Batteries for Affordable Housing: Key Trends, Barriers, and Opportunities

This story is contributed by Ankur Podder.

  • A battery located in an apartment is a key trend and will continue to grow with the rise of home battery system providers
  • Installation of pre-assembled integrated battery energy storage systems in the form of “skids” during off-site construction of apartment units can significantly reduce high first costs
  • The net-zero energy and grid-interactive efficient apartment of the future cannot be effectively designed without careful consideration and planning of where the battery will be safely located and how it will be safely operated


The United States needs approximately 7 to 12 million affordable housing units to provide homes to extremely cost-burdened renter households and to those experiencing homelessness. [1] [2] The Terner Center’s 2017 report, Building Affordability by Building Affordably, recognizes that off-site construction can facilitate rapid production of an affordably built supply of housing through faster construction timelines, improved workforce productivity, and cost savings. [3] As the building industry rises to meet capacity needs by leveraging the benefits from off-site construction, there is a need to address “long-term affordability” by including another key determinant — household energy costs. These costs continue to place a major energy burden on both tenants and homeowners. Compared to middle- and upper-income households that spend 5% or less of their total household income on energy purchases, low-income households spend 10% or more of their income on energy expenses. [4]

A vital part of ensuring long-term affordability is to achieve a high level of resilience. This can be done by installing battery energy storage systems (BESSs) such as residential batteries. These residential batteries can be small batteries (3 kWh to 5 kWh) or large batteries (6 kWh to 20 kWh). Batteries can be implemented in both retrofits and new construction projects. Small residential batteries are generally designed for self-consumption of electricity, including peak-demand shaving and time-of-use shifting, whereas large batteries are mostly used to support greater backup energy requirements for improved resilience against outages. [5] Clean Energy Group’s report Resilience for Free contains the first public analysis indicating the following four main benefits on the use of BESSs (along with solar panels): [6]

1) BESSs can provide an economic return while making affordable housing resilient by powering critical loads like common area lighting, water, communications, etc. — protecting vulnerable residents at little to no net cost;

2) BESSs can reduce utility expenses through demand management and electricity time-shifting;

3) BESSs can generate revenue through participation in demand response programs and wholesale electricity markets such as frequency regulation;

4) BESSs can do all of this while still providing resilient power during grid outages.

Residential batteries are emerging as affordable and accessible technology. Affordable housing developers can benefit from such stationary batteries because they help generate savings by reducing utility demand charges. Batteries have also proven to generate revenue for developers through providing grid services.

Key Trends

The rise of home battery system providers such as Tesla and sonnen Inc. has led to emerging integration opportunities during new construction of affordable multifamily housing. Recently, the largest affordable housing provider in Boulder, CO installed a storage system to provide command post services during emergencies. [7] Similarly, the developers of the Soleil Lofts project in Herriman, UT made a deliberate choice to put each of the 600 batteries inside apartments (Figure 1) rather than stacked up together in a large utility room. [8] A major benefit to having a sonnen battery in each of the Utah apartments is that the combined 12,600 kWh of residential battery system can be managed by the local utility Rocky Mountain Power as a Virtual Power Plant to provide emergency back-up power, daily management of peak energy use, and demand response at the apartment level for each tenant or homeowner. [9] Additionally, an aesthetically pleasing and safe-to-operate battery inside the apartment can render these products as ubiquitous appliances for modern households, just like the refrigerator or the air conditioner.

Figure 1: The sonnen ecoLinx at the Soleil Lofts in Herriman, UT. Image courtesy: sonnen Inc.

Following is a growing list of relevant projects and residential battery products in the United States:A housing development in Utah, the start of sonnen Inc.’s U.S. solar ambitions [10]

  • Projects using Tesla Powerwall as noted by Green Mountain Power (Vermont) [11]
  • Span with Panasonic/EverVolt [12]
  • Generac UPS battery [13]
  • Sunpower with Equinox [14]
  • Sunrun’s Brightbox [15]

