vehicles), the need for specialized bidirectional chargers ($3,000–$10,000 installed), and utility interconnection requirements. V2H is ready for early adopters but will likely reach mainstream viability by 2027–2028 as more vehicles support bidirectional charging and charger costs decline.

Q: How do renters participate in the residential energy transition? A: Renters face structural barriers to on-site solar and storage but have several pathways to participation. Community solar programs allow subscribers to receive credits on their electricity bills for a share of a remotely-located solar array—no rooftop required. Approximately 40 states now have community solar programs, though availability varies. Portable battery systems (e.g., EcoFlow, Bluetti) offer limited backup capability without installation. Advocacy for landlord investment in building-level systems and support for policies like California's SOMAH (Solar on Multifamily Affordable Housing) program can expand access. Finally, green power purchasing programs enable renters to match their consumption with renewable energy certificates.

Q: What are the implications of residential energy for corporate Scope 3 emissions reporting? A: For organizations with significant work-from-home populations or products used in residential settings, employee and customer home energy consumption may constitute material Scope 3 Category 7 (employee commuting, now including WFH) or Category 11 (use of sold products) emissions. Interventions to support residential clean energy adoption—such as subsidizing employee solar installations, offering energy-efficient home office equipment, or designing products for low standby power—can reduce reported emissions and demonstrate climate leadership. The GHG Protocol's Scope 3 guidance is evolving to address these categories more specifically.

Q: How resilient are residential batteries during extended outages? A: Modern residential batteries (10–15 kWh capacity) can power essential loads for 12–48 hours depending on consumption levels. When paired with solar, systems can potentially operate indefinitely during daylight hours if loads are managed appropriately. Critical design considerations include: (1) load isolation—which circuits receive backup power; (2) solar-to-battery ratio—adequate solar capacity to recharge during outages; and (3) system availability—ensuring inverters and transfer switches function reliably. During the 2023 California atmospheric rivers, Tesla reported that Powerwall customers experienced average backup durations of 3.2 days, with solar-equipped systems showing minimal degradation in coverage.

Sources

Wood Mackenzie & American Clean Power Association. "U.S. Energy Storage Monitor Q1 2025." January 2025. Data on residential battery installations and market growth.
National Renewable Energy Laboratory (NREL). "Fall 2024 Solar Industry Update." October 2024. Statistics on solar deployment, costs, and attachment rates.
U.S. Energy Information Administration. "Preliminary Monthly Electric Generator Inventory." December 2024. Federal data on electricity generation capacity additions.
California Public Utilities Commission. "Net Energy Metering 3.0 Decision." December 2022. Policy documentation on California's revised net metering structure.
EnergySage. "Residential Solar Equipment Market Share Analysis, H1 2025." September 2024. Marketplace data on panel, inverter, and battery brand distribution.
Global Growth Insights. "V2H Vehicle-to-Home Power Supply Systems Market Report 2024-2032." 2024. Market sizing for bidirectional charging technologies.
Solar Energy Industries Association (SEIA). "U.S. Solar Market Insight 2024 Year in Review." January 2025. Industry analysis of solar market trends and forecasts.
BloombergNEF. "Lithium-ion Battery Pack Prices Hit Record Low." November 2024. Analysis of battery cost trajectories and manufacturing trends.