Battery Energy Storage Systems as a Resilience Solution

In the first four months of 2026, a local ice cream shop in Celina, Texas, lost $70,000 worth of product due to re-occurring and unpredictable power outages. While this loss is just a fraction of worst-case-scenarios (Texas winter storm power outages cost the local economy $80–$130 billion in 2021), businesses are at risk of shutting their doors if unpredictable outages persist.  

Demand for back-up power supply is growing as daily life and operations increasingly depend on grid stability. What if the ice cream shop in Celina had a cost-effective option to protect their business from losing power and risking product spoilage? A battery energy storage system (BESS) is a fuel-free backup solution that could help reduce exposure to power-outage-caused losses, which are often not covered by insurance. 

This brief explores how BESS can be economically competitive in helping to limit or avoid the losses caused by power system disruptions, and describes the opportunity to place monetary value on resilience solutions. The financial analysis of three back-up power scenarios in the case of power outages in Texas demonstrates the benefit of backup power for homeowners and businesses by quantifying the value of avoided losses. 

BESS as a resilience solution 

A resilient energy system is one that can adapt quickly and bounce back from disruptions. Implementing technologies that allow flexibility and adaptation is necessary as energy needs and risks evolve. Technologies that can provide backup power, like BESS, can strengthen the energy system’s reliability and bolster its resilience, which helps reduce financial losses from system disruption. Investment costs can deter potential beneficiaries from pursuing backup power options because the true value they create is not always understood or quantified. 

RMI identified 13 unique services BESS can provide to consumers and the grid. For consumers, these services include time-of-use bill management (reducing the amount of energy pulled from the grid at peak prices to keep electricity bills low), demand charge reduction (reducing the maximum power demand recorded during the billing period), and backup power (re-instating power during an outage). New benefits continue to arise as technology evolves, as battery owners can now participate in virtual power plants (VPPs) and leverage their batteries to generate revenue.  

The co-benefits of BESS also increase its value as a resilience solution. When compared to other power technologies, such as natural gas, BESS demonstrates additional value streams like lower maintenance costs, rapid ramp-up time, decreased water and air pollution, and medical cost savings from reduced pollution exposure (Exhibit 1). As noted by the Regenerate California coalition, cost–benefit analyses for power infrastructure often overlook these co-benefits. Accounting for both co‑benefits and revenue opportunities can strengthen the investment case beyond reliability value, especially as battery costs decline and markets expand. 

Exhibit 1 

To further demonstrate the business case for investing in BESS as a resilience solution, RMI conducted an economic analysis of different approaches to combating power outages. This analysis shows how BESS can create resilience and monetary savings, even before valuing other service-benefit and co-benefit opportunities, as discussed above.  

Analyzing the value of BESS’ resilience  

This analysis evaluates the role that backup technologies can play in reducing power outage-related losses for customers and quantifying this resilience. Power outages create economic losses by interrupting normal household activity, business operations, equipment use, revenue-generating activity, and more. As customers, utilities, and policymakers place greater emphasis on resilience, it is increasingly important to understand the economic value backup systems create by reducing the impact of outages.  

Backup power technologies are evaluated primarily on capital cost, operating cost, and technical performance. If resilience benefits, such as the monetary value of losses avoided during a power outage, can be measured and calculated, then batteries and other technologies that provide backup power may have a stronger economic case than their up-front costs alone would suggest. 

This case study compares three approaches to backup power: a customer-owned lithium-ion battery;¹ a subscription-based battery backup service, as demonstrated by Base Power for residential customers; and a diesel standby generator (Exhibit 2). The analysis evaluates how each option performs under different customer types, outage conditions, and market environments, and their relative costs and benefits (assuming no business interruption insurance coverage). Batteries can provide fast, quiet, low-maintenance backup power and may be able to support multiple value streams beyond resilience. Diesel generators, by contrast, can provide longer-duration backup if fuel is available.  

