Tesla Motors has finally unveiled its long anticipated home energy storage solution – Powerwall.
The all-electric car company is beginning to redefine itself as an energy company, its intention all along. The premise for Tesla, as its founder Elon Musk has stated, is to help transition the world to one that is based on the sustainable generation and use of electricity.
The company is offering a 7 and a 10 kilowatt battery. The prices are $3,000 and $3,500, respectively. These prices do not include the necessary inverter and installation costs. While the system can be used without solar panels, it can be seen as more cost effective when added to a solar home since the inverter has already been paid for.
There are two primary purposes for these battery systems.
1. Peak Rate Avoidance – Many power companies charge higher rates for electricity during peak evening hours. Cheaper rate energy can be stored in a Powerwall, then used during peak hours.
2. Emergency Power – Those who live in places where storms can cut off electricity or areas where the grid can be unreliable, the Powerwall can provide electricity when the grid is not supplying any.
It’s primary use will be high electric rate avoidance. Powerwall can provide about a few hours of power every day based on average homeowner electricity usage. This will be in the evening hours when many utilities charge extra for power.
While current energy storage prices prevent complete energy independence, the Powerwall is definitely a step in the right direction. Let’s take a look at the numbers involved.
For the 10kw system at $3,500, the cost per kilowatt is $350. This is significant as Tesla has managed to achieve relatively low pricing for cutting-edge lithium-ion battery technology.
What about pricing related to everyday home use? Assuming a homeowner gets frequent use out of Powerwall over its warrantied 10 year expected life, the cost is about 15 cents per kilowatt hour.
Economically this only currently makes sense in states where peak energy costs 20 cents or more per kilowatt hour. A solar powered homeowner who lives in one of these states is paying 8 cents per kilowatt hour for solar power during the day time and 15 cents per kilowatt hour for a few hours from stored solar power. This would save a bit of money compared to the more expensive 20 cents or more per kilowatt hour peak rate.
For many of us, however, battery prices must still fall quite a bit for massive adoption of storage technologies like the Powerwall. Solar plus net metering is still much more cost effective without battery storage.
Looking towards the future, a reduction of battery and solar power prices will eventually turn the grid into a kind of back up energy provider as we all become more self-sufficient producers of power. This diminished role could have it playing more of a power manager than its traditional one of power seller.
Again, the Powerwall is definitely a major step forward for sustainable energy. Costs will continue to fall. A significant piece of the cost puzzle will arrive with the completion of Tesla’s Gigafactory. It is estimated that this battery plant will be able to reduce costs an additional 30% due to economies of scale.
Tesla’s goals reach much farther than residential energy storage. The company is continuing to work with large corporations and utility companies. They will continue their open source patent policy so that other companies can help speed up our transition to a clean energy society.