Minnesota is now offering rebates for home batteries. Should you get one?

Kevin Bornfleth knows severe storms are getting stronger as climate change intensifies. The Minnesotan read about widespread blackouts hitting Texas during a 2021 winter cold snap.

So Bornfleth, 54, decided to buy a $15,000 home battery system along with a new rooftop solar array at his home in Prior Lake.

"If [an outage] happened in the winter we wouldn't have heat," Bornfleth said. "We're on a well so we wouldn't have water. We're all very dependent on the electricity, and so we wanted to make sure that we would be able to cover our needs."

On Monday, workers from TruNorth Solar were busy installing a stack of black glass solar panels on Bornfleth's home on a quiet cul-de-sac.

TruNorth was also preparing wiring for the white Tesla Powerwall battery, a roughly 3-foot-tall square box mounted on the wall in the corner of his garage that can power a house.

This kind of battery system is exactly what Minnesota's DFL lawmakers want more people to install. In 2023, Democrats who controlled the Legislature approved $7 million in battery rebates that are available now for homes and small businesses as part of a state budget that included incentives for other climate-friendly technology like heat pumps, electric bikes and electric cars.

Of all that green tech, home batteries might be the least well-understood by the public. But many utilities and environmental nonprofits view them as an important part of Minnesota's transition to carbon-free electricity.

Not only could small home batteries save customers money, but utilities want to use them to reduce strain on the grid and burn less natural gas when energy demand is highest, like a hot summer day.

That future is not quite here yet.

What batteries are good for in Minnesota

For now, the main use for a battery is simply for cleaner backup power at your house should the electricity go out, said Colby Abazs, a battery expert for the state's Clean Energy Resource Teams. The organization is a partnership between the state, University of Minnesota and others to help people adopt clean energy products.

The average U.S. household buys roughly 30 kilowatt hours of electricity a day. One Tesla Powerwall stores 13.5 kilowatt hours. But during an outage, people typically don't need to keep everything running, Abazs said. Most people aim for enough energy to feed critical appliances like a freezer, a few lights or medical equipment like a CPAP machine, he said. Customers can pick and choose what they want to stay connected in an outage.

Abazs said a rooftop solar system alone won't power a house when the grid is down. It disconnects from the grid to keep line workers safe. A battery fueled by solar, however, can keep electricity flowing to a house during an outage if there is adequate sun to recharge it.

A battery could also be a smart investment for a small business, like to keep refrigeration running at a convenience store, Abazs said. "Your financial benefit is you don't lose perishables during an outage," he said.

Minnesota does not usually face the lengthy power outages experienced elsewhere in the country. Customer of Minnesota's three investor-owned utility companies — Xcel Energy, Minnesota Power and Otter Tail Power — faces less time when the power is out on average per year than the national average, according to state regulators. But customers of those Minnesota utilities do experience outages more frequently than the national average.

"When people do get outages, it's weather, ice storm, a tree falling on distribution equipment or like a squirrel nuking themselves in a transformer," said Allen Gleckner, executive lead of policy and programs for St. Paul-based nonprofit Fresh Energy.

Michael Allen, CEO of St. Paul-based All Energy Solar, said many battery customers are looking for more independence from the grid and for confidence that an outage won't plunge their home into darkness.

He also said some people who work from home use batteries to protect internet access, especially in more rural areas with less reliable power.

"Now so many people are working from home, if you can't work and this is your primary form of business, and you are at home and you lose power that is a direct hit to your daily income," Allen said.

Allen said two to three of every 10 solar customers are adding batteries, which is an increase from last year. But they're still uncommon. Dave Reinke, energy and member services manager for Dakota Electric Association, said fewer than 40 of the cooperative's 115,000 customers have home batteries.

Allen estimated it would cost roughly $9,000 for a standard battery that can "back up your entire house and give you most of the energy you need," factoring in federal tax credits and a state rebate.

Abazs said most batteries should last between 10 and 15 years.

How the state rebates work

The Legislature created two battery rebate programs, one run by Xcel and one by the state Department of Commerce. Only batteries paired with rooftop solar systems are eligible, and they must have a capacity of no more than 50-kilowatt hours.

The program run by Commerce is for utility customers living outside of Xcel territory. The fund has $1.87 million left to allocate from its original $2.1 million.

The Commerce rebates are $250 per kilowatt hours up to a $7,000 maximum. There are more generous rebates for low-income households with a $15,000 limit.

Xcel's grants are $175 per kilowatt hour, capped at $5,000. The company also has a bigger rebate for income-qualified customers with the same maximum.

Bornfleth got a $3,375 rebate for his Tesla battery, according to TruNorth.

His house had a good roof for solar, and Bornfleth said he was looking for backup power anyway, so tying the projects together made sense. He works from home doing information security for a bank, and his wife works remotely, too, another reason for a battery backup.

Otherwise, "if there was an outage, then where would we work?" Bornfleth said.

The future of batteries

Most Minnesotans currently use a home battery in place of a gas generator. Soon, those batteries might be more integrated into the electric grid, to the benefit of utilities and homeowners.

If utilities continue to move toward charging higher energy prices during peak usage, called "time of use rates," customers could switch to battery power to save money, and then charge up the batteries from home solar or the grid during cheaper periods.

Those variable rates are still unavailable for most Minnesotans, at least yet. Xcel Energy proposed a voluntary program for customers. Duluth-based Minnesota Power has been phasing in default time-of-use rates for residential customers since 2022. From 10% to 12% of customers are on the rate now.

Next year, Xcel wants to give "upfront incentives" to customers who agree to let the utility draw power from their home batteries when demand is highest, said spokesman Theo Keith. Dakota Electric is working on a similar initiative, Reinke said.

Gleckner said utilities have begun using huge grid-scale batteries to charge when energy is cheap and discharge when it's more expensive or less available.

"But there's also the ability on the customer side, on our distribution system, the poles and wires in our neighborhood, to use the same kind of concept," he said.