The analysis highlights how the relative value of each option depends on the duration of the outage, the customer’s cost of interruption, and the total cost of the backup solution over the project life. 

Exhibit 2 

Technology options overview 

Overview of scenarios 

The analysis looks at a forward-looking 20-year timeframe for power outages occurring in Texas driven by severe weather hazards. These severe weather hazards consist of hurricanes, storms such as wind events and tornadoes, winter storms, and flooding. Historical data on weather hazards from Climate Central are used to assume how severe weather events may change in the next 20 years, and the analysis estimates how many weather-driven outages will occur during the study period.  

Three scenarios are investigated:  

1. Main case — Each weather-driven outage is assumed to be 10 hours. 
2. Outage duration sensitivity case — The impacts of 2-, 6-, 16- and 24-hour outages are evaluated.  
3. Battery cost sensitivity case — How projected reductions in customer-owned battery costs affect the relative economics of the technologies. 

For more details on the assumptions and scenarios, see the Appendix. 

Residential main case 

The results show that resilience approaches that allow residential customers to access backup power without bearing the full cost of asset ownership can result in stronger economics. Across nearly all residential scenarios, a battery-based subscription service provides the highest net benefit (Exhibit 3). For residential customers in the main case, the subscription service has a total net benefit of $1,700, while customer-owned diesel and battery scenarios result in a net cost.  

It is important to note that the total costs and benefits here represent the evaluation of avoided outage losses and do not include any co-benefits of the technologies, such as (but not limited to) retail bill savings, wholesale market arbitrage, capacity payments, and deferred transmission and distribution investment value.  

Residential outage duration sensitivities 

This trend persists when tested for outage-duration sensitivity. At a 2-hour outage duration, the battery subscription service has a total net cost of approximately $20,000 less than the other technologies. Given the outage frequency across the 20-year study period, the subscription service achieves a positive total cash flow for outages 6 hours and above, meaning that it would be a net benefit for the residential customer to enroll as a resilience solution from avoided outage losses alone. Outage losses for residential customers are generally from food spoilage, health and safety impacts, and work and productivity losses.  

For outages shorter than 6 hours, the customer does not break even from avoided outage losses alone but could depend on additional revenue streams and co-benefits to justify investment. As the battery technologies are both subject to dispatch limitations due to battery duration, the options do not provide any additional financial value to the customer for outages longer than 16 hours.  

Non-residential main case 

For non-residential customers, the economics are substantially different because the outage costs are much higher due to business interruption. For non-residential customers in the main case, all three backup options generate significant net value, meaning that over the 20-year timespan, avoided outage losses exceed total costs suggesting that there is significant economic value in developing resilience under these assumptions, regardless of additional co-benefits and income streams. The subscription service and the diesel generator have the strongest result in the main case, with a net benefit of approximately $1.7 million, or $200,000 more than customer-owned backup power. 

 Non-residential outage duration sensitivities 

For shorter non-residential outages, battery-based options perform especially well because all three technologies avoid similar outage losses, while the customer-facing cost of a subscription service is much lower than the cost of the other technologies. At a 2-hour outage duration, the subscription service has a total net of $221,900 more than individually owned backup power. 

The relative performance of the technologies changes as outage duration increases. The battery technologies again meet value limitations at the 16-hour mark. At 24 hours, the diesel generator has a total net benefit of approximately $2.9 million, pulling ahead of the other scenarios. 

Outage duration is therefore one of the most important differentiators between the three options. For 2- and 6-hour outages, all technologies provide similar outage-loss reductions, so total cost is the primary driver of the results. For 16- and 24-hour outages, runtime carries the most weight, and the diesel generator can alleviate outage losses for longer. Still, this conclusion does not account for potential health and safety costs that could be incurred by using a diesel generator, which can also increase as outage lengths increase.  