As more residential battery products hit the market, wider adoption by affordable housing developers can be facilitated by addressing challenges associated with higher first costs (see Barriers section) and growing fire safety concerns. Supported by the U.S. Department of Energy (DOE) Advanced Building Construction Initiative, [16] the National Renewable Energy Laboratory (NREL) has developed an ambitious plan to accelerate the integration of energy efficiency measures and distributed energy resources (DERs), including residential batteries, during the off-site construction of affordable housing. The research shows optimal integration of residential batteries (along with associated electrical infrastructure and control systems) is possible with little or no additional cost. The off-site integration occurs in a controlled factory environment. This ensures better coordination of standard installation procedures that are necessary for fire safety. In the off-site factory, installers can perform their work at a predetermined station or bay suitable for battery integration. In this environment, installers and factory workers can non-intrusively carry out tasks such as electrical wiring and quality assessments/quality checks (QA/QC) of non-combustible enclosures surrounding the battery system, if any. An off-site factory also lends itself to a quick test-fire run of the charging and discharging cycles as part of the extensive QA/QC protocol. As presented in the 2020 ACEEE Summer Study paper, “Integrating Energy Efficiency Strategies with Industrialized Construction for our Clean Energy Future,” NREL is engaging with off-site construction factories to integrate residential batteries inside modular apartment units. [17]


  • High first costs of residential batteries
  • Growing fire safety concerns of residential batteries.

Residential batteries contribute significantly to the total system cost for affordable housing projects considering solar photovoltaics (PV) and storage. For any new construction, the first costs include the sum of the initial expenditures involved in capitalizing a property, such as transportation, installation (Figure 2), service preparation, and other related costs. Battery costs largely depend on the selected capacity, measured in kilowatt-hours (kWh). First costs can also vary depending on the brand of solar or hybrid inverter used. As of 2021, first costs (including cost of all hardware and cost of full installation) for a 10-kWh to 14-kWh residential battery system is in the range of $10,000 to $15,000 (before state-specific incentives). [18] [19] To those interested in exploring total system costs, costs associated with storage, and payback period for upcoming built projects, Solar Savings Calculator [20] is an effective platform to start learning and planning.

Figure 2. A Tesla Powerwall Certified Installer (left). Courtesy: Tesla Inc., sonnen Inc.’s U.S. factory (right). Courtesy: sonnen Inc.

According to the 2017 NREL report, Installed Cost Benchmarks and Deployment Barriers for Residential Solar Photovoltaics with Energy Storage, hardware costs constitute about half the total price of modeled small-battery systems for residential buildings (including the cost of the lithium-ion battery). [21] Note that this NREL report focuses solely on hardware costs, because non-hardware — or “soft” — costs are largely absent from the energy storage literature. Soft costs consist of design fees, procurement, shipping, storage costs, and, most importantly, labor costs during construction, assembly, and installation. The NREL report explains that it is difficult to normalize the soft cost estimates for comparison purposes without knowing what portion of these costs are fixed. Robust data-driven research on soft costs is absent because it is difficult to record and analyze the time, effort, generated waste, and other associated costs to perform these tasks. Unlike hardware costs, soft costs vary between projects, regions, and supply chains. According to a recent study by Clean Energy Reviews, the payback period for most battery systems is around 7 to 10 years. The study shows that it is generally more cost-effective to install rooftop solar panels and run an efficient appliance or hot water during the day rather than store excess energy in a battery. However, for some people the value and security of having a reliable, sustainable power supply easily outweighs the cost. [22] It should be noted that DOE’s Energy Storage Technology and Cost Characterization Report [23] calculated that among battery technologies, lithium-ion batteries provide the best option for 4-hour storage in terms of cost, performance, and maturity of the technology.

To address the fire safety concerns surrounding residential batteries, best practices have been developed for installation and integration of residential batteries in Australia and New Zealand. The AS/NZS 5139:2019 “Electrical installations — Safety of battery systems for use with power conversion equipment” standard sets out the requirements for safe installation and operation of battery systems. [24] The standard aims to fill a gap in safety guidance for the home battery storage sector, particularly regarding concerns of potential ignition and combustion of flammable materials present in the battery, battery system, or enclosure. The standards are applicable to both new buildings during construction and existing buildings during retrofits. In terms of installation of residential batteries in homes, the standard requires strict adherence to aspects of installation such as materials used, installment positioning, and system room location. AS/NZS 5139:2019 details seven hazard categories and more than 110 risk management factors that need to be considered when installing residential batteries (Figure 3). The standard requires accredited residential battery systems to be installed with additional cement sheeting or other non-combustible materials when adjacent to any occupied indoor space. This does not apply if the wall in question is made of bricks, tiles, concrete, or any other material that has been tested to be non-combustible.

