Residential Battery Storage

The 2025 Annual Technology Baseline (ATB) represents cost and performance for battery storage with a representative system: a 5-kilowatt (kW)/12.5-kilowatt hour (kWh; 2.5-hour) system. It represents lithium-ion batteries (LIBs), with specific costs based on lithium iron phosphate (LFP) battery cells.

Figure 1. Overnight capital cost breakdown for a residential battery system for 2024

Scenario Descriptions

Available cost data and projections for distributed battery storage are very limited. Therefore, the battery cost and performance projections in the 2025 ATB are based on the same literature review as that done for the utility-scale battery cost projections: Battery cost and performance projections in the 2025 ATB are based on a literature review of 16 sources published in 2023, 2024, and early 2025, as described by Cole et al. (Cole et al., 2025). Three projections for 2023 to 2050 are developed for scenario modeling based on this literature.

In all three scenarios described below, costs of battery storage are anticipated to continue to decline. The Storage Futures Study (Augustine and Blair, 2021) describes how most of this cost reduction comes from the battery pack cost component with minimal cost reductions in balance of system (BOS), installation, and other contributions to the cost. The Storage Futures Study (Augustine and Blair, 2021) indicates the National Laboratory of the Rockies (NLR), BloombergNEF (BNEF), and others anticipate the growth of the overall battery industry—across the consumer electronics sector, the transportation sector, and the electric utility sector—will lead to cost reductions. In addition, BNEF and others indicate changes in lithium-ion chemistry will also reduce costs. A third key factor is ongoing innovation with significant corporate and public research on batteries. Finally, the growth in the market (effective learning-by-doing), greater energy density, and more diversity of chemistries will expand and change the dynamics of the supply chain for batteries, resulting in cheaper inputs to the battery pack (Mann et al., 2022).

The three scenarios for technology innovation are as follows:

• Conservative Technology Innovation Scenario (Conservative Scenario): The conservative projection comprises the maximum projection in 2026, 2035, and 2050 from the cost projections in the literature review (Cole et al., 2025).
• Moderate Technology Innovation Scenario (Moderate Scenario): The moderate projection is taken as the median point in 2026, 2035, and 2050 from the projections reviewed.
• Advanced Technology Innovation Scenario (Advanced Scenario): The advanced projections are taken as the lowest cost point in 2026, 2035, and 2050 from the projections reviewed.

In all cases, the projection from 2050 through 2060 is extrapolated from the pre-2050 cost reductions, assuming the rate of decline from 2050 through 2060 is half the rate of decline from 2035 to 2050.

Scenario Assumptions

Scenario assumptions for residential battery energy storage systems (BESS) were derived using a literature review and are not based on learning curves or deployment projections.

For a 5-kW, 12.5-kWh battery, the technology innovation scenarios for utility-scale BESS described above result in overnight capital cost reductions of -5% (Conservative Scenario), 26% (Moderate Scenario), and 55% (Advanced Scenario) between 2023 and 2035. The benchmark costs that are the focus of (Cole et al., 2025) focus on the costs for 2024 (and are presented in Figure 1, above), with 2023 costs retained from the 2024 ATB.

Between 2035 and 2050, the capital expenditures (CAPEX) reductions are 10% for the Conservative Scenario, 26% for the Moderate Scenario, and 28% for the Advanced Scenario.

Methodology

Future cost projections for commercial BESS are based on a synthesis of cost projections for 4-hour-duration systems as described by (Cole et al., 2025). The share of energy and power costs for batteries is based on the bottom-up cost model used in that work, with share of bottom-up cost categories in future years shown on the utility-scale battery storage page.

Capital Expenditures (CAPEX)

Definition: The bottom-up cost model documented by Cole et al. (Cole et al., 2025) contains detailed cost bins. The breakdown of those cost categories is shown in Figure 1, with a description matching that on the utility-scale battery storage page.

Current Year (2023): The Current Year (2023) cost for the 2025 ATB is carried over from the 2024 ATB. The bottom-up cost modeling (with results shown in Figure 1) is then used for the 2024 cost value. Projections are made based on that 2024 cost.

Within the ATB Data spreadsheet, costs are separated into energy and power cost estimates, which allows capital costs to be calculated for durations other than 4 hours according to the following equation:

$$\text{Total System Cost (\$/kW)} = \bigg[ \text{Battery Pack Cost (\$/kWh)} \times \text{Battery Energy Capacity (kWh)} \; +$$

$$ \text{Battery Power Capacity (kW)}\times \text{BOS Cost (\$/kW)} \; +$$

$$\text{Battery Power Constant (\$)} \bigg] / \; \text{Battery Power Capacity (kW)}$$

Future Projections: Future cost projections for utility-scale BESS are based on a synthesis of cost projections for 4-hour-duration systems as described by Cole et al. (Cole et al., 2025), which used the median of published cost estimates to develop a Moderate Technology Cost Scenario and the maximum and minimum values to develop the Conservative and Advanced Technology Cost Scenarios, respectively. Within these projections, the energy portions of the capital cost decline more rapidly than the battery portions of the capital costs. This results in greater cost declines for longer-duration batteries relative to shorter-duration batteries into the future.

Operation and Maintenance (O&M) Costs

Base Year: (Cole et al., 2025) assume no variable O&M (VOM) costs. All operating costs are instead represented using fixed O&M (FOM) costs. In the 2025 ATB, FOM is defined as the value needed to compensate for degradation to enable the battery system to operate at its rated capacity throughout its 15-year lifetime. FOM costs are estimated at 4% of the capital costs in $/kW. 

Future Years: In the 2025 ATB, the FOM costs and VOM costs remain constant at the values listed above for all scenarios.

Capacity Factor

The cost and performance of the battery systems are based on an assumption of approximately one cycle per day. Therefore, a 4-hour device has an expected capacity factor of 16.7% (4/24 = 0.167), and a 2-hour device has an expected capacity factor of 8.3% (2/24 = 0.083). Degradation is a function of this usage rate of the model, and systems might need to be replaced at some point during the analysis period.

Round-Trip Efficiency

Round-trip efficiency is the ratio of useful energy output to useful energy input. (Cole et al., 2025) identified 85% as a representative roundtrip efficiency, and the 2025 ATB adopts this value.

References

The following references are specific to this page; for all references in this ATB, see References.