In choosing the most suitable backup technology for a customer, it is important to understand the duration of historical outages in Texas to assess the likelihood of experiencing a long duration outage that would benefit from diesel generators as a resilience option. RMI’s Utility Transition Hub Reliability Dashboard shows that the average outage duration across the United States between 2014 and 2024 was 6.4 hours. In Texas, the average outage has consistently been around 4.5 hours in the last decade. Major weather events in 2021 and 2024 led to longer outages of 19 and 21 hours respectively. However, outages of this duration account for only a small fraction of total events. These trends signify that the longer duration benefits of diesel generators are much less likely to be fully realized in practice.  

Historical weather data shows that hazardous weather occurrences are increasing, which may raise the frequency of outages. Critically, however, increased hazardous weather frequency does not necessarily translate to longer outage durations. Timely investments in backup technologies such as battery storage can shorten restoration times and prevent outage duration from rising even as weather events become more common.   

Exhibit 3

Exhibit 4 

Battery cost sensitivity 

The battery cost decline sensitivity was developed to evaluate how future reductions in battery costs could affect the economics of customer-owned storage. Battery costs have declined significantly over the past decade and are expected to continue falling as manufacturing scales, supply chains mature, and technology improvements continue. To examine the impact of these trends, the analysis applies a 2030 battery cost projection based on the National Laboratory of the Rockies’ 2025 battery cost outlook .  

The results demonstrate that battery cost reductions can materially improve the economics of customer-owned storage. In the residential main case, the customer-owned battery has a total net cost of approximately $23,600, compared with approximately $19,500 for the diesel generator. Under the 2030 battery cost sensitivity, however, the customer-owned battery total net cost falls to approximately $19,200, slightly below the diesel generator’s total net cost. 

In all other scenarios, the diesel generator maintains a lower total net cost than the customer-owned battery. The projected battery cost decline is an important factor in evaluating the economics of the two options. Furthermore, this analysis does not include any federal, state, or utility incentives for battery ownership. Commercial battery systems may qualify for federal investment tax credits under Section 48E, and additional incentive programs may be available depending on location and customer type. These incentives can significantly reduce the effective cost of battery ownership and improve the economics of resilience in these scenarios. As a result, the customer-owned battery economics presented in this study should be viewed as conservative relative to real-world deployment opportunities and benefits where incentives are available. 

Taken together, the results suggest that declining battery costs and available policy incentives have the potential to substantially improve the competitiveness of customer-owned storage relative to traditional diesel backup generation (Exhibit 5).  

Exhibit 5 

Key Findings  

This analysis has shed light on four key insights relating to power sector resilience:   

1. Ownership structure can be just as important as technology selection in understanding the economics of resilience solutions. Across nearly all residential scenarios, the subscription service-based model provides the strongest cost-benefit outcomes. By allowing customers to access backup power without bearing the full capital cost alone, the model delivers resilience at a significantly lower total cost than either a customer-owned battery or a diesel generator.  
    
   This finding suggests that business models capable of sharing costs across multiple stakeholders can improve access to resilience technologies. 
    

2. Investing in BESS technologies makes greater economic sense for non-residential customers. Although there are scenarios in which residential customers can experience savings from using BESS, particularly when avoiding high up-front costs via the subscription model, the economics are much stronger for non-residential customers with large potential business interruption costs.  
    
   This finding suggests that resilience approaches will need to cater to different customer types, and that investment in commercial-scale battery technologies could unlock greater cost-effective resilience at scale.  

3. Outage duration is one of the most important factors when selecting a technology. As displayed in the analysis, outage duration can influence the net benefits of technologies. For shorter outages, all three technologies provide similar outage-loss reductions, making total cost the primary differentiator. Under these conditions, battery-based solutions perform particularly well because they can provide comparable resilience benefits at lower customer cost. However, as outage durations increase, energy limitations of battery systems emerge.  
    
