Battery storage basics: backup power, export credits and what the incentives say in 2026

What to ask first if backup power is the reason

If the reason you’re looking at a battery is the next outage, start with one question to any company that quotes one: what will the battery run when the grid is down, and what won’t it run? Ask for the answer in writing, with the list of circuits it would power and the make and model of the battery and the inverter. The battery storage pages for Michigan and California describe what an installation involves.

If a battery, an inverter or the wiring gives off smoke, a burning smell or fire, call 911. Don’t open the equipment or try to switch anything off yourself.

The federal credit and batteries

Batteries fall under the same section of the tax code as solar panels, section 25D. The IRS says the Residential Clean Energy Credit “is not available for any property placed in service after December 31, 2025,” and its termination table says the credit won’t be allowed for any expenditures made after that date. A battery finished in 2026 gets no federal credit. The federal credit guide has the dates and the rule that the installation completion date controls.

A quote that shows a battery price “after the credit” on a 2026 job describes something the IRS says isn’t available, so ask for the price before any incentive.

Michigan: outages, credits and what the programs list

The Michigan Public Service Commission’s consumer tips say inverters shut off in an outage by national standards, so backup power needs a battery. Panels on their own stop when the grid does.

None of the Michigan programs this site cites, from DTE, Consumers Energy, BWL, Michigan Saves and EGLE, lists a state battery rebate, so ask any company that mentions one for the program’s name and its page.

Export rules are the utility rules that touch a battery. DTE’s Rider 18 charges the power you draw at the retail rate and credits the power you send out at the power supply rate, including the power supply cost recovery factor. Excess goes to an Excess Generation Bank that’s carried forward, and DTE says the credits “do not expire and cannot be withdrawn or transferred.” Consumers Energy credits excess energy at the power supply rate including transmission, and since February 27, 2024 it applies DG credits to all electric charges. If a company tells you what a battery will do for your bill, ask it to show in writing how it worked that out against these rules.

Consumers Energy also tells customers to avoid anyone who promises “you will not receive an electric bill,” claims you can be independent of the grid, or offers solar “with no upfront cost.” The same page says that even with a perfect system a customer still has a bill for fixed charges. A battery pitched as making you independent of the grid is one of the claims Consumers warns about.

For Michigan permits and utility steps, see how solar permits work in Michigan and utility interconnection timelines.

California: batteries and the net billing tariff

Under California’s net billing tariff, the CPUC says export credits come from Avoided Cost Calculator values by the hour and are usually lower than the retail rate. They can rise above the retail rate on late summer evenings, and the CPUC says batteries let customers export in those high-value hours. It also notes that about 70 percent of NBT customers had paired a battery by the end of 2024.

Storage changes the utility timeline. SCE’s page says simple, standard solar-only requests with all the correct information may receive permission to operate within 10 business days, and that paired storage or non-standard metering will need more time. On the permit side, SB 379 requires most California cities and counties to offer an online, automated permitting platform for a residential solar system of up to 38.4 kW AC and paired storage.

SGIP and other incentives, as of October 23, 2026

As of October 23, 2026, the program administrators’ step tracker for California’s Self-Generation Incentive Program (SGIP) shows the Small Residential Storage step at $0.15 per Wh as Closed for CSE, SCE, SoCalGas and PG&E. The Residential Solar and Storage Equity budgets are for low-income residential customers. They list $1.10 per Wh for storage and $3.10 per W for solar, and the tracker shows them closed or on a waitlist for the administrators it lists. The CPUC’s page puts the equity budget at $280 million, open for reservation beginning June 2, 2025.

A quote that counts an SGIP payment toward a battery should name the step, its status and the date; if it doesn’t, ask for all three.

SMUD runs its own program. Its battery page says the upfront enrollment incentive is reduced from $500 per kWh (up to $10,000 per household) to $300 per kWh (up to $6,000 per household). Projects had to be submitted for interconnection by September 22 and enrolled by December 31, 2026 to get the higher incentive, and customers must enroll within 90 days of permission to operate.

LADWP is a municipal utility and runs its own SGIP page. That page notes (March 2026) that after a CPUC ruling of February 20, 2026, administrators “must now require additional cost verification documentation.”

New homes

The 2025 Building Energy Efficiency Standards, effective January 1, 2026, require solar PV on newly constructed single-family homes under section 150.1(c)14, with five exceptions. A JA12-compliant battery of at least 7.5 kWh usable lets the required PV size shrink by 25 percent. The rule covers new construction, and additions and alterations aren’t included.

What to ask about a battery

In either state, get these in writing:

1. The battery’s make, model and usable kWh, and the circuits it powers in an outage.
2. The warranty on the battery and the inverter, and who services each.
3. Whether the price is before any incentive, and the status and date of each incentive the quote mentions.
4. Who files the utility application, and how long the utility says it takes when storage is included.
5. The installer’s license number: in Michigan the electrical contractor license, in California the CSLB number and class.

For a battery added to an existing system, the inverter replacement pages for Michigan and California cover the neighboring job.