All the breathless coverage of Elon Musk’s Powerwall battery brouhaha last night is missing the most important thing: a sober discussion of real-world costs. So let’s take a look at the costs and see if this world-shaking, game-changing innovation really makes any sense.
Musk said Tesla’s 7 kwh capacity battery would cost $3,000, while the 10 kwh capacity one would be $3,500. (That doesn’t include the cost of a DC-AC inverter – about $4,000 $2,000– plus professional installation.)
The implication is that a 10 kwh system could supply 1,000 watts of current to your home for 10 hours. That’s a good amount of energy. The average American home draws an average of 1,200 watts of power around-the-clock, according to the U.S. Department of Energy. For a sense of scale, a desktop computer draws about 100 watts, a big TV 200 watts. Refrigerators cycle on and off, but average about 100 watts.
for a lithium-ion system with an initial installation cost of $400 per kwh capacity, 80% efficiency and ability to run 5,000 cycles, the average cost of stored electricity will be 15 cents per kwh.
This might be conservative.
It’s unclear how many cycles you could expect to get out of Powerwall. Tesla says its 7 kwh Powerwall can cycle daily, while the 10 kwh system would cycle weekly. The cost of the battery is amortized over the total amount of electricity cycled through it over its lifetime. The less you use it, the higher your average unit cost.
Either way, 15 cents per kwh for battery storage seems ball-park reasonable.
To get your real electricity cost, you have to add to that 15 cent battery charge whatever you’re paying for that electricity in the first place. Since the idea is that batteries will work in tandem with solar, we’ll look at what Tesla’s sister company SolarCity SCTY -2.91% charges its customers. According to SolarCity, a customer pays no upfront costs for a system, but then gets dinged for 15 cents per kwh of power generated
adding together your 15 cents per kwh for solar power plus the 15 cents to cycle a kwh in and out of the battery, and you’re looking at 30 cents per kwh for electricity.
And here’s where the economics of the Powerwall break down. If you do not have a big enough solar system to get your home entirely off the grid, then there is simply no point whatsoever in paying 30 cents per kwh to get electricity via the Powerwall. At night, when you’re not generating solar power, you could simply get your electricity from the grid. For an average 12.5 cents a kwh.
I’ll say it another way: unless your solar-powered home is entirely disconnected from the grid, or your solar system is big enough to provide for all your electricity needs, an expensive battery backup system like Powerwall does not make economic sense.
Tesla announced a battery for your house, the Powerwall. I think this is a great opportunity to talk about batteries and physics. Let me answer some questions you might have.
Tesla says demand for batter storage products “just nutty”, and cites Australia and Germany as countries where household system will be economic.
The hoopla around Tesla’s battery storage device continues apace, with Tesla founder and chairman Elon Musk saying that demand for the stationary energy storage is “just nutty,” and the Powerwall home system is already sold out through mid-2016.
Musk told analysts in a phone hook-up after his electric vehicle manufacturer’s first quarter results that around 38,000 reservations for the battery system system had been received.
Interestingly, it was not just the home system that was gaining attention, but the commercial and grid level Powerpack, which analysts suggest is already economic. Some 2,500 companies had put in expressions of interest, around 10 units each.
“The response has been overwhelming. Like, crazy,” Musk told the analysts, before throwing in a few more superlatives such as “off the hook” and “just nutty”.
Demand has been so strong that Musk does not think Tesla can produce enough to meet that demand until mid 2016. That’s when its gigafactory in Nevada is complete.
“There’s no way we can possibly satisfy this demand this year,” Musk admitted. “We’re basically sold out through the first half of next year.
Renewable energy consultant Chris Cooper has put together a calculator that we publish today, which shows that for many people, solar only remains the best value for households. But solar and storage still beats the grid, and with costs coming down, that is likely to continue. http://reneweconomy.com.au/2015/what-the-tesla-powerwall-battery-means-for-households-61055
A couple more interesting details have emerged about Tesla’s “game-changing” home battery, and it remains a moderately limp competitor that’s done wonders for market awareness.
Courtesy of Bloomberg, the world gets an idea of what the retail from-the-installer price of the battery might look like (rather than the wholesale price the ‘leccy car maker announced last week).
