Can Residential BESS – Powered Accessory Dwelling Units (ADU) Relieve California’s Housing and Energy Crisis?

California is currently navigating the confluence of two acute systemic challenges: a chronic housing affordability deficit and increasing grid instability driven by climate-induced volatility and the aggressive transition to variable renewable energy. This review posits that the strategic integration of Accessory Dwelling Units (ADUs) with residential Battery Energy Storage Systems (BESS) constitutes a synergistic, decentralized intervention capable of mitigating these dual crises simultaneously. Adopting the “Photovoltaic-Energy Storage-Direct Current-Flexibility” (PEDF) architectural framework, this study evaluates the transition of the residential dwelling unit from a passive consumption endpoint to an active “prosumer” node capable of providing critical grid services. We employ a stochastic financial simulation using the RShiny framework to assess the economic viability of prefabrication-based deployment strategies under Senate Bill 9 (SB 9) provisions for three investment scenarios: Acquisition-to-Rent, Acquisition–Development-Resale, and Long-Term-Asset-Retention. Our results indicate that modular prefabrication reduces project timelines by 30–50% and embodied carbon by up to 47%, while financial modeling confirms that “Acquisition-Development-Resale” and “Long-Term-Asset-Retention” strategies yield robust returns on investment, validating the economic competitiveness of sustainable densification. Despite identifying implementation barriers—specifically the “split-incentive” dilemma in rental markets and emerging data sovereignty constraints—this review concludes that the BESS-powered ADU represents the fundamental atomic unit of a resilient, low-carbon urban dwelling infrastructure, necessitating aligned policy support to achieve scalable deployment.