For the purpose of affordable housing developers utilizing off-site integration of residential batteries, the AS/NZS standard highlights that a pre-assembled integrated BESS cannot be installed within a set distance of any exit, vertical side of a window, building ventilation opening to a habitable room, hot water unit, air conditioning unit or any other appliance not associated with the pre-assembled integrated BESS (summary in Figure 3). Finding the optimum location and incorporating safety features is straightforward when decisions are made early in the design process for upcoming buildings. On the contrary, adhering to these requirements becomes challenging when deploying in existing homes as retrofits. For installers, the standard prevents residential battery systems from being installed in ceiling spaces, wall cavities, on roofs except where specifically deemed suitable, under stairways, under access walkways, in evacuation or escape routes (such as a hallway), in areas of domestic or residential electrical installations, or in habitable rooms. AS/NZS 5139:2019 applies to systems greater than 1 kWh and less than 200 kWh with lead, lithium, or other chemistries and systems in the voltage range of 12V to 1,500V DC. Pre-installation site survey requirements by residential battery providers such as Tesla show the minimum clearances required for installation of Powerwall and the Backup Gateway as 8ft x 6ft of floor area. [25] Post-installation, today’s commoditized products require less than 2ft x 2ft of floor space and recommended floor-to-ceiling height against an empty wall.

Figure 3. Australian company DPA’s snapshot of covered topics in AS/NZS 5139:2019 “Electrical installations — Safety of battery systems for use with power conversion equipment.” The standard covers three categories — a pre-assembled comprehensive BESS, a pre-assembled but simple battery system, and an installer assembled system that does not conform to the standard’s suggested best practices. [26] Courtesy: DPA Solar

Recent developments in lithium-ion technologies have led to maturity of electric vehicle batteries as well as residential batteries. However, as mentioned, fire safety concerns arise around lithium-ion technologies for residential batteries. This applies to both nickel-manganese-cobalt batteries (currently provided by LG Chem, and Tesla Powerwall 2 with cathodes made from a compound of lithium, cobalt, nickel, and manganese) and lithium-iron phosphate batteries (provided by sonnen Inc. and SimpliPhi). According to a 2019 Greenbiz study, safety remains an issue because nickel-manganese-cobalt batteries are prone to thermal runaways, especially as the devices get smaller. [27] But, according to a recent piece by Solar Power World, batteries made up of lithium-iron phosphate have been found to come with similar concerns. [28]

In the United States, the National Fire Protection Association (NFPA) maintains NFPA 855 “Standard for the Installation of Stationary Energy Storage Systems” for large-scale battery installation requirements. NFPA 855 can be applied to the residential market with an extra dose of practicality. According to NFPA, “If you’re going to install a storage system in the garage, make sure you have space for vehicle protection — if you’re backing into the garage, you don’t want to hit the battery. Make sure batteries are not in the place you sleep, because it would limit the time you egress your house. Don’t install a battery outside under a window, because during a fire, windows are used to exit the house.” [29] As these national standards become more stringent, they continue to have spatial and functional implications to modern homes. More precisely, the net-zero energy and grid-interactive efficient house of the future cannot be effectively designed without careful consideration and planning of where the battery will be safely located and how it will be safely operated. With time, early design decisions with batteries are likely to be as fundamental to the success of the housing project as with today’s common equipment such as the heating, ventilation, and air-conditioning system.


DERs — such as rooftop solar PV, BESSs including residential batteries, energy efficiency measures, and demand management — are key ingredients to ensure long-term affordability, and must be integrated creatively during new constructions of affordable housing units. Along with rooftop solar PV, residential batteries make a clean grid vastly more affordable. Including distributed storage will also allow more realistic comparison between utility-scale and building-scale solar PV. By investing in a distribution grid that can support high levels of DERs and offer grid controlled or load shape incentives for tenant or owner control, we can free up modern infrastructure that would need to be upgraded eventually. This would further enable more grid-scale renewables to be added faster. [30] Higher adoption and deployment of residential batteries become exceedingly achievable by leveraging benefits from off-site construction of new and upcoming housing. According to a recent report by McKinsey & Company, prefabricated assembly of buildings has demonstrated up to 50% construction time savings and, in the right environment and trade-offs, it can cut costs by about 20%. [31] Similarly, costs associated with procurement and installation of residential batteries could be significantly lowered in order to increase adoption by affordable housing developers. For example, commoditized products (Figure 4) along with electrical infrastructure and control systems can be pre-assembled as a “skid” in the off-site factory and shipped to the construction site. A skid is an example of a modularized approach that allows pre-installation and pre-assembly of a set of equipment. This contrasts with transportation of all equipment to site followed by individual in-situ installation. [32] The off-site approach ensures better control on the supply chain for procuring the various system components such as enclosure, bi-directional inverter, DC–DC converters, and control fixture. Furthermore, the controlled environment in a factory ensures better coordination of sub-contractors as well as quality assessments and quality checks to mitigate any fire safety concerns by following existing standards closely. As an added layer of failsafe strategy, this skid with residential battery system can be wrapped with fire-rated insulation to provide necessary isolation during any hazard event. Although the cost reduction potential from designing skids with residential batteries along with all functional and structural components is yet to be demonstrated and documented, plug-and-play self-contained skids are common practice in the field of industrial engineering and have shown approximately 25% to 40% cost reduction than traditional installed-on-site approaches. [33] [34]