The Elon Musk-led system seller SolarCity, Bloomberg reports, will ship an installed 10 kWh Powerwall for US$7,140 (ouch outright purchase) or $US5,000 plus a nine-year lease.
To match a 16 kW generator that sells in the US for just US$3,699, the reporter works out, would require around US$45,000 worth of Powerwalls on the lease deal.
Bloomberg New Energy Finance doesn’t imagine the Powerwall making a dent in European markets like Germany, where the economics of solar power are well-understood. Its take is that “the economics of an average home with rooftop solar are not significantly enhanced by including the Tesla battery”.
The problem with the larger battery gets worse, with SolarCity’s Jonathan Bass telling Bloomberg the 10 kWh unit is limited to around 50 charging cycles per year (500 over its lifetime).
That makes the 10 kWh version entirely unsuitable for off-grid applications, leaving the 7.5 kWh Powerwall as the only contender in that market.
Entrepreneur. Investor. The inventor. The rescuer. The first three Elon Musk is for sure, the fourth role for him arbitrated strong – not least last week’s announcement of the battery.
Last week, the news told Musks in one fell swoop destroyed the nuclear power business. Maybe it does, maybe not. Unfortunately, in the short term, practically every big hype at a similar level of energy news has proven to be at least somewhat disappointing. Not long ago, when it was reported in India solar energy to be cheaper to produce than nuclear power.
Legendary Osmo A. Wiio law on technological development states that “in the near future the development overestimated, and long-term development is underestimated.” Point number one seems to think that very rare true for energy matters. In particular, the consumer side of things enormous progress in promising battery-news seems to come every news outlet at least once a week, and each day promises laptop case periods of battery life, and the phones even weeks.
Made to universities for basic research breakthroughs, there is still a huge long way to final commercial products. And, unfortunately, many times feel-setting breakthrough in the train station for departure.
The Tesla PowerWall announcement is having an effect in Australia, but perhaps not the one Elon Musk predicted: utilities are moving to head it off with their own solar/storage offerings.
Shortly after the Tesla battery launch, NSW’s AGL announced its solar customers could add electrical storage, and now Queensland’s Ergon energy is toying with the same idea.
Ergon’s managed to secure government funding for a trial: the Australian Renewable Energy Agency (ARENA) has agreed to hand over AU$400,000 to support the $2.6 million project.
Ergon will offer solar PV panels from SunPower and batteries from Sunverge (the two companies inked a partnership late in 2014, nominating Australia as one of their target markets).
Initially, the Ergon offering will be tested in 33 homes, which will get a 4.9kW array feeding either 12kWh or 5kWh storage.
The systems, to be installed in the Queensland locales Cannonvale, Toowoomba and Townsville, will be centrally monitored to manage what’s fed into the grid and reduce peak load on the network.
The company says it will feed data back to ARENA to help manage the impact of renewables on Australia’s national energy market.
Ergon has found that leaving customers in charge of their solar usage is a pain in the neck.
Grid batteries are already coming out of the Gigafactory in Nevada.
Electric car maker Tesla Motors is already assembling batteries to be used by utilities and building owners at its huge battery factory, the Gigafactory, just outside of Reno, Nev. The company made the announcement during its third quarter earnings on Tuesday.
Earlier this year Tesla announced that it would start selling batteries that could be plugged into the power grid, connected to buildings, or paired with solar panels. Business owners and home owners can use Tesla’s batteries to lower electricity bills by powering buildings when grid electricity rates are high. Utilities can use the batteries to operate their grids more smoothly and to avoid building additional expensive and dirty power plants.
Tesla is going hard after a new customer: the power grid.
In a presentation at the company’s annual shareholder meeting on Tuesday (May 31), CEO Elon Musk said he thinks half of the company’s batteries will go toward electricity storage for the power grid rather than Tesla’s vehicles in the coming years as Tesla expands its battery business.
The company’s Gigafactory in the Nevada desert (a joint-venture with Panasonic) is expected to churn out 35 GWh of the newly designed lithium-ion batteries (pdf) each year (Musk speculated that figure could triple if demand warrants).
Musk believes electricity storage now looks like it could be a faster growing business, if not necessarily a larger one, than selling cars for the company.
