When can solar and battery systems be cost-effective without subsidies?
The key to cost-effectiveness without permanent subsidies is high electricity prices and the ability to sell surplus power to the grid. In a study of detached houses in Finland, solar PV alone was profitable up to a 20% renewable fraction (meaning 20% of the home's energy came from solar) when surplus electricity could be sold to the grid at 2019 market prices [1]. With the unusually high electricity prices of 2021, that threshold jumped to 50% [1]. This shows that when grid electricity is expensive and you can sell your excess, solar pays for itself.
Adding battery storage to that same system was only financially feasible when electricity prices were sustained at high levels or with subsidies [1]. Lithium-ion batteries came closest to being cost-effective, but still required either high prices or policy support to break even [1]. So, in regions with moderate electricity prices, batteries remain a tough sell without subsidies.
Where do solar and battery systems still need subsidies?
In many locations, solar and battery systems are not yet cost-effective without subsidies. A utility-scale study in Saudi Arabia found that a solar PV plant with 9-hour battery storage had an average benefit-cost ratio of 0.984, meaning for every dollar invested, you get back only 98.4 cents—a slight loss [3]. This was worse than solar thermal with thermal storage, which averaged a ratio of 1.105 (a 10.5% profit) [3]. The study also showed that the battery system could meet only 58–74% of annual load demand, highlighting that batteries alone don't guarantee reliability [3].
Even in a specialized application like a solar-powered indoor farm in Greece, the most profitable option was a grid-connected system without batteries, which had the highest environmental impact [2]. The autonomous system with battery storage had a positive net present value of €22,895, but the authors noted that subsidies and policy incentives would help adoption [2]. This suggests that while batteries can be profitable in niche cases, they are not yet a universal solution.
What role do policy and market conditions play?
The studies agree that policy and market conditions are decisive. In Finland, the difference between 2019 and 2021 electricity prices—a market condition, not a subsidy—dramatically improved profitability [1]. Similarly, the Greek study found that a net metering scheme (where you get credit for surplus power) made the system more profitable than going fully off-grid with batteries [2]. This shows that policies like net metering or feed-in tariffs can substitute for direct subsidies.
However, none of the studies found that solar-plus-battery systems were robustly profitable across all scenarios without some form of support—whether high market prices, net metering, or direct subsidies. The authors of the Finnish study explicitly concluded that "sustained high electricity market prices or subsidies" are needed for economic viability in Nordic climates [1]. The Saudi study's average benefit-cost ratio below 1 for battery systems reinforces that point [3].
About These Sources
This answer is built on 3 peer-reviewed studies — published from 2022 to 2025, 1 from 2024 or later, 3 in Q1 journals, collectively cited 54 times — selected as the most relevant from 3 studies that passed quality screening, drawn from 51 papers retrieved from a database of over 500 million.
Sources used in this answer
Feasibility study of energy storage options for photovoltaic electricity generation in detached houses in Nordic climates
In a modeling study of detached houses in Finland, solar PV alone was profitable up to a 20% renewable fraction with 2019 market prices and up to 50% with 2021 high prices when surplus could be sold to the grid; lithium-ion battery storage was the most feasible storage option but still required sustained high prices or subsidies to be economically viable.
Sustainable leafy greens: a techno-economic and environmental assessment of baby rocket production in a photovoltaic-powered growth room
In a techno-economic and environmental assessment of a closed agrivoltaic system for baby rocket production in Greece, the autonomous system with battery storage had a net present value of €22,895.3 and was the most environmentally and economically viable option, though the authors noted subsidies and policy incentives could enhance adoption.
A techno-economic evaluation of utility scale solar power generation
In a techno-economic analysis of utility-scale solar plants in 40 Saudi Arabian cities, PV with 9-hour battery storage had an average benefit-cost ratio of 0.984 (slightly below profitability) and an annual load satisfaction factor of 0.58–0.74, while solar thermal with thermal storage performed better with an average ratio of 1.105.