   Utilizing RMI’s Utility Transition Hub Reliability Dashboard can help customers understand frequency and likely duration of outages in their state. While analysis points to greater outage-loss reductions for diesel generators at 16 and 24 hours, these conditions may not be common in some places. This means a battery-based solution may still be ideal for their needs.  
    
   This finding suggests resilience solutions will need to consider local contexts to account for the type and length of outage experienced.  
    

4. The economics of battery-based resilience solutions are likely to improve over time as battery costs continue to decline, and incentive programs remain available. While diesel generators continue to offer advantages in extended outage scenarios today, developments in long-duration battery energy solutions and improving battery economics overall continue to improve the competitiveness of batteries compared to traditional diesel generators.  
    
   This finding suggests that future resilience planning efforts should consider future technology cost trends as well as the economic value of avoided outages. 

Conclusion 

This analysis demonstrates that customer resilience through backup power technologies can provide significant economic value. While backup power technologies are often evaluated primarily on their up-front and operating costs and energy savings, the value created through avoided outages can be substantial, particularly for customers with high interruption costs. Quantifying and monetizing these avoided losses as resilience benefits therefore provides a more complete framework and better economic outcome expectations for evaluating backup power solutions. This approach could help homeowners and small businesses, like the ice cream store in Celina, better understand their options for reducing their exposure to future grid failures and extreme weather impacts.  

For battery storage in particular, outage-resilience represents only one component of the overall value proposition. Although not included in this analysis, other co-benefits (such as the ability to increase efficiency of clean power generation with the associated environmental and health benefits), as well as additional value streams (such as energy arbitrage, grid services, and pollution reduction) can make the financial and nonfinancial case for battery deployment significantly stronger than reflected in this resilience-based analysis of direct outage losses.  

Although subscription-based BESS was the most economic battery solution when analyzing outage loss savings compared to costs, customer-owned BESS will likely benefit from additional value streams, boosting their relative advantages for customers able to afford the higher up-front costs. Access to stacked-value application analysis could comprehensively evaluate the total economic value that batteries can provide to users. Greater evaluation of the system’s benefits of resilience from using BESS to reduce outage-related losses could help extend that value and uptake beyond the individual user. 

As energy system actors — such as utilities, investors, policymakers, and homeowners —increasingly focus on energy system resilience, incorporating these insights into planning and investment decisions can help with understanding the full value of BESS and similar resilience technologies. This understanding may also highlight the potential for innovative business models, particularly cost- and asset-sharing solutions, that can help scale and monetize resilience services. 

Appendix

Assumptions and Scenarios 

 Exhibit A1 – Outage duration and frequency for the three scenarios 

Each backup power scenario is evaluated over a 20-year period by comparing total costs against the present value of avoided outage losses before the generator must be augmented or replaced. Generator degradation due to use is assumed to be small for the purposes of the analysis. The resulting net value indicates whether the avoided outage costs are large enough to justify the cost of the backup solution.  

Each scenario is conducted for residential and non-residential customers. This is important as outage costs differ substantially, with non-residential customers often experiencing much larger losses due to costs of interrupted business activity.  

The Interruption Cost Estimator (ICE) tool developed by Lawrence National Berkeley Laboratory is used to determine the cost of lost load for both customer segments. In determining the cost of lost load, residential customers are defined as single household customers with average demand varying between 0.5 and 5 kW, with most customers centered between 1 and 2 kW. Non-residential customers are made up of a mix of small and medium-sized businesses and large commercial customers.  

Average demand of non-residential customers varied between 0.5 and above 5,000 kW, with the majority of the customers surveyed centered between 10 and 25 kW. This distinction is central to the analysis as customer outage cost is one of the most important drivers of backup power economics. A backup system that is difficult to justify for a residential customer may create substantial economic value for a non-residential customer if the cost of lost load is high.  

Endnotes

For more information about the methodology and assumptions used in this analysis please email Rachel Goldstein, rachel.goldstein@rmi.org.