Tesla’s Powerwall for the home (which costs $3,000, plus installation) has not proved to be a best seller so far, with the company discontinuing its 10kWh version this year. Analysts say the Powerwall is overpriced for customers expecting to recoup their costs quickly in most markets. Instead, Tesla has shifted toward grid-scale applications, where battery systems offer storage and balance electricity supply for regional electrical system. Exact sales figures were not released, but Musk said last year that 80,000 orders were placed for grid-scale Powerpack batteries, and the $40 million in quarterly sales could ramp up to “a few billion dollars” per year by 2017.
One of the largest grid projects is in Hawaii
Musk’s critics have scoffed that pricey batteries will ever offer more than niche services for the grid. Bob Lutz, the former vice chairman of General Motors, said in a CNBC interview last year that using batteries as backup storage was a hundred-year-old idea that remains prohibitively expensive and called the concept “greatly overvalued.” Lutz said: “The highest cost in the lithium-ion battery is not the assembly labor; it’s the raw materials.”
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9 Comments
Tomi Engdahl says:
Why Tesla’s Powerwall Is Just Another Toy For Rich Green People
http://www.forbes.com/sites/christopherhelman/2015/05/01/why-teslas-powerwall-is-just-another-toy-for-rich-green-people/
All the breathless coverage of Elon Musk’s Powerwall battery brouhaha last night is missing the most important thing: a sober discussion of real-world costs. So let’s take a look at the costs and see if this world-shaking, game-changing innovation really makes any sense.
Musk said Tesla’s 7 kwh capacity battery would cost $3,000, while the 10 kwh capacity one would be $3,500. (That doesn’t include the cost of a DC-AC inverter – about $4,000 $2,000– plus professional installation.)
The implication is that a 10 kwh system could supply 1,000 watts of current to your home for 10 hours. That’s a good amount of energy. The average American home draws an average of 1,200 watts of power around-the-clock, according to the U.S. Department of Energy. For a sense of scale, a desktop computer draws about 100 watts, a big TV 200 watts. Refrigerators cycle on and off, but average about 100 watts.
for a lithium-ion system with an initial installation cost of $400 per kwh capacity, 80% efficiency and ability to run 5,000 cycles, the average cost of stored electricity will be 15 cents per kwh.
This might be conservative.
It’s unclear how many cycles you could expect to get out of Powerwall. Tesla says its 7 kwh Powerwall can cycle daily, while the 10 kwh system would cycle weekly. The cost of the battery is amortized over the total amount of electricity cycled through it over its lifetime. The less you use it, the higher your average unit cost.
Either way, 15 cents per kwh for battery storage seems ball-park reasonable.
To get your real electricity cost, you have to add to that 15 cent battery charge whatever you’re paying for that electricity in the first place. Since the idea is that batteries will work in tandem with solar, we’ll look at what Tesla’s sister company SolarCity SCTY -2.91% charges its customers. According to SolarCity, a customer pays no upfront costs for a system, but then gets dinged for 15 cents per kwh of power generated
adding together your 15 cents per kwh for solar power plus the 15 cents to cycle a kwh in and out of the battery, and you’re looking at 30 cents per kwh for electricity.
And here’s where the economics of the Powerwall break down. If you do not have a big enough solar system to get your home entirely off the grid, then there is simply no point whatsoever in paying 30 cents per kwh to get electricity via the Powerwall. At night, when you’re not generating solar power, you could simply get your electricity from the grid. For an average 12.5 cents a kwh.
I’ll say it another way: unless your solar-powered home is entirely disconnected from the grid, or your solar system is big enough to provide for all your electricity needs, an expensive battery backup system like Powerwall does not make economic sense.
Tomi Engdahl says:
Should You Get a Tesla Home Battery? Let Physics Explain
http://www.wired.com/2015/05/get-tesla-home-battery-let-physics-explain/
Tesla announced a battery for your house, the Powerwall. I think this is a great opportunity to talk about batteries and physics. Let me answer some questions you might have.
Tomi Engdahl says:
On the business point of view the keynote talk seems to hit the right note:
Tesla’s Musk says Powerwall sold out for 12 months, demand “just nutty”
http://reneweconomy.com.au/2015/teslas-musk-says-powerwall-sold-out-for-12-months-demand-just-nutty-75267
Tesla says demand for batter storage products “just nutty”, and cites Australia and Germany as countries where household system will be economic.