Figure 4. A growing suite of commoditized products available for affordable housing developers to consider integrating in upcoming projects by leveraging off-site approach to lower first costs and reduce fire safety concerns. Courtesy: Clean Energy Reviews

In the last five years, reduction in unit costs of batteries have led to increase in their supply-demand. According to the report “Residential Battery Storage: Is the timing right?”, in the near future, the optimization of the economy of scale of battery storage will be conducive to an aggressive reduction in price — similar to the experience of PV in the last decade. [35]

For fire safety, the NFPA standard’s storage guidance is mostly for outdoor or garage space installation; a large residential battery located in the utility space could need substantially more fire safety infrastructure, whereas smaller distributed batteries in apartments do not need extensive additional fire safety infrastructure. Another emerging opportunity to reduce fire safety concerns is within the scope of rooftop solar panels — Yotta Energy’s SolarLEAF modular storage solution stores the batteries under rooftop PV panels. [36] In fact, for commercial projects with peak demand utility rates, well-designed battery storage with solar PV will very likely be required in the future. [37]


Batteries can make housing more resilient to power outages — after any disaster event, it can take weeks before the grid can operate at the necessary capacity to support community-wide recovery and rehabilitation, so having backup support for households is crucial. Unfortunately, the United States requires a high volume of additional BESSs to achieve this type of resilience. In particular, studies have shown that three times more BESSs by volume are needed for a high-risk city compared to a low-risk city. [38] In terms of battery sizing, Figure 5 shows recommendations for residential batteries in the U.S. market in accordance with yearly household consumption. An affordable multifamily housing developer considering a residential battery system to meet resilience goals encounters several decision points and barriers, most importantly high first costs from the additional storage volume as well as increased fire safety concerns associated with additional infrastructure.

Figure 5. The recommended sizing of battery storage systems for residential purposes and examples of U.S. battery storage products. [39]

Off-site construction could be the path forward, addressing both the challenges of cost and safety. However, there has been minimal work to creatively combine both the intrinsic benefits of off-site construction with the installation of residential batteries. Important questions remain: Can we design and pre-assemble residential battery systems as a skid to be efficiently installed and integrated during off-site construction of new, resilient, and affordable multifamily housing projects? Can this be achieved at scale with lowest possible additional first costs and lowest possible fire safety concerns?


This work was authored by the National Renewable Energy Laboratory, operated by Alliance for Sustainable Energy, LLC, for the U.S. Department of Energy (DOE) under Contract No. DE-AC36–08GO28308. Funding provided by the U.S. Department of Energy Office of Energy Efficiency and Renewable Energy Building Technologies Office. The views expressed in the article do not necessarily represent the views of the DOE or the U.S. Government. The U.S. Government retains and the publisher, by accepting the article for publication, acknowledges that the U.S. Government retains a nonexclusive, paid-up, irrevocable, worldwide license to publish or reproduce the published form of this work, or allow others to do so, for U.S. Government purposes.

The author gratefully acknowledges mentors and fellow researchers working in partnership to develop thought leadership under the NREL Industrialized Construction Innovation research area.


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Ankur Podder is a Buildings Advanced Manufacturing and Integration Science Research Engineer at National Renewable Energy Laboratory based in Golden, Colorado. His work focuses on purposefully applying manufacturing and industrial engineering approaches, methods, and tools to the off-site construction industry to streamline integration of energy efficiency and solar-plus-storage into the final factory-built product. He received academic and research training from Massachusetts Institute of Technology. He has past professional experience working in the Architectural, Engineering, and Construction (AEC) industry in Japan and India.

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