The hoopla around Tesla’s battery storage device continues apace, with Tesla founder and chairman Elon Musk saying that demand for the stationary energy storage is “just nutty,” and the Powerwall home system is already sold out through mid-2016.
Musk told analysts in a phone hook-up after his electric vehicle manufacturer’s first quarter results that around 38,000 reservations for the battery system system had been received.
Interestingly, it was not just the home system that was gaining attention, but the commercial and grid level Powerpack, which analysts suggest is already economic. Some 2,500 companies had put in expressions of interest, around 10 units each.
“The response has been overwhelming. Like, crazy,” Musk told the analysts, before throwing in a few more superlatives such as “off the hook” and “just nutty”.
Demand has been so strong that Musk does not think Tesla can produce enough to meet that demand until mid 2016. That’s when its gigafactory in Nevada is complete.
“There’s no way we can possibly satisfy this demand this year,” Musk admitted. “We’re basically sold out through the first half of next year.
Renewable energy consultant Chris Cooper has put together a calculator that we publish today, which shows that for many people, solar only remains the best value for households. But solar and storage still beats the grid, and with costs coming down, that is likely to continue.
http://reneweconomy.com.au/2015/what-the-tesla-powerwall-battery-means-for-households-61055
Tomi Engdahl says:
Tesla’s battery put in the shade by current and cheaper kit
Reality pays the pretty Powerwall a visit
http://www.theregister.co.uk/2015/05/07/bloomberg_tesla_powerwall_more_wall_than_power/
A couple more interesting details have emerged about Tesla’s “game-changing” home battery, and it remains a moderately limp competitor that’s done wonders for market awareness.
Courtesy of Bloomberg, the world gets an idea of what the retail from-the-installer price of the battery might look like (rather than the wholesale price the ‘leccy car maker announced last week).
The Elon Musk-led system seller SolarCity, Bloomberg reports, will ship an installed 10 kWh Powerwall for US$7,140 (ouch outright purchase) or $US5,000 plus a nine-year lease.
To match a 16 kW generator that sells in the US for just US$3,699, the reporter works out, would require around US$45,000 worth of Powerwalls on the lease deal.
Bloomberg New Energy Finance doesn’t imagine the Powerwall making a dent in European markets like Germany, where the economics of solar power are well-understood. Its take is that “the economics of an average home with rooftop solar are not significantly enhanced by including the Tesla battery”.
The problem with the larger battery gets worse, with SolarCity’s Jonathan Bass telling Bloomberg the 10 kWh unit is limited to around 50 charging cycles per year (500 over its lifetime).
That makes the 10 kWh version entirely unsuitable for off-grid applications, leaving the 7.5 kWh Powerwall as the only contender in that market.
Tesla’s New Battery Doesn’t Work That Well With Solar
Even Elon Musk’s SolarCity, the biggest supplier in the U.S., isn’t ready to install Tesla’s home battery for daily users
http://www.bloomberg.com/news/articles/2015-05-06/tesla-s-new-battery-doesn-t-work-that-well-with-solar
Tomi Engdahl says:
Did Tesla Just Kill Nuclear Power? – Forbes
http://www.forbes.com/sites/jeffmcmahon/2015/05/01/did-tesla-just-kill-nuclear-power/
I think it did not.
Tomi Engdahl says:
Entrepreneur. Investor. The inventor. The rescuer. The first three Elon Musk is for sure, the fourth role for him arbitrated strong – not least last week’s announcement of the battery.
Last week, the news told Musks in one fell swoop destroyed the nuclear power business. Maybe it does, maybe not. Unfortunately, in the short term, practically every big hype at a similar level of energy news has proven to be at least somewhat disappointing. Not long ago, when it was reported in India solar energy to be cheaper to produce than nuclear power.
Legendary Osmo A. Wiio law on technological development states that “in the near future the development overestimated, and long-term development is underestimated.” Point number one seems to think that very rare true for energy matters. In particular, the consumer side of things enormous progress in promising battery-news seems to come every news outlet at least once a week, and each day promises laptop case periods of battery life, and the phones even weeks.
Made to universities for basic research breakthroughs, there is still a huge long way to final commercial products. And, unfortunately, many times feel-setting breakthrough in the train station for departure.
Source: http://www.tivi.fi/blogit/2015-05-04/En-usko-Elon-Muskiin-3220979.html
Tomi Engdahl says:
Take THAT, Tesla: Another Oz energy utility will ship home batteries
Ergon sees the writing on the PowerWall
http://www.theregister.co.uk/2015/08/11/take_that_tesla_another_oz_utility_to_ship_batteries/
The Tesla PowerWall announcement is having an effect in Australia, but perhaps not the one Elon Musk predicted: utilities are moving to head it off with their own solar/storage offerings.
Shortly after the Tesla battery launch, NSW’s AGL announced its solar customers could add electrical storage, and now Queensland’s Ergon energy is toying with the same idea.
Ergon’s managed to secure government funding for a trial: the Australian Renewable Energy Agency (ARENA) has agreed to hand over AU$400,000 to support the $2.6 million project.
Ergon will offer solar PV panels from SunPower and batteries from Sunverge (the two companies inked a partnership late in 2014, nominating Australia as one of their target markets).
Initially, the Ergon offering will be tested in 33 homes, which will get a 4.9kW array feeding either 12kWh or 5kWh storage.
The systems, to be installed in the Queensland locales Cannonvale, Toowoomba and Townsville, will be centrally monitored to manage what’s fed into the grid and reduce peak load on the network.
The company says it will feed data back to ARENA to help manage the impact of renewables on Australia’s national energy market.
Ergon has found that leaving customers in charge of their solar usage is a pain in the neck.
Tomi Engdahl says:
Tesla is Already Making Grid Batteries at the Gigafactory
http://fortune.com/2015/11/03/tesla-grid-batteries-gigafactory/
Grid batteries are already coming out of the Gigafactory in Nevada.
Electric car maker Tesla Motors is already assembling batteries to be used by utilities and building owners at its huge battery factory, the Gigafactory, just outside of Reno, Nev. The company made the announcement during its third quarter earnings on Tuesday.
Earlier this year Tesla announced that it would start selling batteries that could be plugged into the power grid, connected to buildings, or paired with solar panels. Business owners and home owners can use Tesla’s batteries to lower electricity bills by powering buildings when grid electricity rates are high. Utilities can use the batteries to operate their grids more smoothly and to avoid building additional expensive and dirty power plants.
Tomi Engdahl says:
Elon Musk thinks Tesla can sell batteries much faster than cars
http://qz.com/697304/elon-musk-thinks-tesla-can-sell-batteries-much-faster-than-cars/
Tesla is going hard after a new customer: the power grid.
In a presentation at the company’s annual shareholder meeting on Tuesday (May 31), CEO Elon Musk said he thinks half of the company’s batteries will go toward electricity storage for the power grid rather than Tesla’s vehicles in the coming years as Tesla expands its battery business.
The company’s Gigafactory in the Nevada desert (a joint-venture with Panasonic) is expected to churn out 35 GWh of the newly designed lithium-ion batteries (pdf) each year (Musk speculated that figure could triple if demand warrants).
Musk believes electricity storage now looks like it could be a faster growing business, if not necessarily a larger one, than selling cars for the company.
Tesla’s Powerwall for the home (which costs $3,000, plus installation) has not proved to be a best seller so far, with the company discontinuing its 10kWh version this year. Analysts say the Powerwall is overpriced for customers expecting to recoup their costs quickly in most markets. Instead, Tesla has shifted toward grid-scale applications, where battery systems offer storage and balance electricity supply for regional electrical system. Exact sales figures were not released, but Musk said last year that 80,000 orders were placed for grid-scale Powerpack batteries, and the $40 million in quarterly sales could ramp up to “a few billion dollars” per year by 2017.
One of the largest grid projects is in Hawaii
Musk’s critics have scoffed that pricey batteries will ever offer more than niche services for the grid. Bob Lutz, the former vice chairman of General Motors, said in a CNBC interview last year that using batteries as backup storage was a hundred-year-old idea that remains prohibitively expensive and called the concept “greatly overvalued.” Lutz said: “The highest cost in the lithium-ion battery is not the assembly labor; it’s the raw materials.”