Tesla's Powerwall by the Numbers
Tom Lombardo posted on May 03, 2015 |
Tesla announced a battery unit for home energy storage. Let’s cut through the hype and look at some ...

When Tesla Motors allowed other companies to use its patented technology and later announced the building of the Gigafactory, I had a feeling that Elon Musk had his eye on more than just the electric vehicle (EV) market. Sure enough, this week we saw the young entrepreneur introduce Tesla Energy, a series of off-the-shelf battery banks designed for home users, businesses, and utilities.

Musk’s announcement was made with plenty of fanfare, topped off by his revelation that the whole event was being powered by the company’s new creation, which had been charged by the solar panels on the roof. He showed a real-time shot of the electric meter and said, “This entire night - everything you’re experiencing - is stored sunlight.”

The much anticipated announcement created quite a buzz in the industry. Let’s cut through the hype and look at some realistic numbers. Since there are many other storage options for commercial and utility users, I’ll just look at the Powerwall - the unit designed for residential customers.

Powerwall Specs

The Powerwall comes in two sizes: 7 kWh ($3000) and 10 kWh ($3500). Both use Tesla’s Li-ion battery technology - no surprise there. Since there’s only a small price difference between the two, I’ll focus on the 10 kWh model.

Batteries Included; Inverter Not

The first thing to note is that the Powerwall does not include an inverter - it’s just the battery bank, charge controller, and a liquid thermal control system that allows the unit to withstand temperatures from -20C (-4F) to 43C (110F). Tesla says that the device is compatible with “a growing list of inverters” without specifying which brands or models. The Powerwall can deliver 2 kW of continuous power and 3.3 kW of peak power. An inverter capable of handling that costs around $1500, give or take a few hundred. That brings the price tag up to $5000, not including installation. (It must be installed by a qualified electrician.) Powerwalls can be combined to create up to 90 kWh of storage - enough to meet the needs of virtually any residential customer.

Efficiency and Effective Storage

The storage system has a round-trip DC-DC efficiency of 92%. Factor in the typical efficiency of a good inverter, around 95%, and we’re looking at a total round-trip efficiency of 87%. That 10 kWh battery, for all practical purposes, provides 8.7 kWh of AC electricity.

Can You Power Your House with It?

The Powerwall provides three services to residential users who are on the grid: load shifting, photovoltaic (PV) storage, and backup power.

Load Shifting

In this application the battery charges during non-peak hours when the rates are low, and provides power during peak hours when rates are high. For customers enrolled in time-of-day (ToD) pricing plans, this can be a significant cost saver.

Let’s do the math on that using actual ToD numbers from a US power company and assuming the battery is delivering power during the entire stretch of peak hours.

Rates: $0.203217/kWh (peak) and $0.04643/kWh (off-peak)

Peak times: 2:00PM - 7:00PM (5 hours)

Assume a constant 1.7 kW load over five hours, which completely drains the battery every day.*  

8.7 kWh x $0.203217/kWh = $1.77/day (if the customer were buying electricity at peak rates)

8.7 kWh x $0.04643/kWh = $0.40/day   (customer buying electricity at off-peak rates instead)

Energy cost savings = $1.37/day or $500/year

If a person spent $3500 on the Powerwall and another $1500 on the inverter, it would take ten years (simple payback) for the unit to pay for itself. Since it has a 10 year warranty (and so do most inverters), it’s a break even situation at best.

*In reality, completely draining the battery every day shortens its life. A battery under those conditions would lose about 30% of its initial capacity after 500 charge-discharge cycles - not even two years of daily use. (Good thing there’s a ten-year warranty!) At a friendlier 80% depth of discharge, a Li-ion battery will survive about 1900 cycles (about five years) before losing a significant amount of its capacity.

PV Storage

When grid power is available, a homeowner with a photovoltaic (PV) system can use the grid as a “virtual storage” system. When the PV array is generating more than what the house is using, the customer sells energy to the grid through a net-metering agreement. When the house uses more than the array can generate, the user buys grid power. This is by far the least expensive way to go since the owner doesn’t need to purchase batteries, a charge controller, and a more expensive inverter. 

Utility companies have a love-hate relationship with net-metering. On one hand, it reduces the need for peaker plants; on the other hand, an abundance of somewhat unpredictable energy sources providing power to the grid complicates the distribution process. Some European countries are encouraging self-consumption - locally storing and using all of the energy that you generate rather than putting it on the grid. We may see such policies in the US if utilities continue to protest against net-metering.

Backup Power

When the grid goes down, the Powerwall can provide power to the home. This requires an intelligent grid-tied inverter. Every grid-tied inverter is capable of automatically shutting itself down when it senses that grid power has gone down; that’s so the residential power source - battery or photovoltaic array - doesn’t send power out to the grid when workers may be in the middle of repairs. We call this “anti-islanding.” The down side is that when the inverter goes down, it no longer powers the house.

An intelligent grid-tied inverter can disconnect itself from the grid and still allow the PV or batteries to provide power to the house itself. These inverters cost more than standard grid-tied inverters - in some cases up to twice as much for the same power rating.

From a purely economic standpoint, it’s not cost-effective to use the Powerwall in the above scenarios. But that’s not really the point. Much like he did with electric vehicles, Elon Musk is creating a product in order to advance the technology. He sees a future where renewable energy and storage work together to provide all of the world’s electrical needs, with or without the grid.

Hey … You, Get Off of the Grid!

Here’s where I see the Powerwall making its mark: off-grid applications. In developing nations and remote areas, it’s too expensive to bring grid power to homes. In those cases, a PV system with on-site storage is the best solution. (Some might argue that a gasoline, diesel, natural gas, or propane generator is more cost-effective, but it’s not really off-grid if a truck has to haul fossil fuel to the site every couple of months.)

Currently there are few storage options for off-grid users. Deep-cycle lead-acid batteries are the most common since they’ve been around for a long time. But lead-acid batteries require maintenance several times each year and degrade when exposed to extreme temperatures. They also have a lower energy density than Li-ion, so the same capacity will take up much more space and won’t hang on a wall easily. Finally, lead-acid batteries suffer greatly when the depth of discharge exceeds 50%, which means that a customer would have to purchase twice as much storage as he expects to use. Many off-grid users need a dedicated battery room. Tesla’s Powerwall is clean, scalable, and maintenance-free, and it hangs unobtrusively on a wall.

With all the investment in this technology, both for EVs and for home/commercial/utility storage, I can see the price of Li-ion batteries dropping significantly over the next five to ten years ... just in time for my wife and I to build our off-grid solar powered retirement cabin!

You can watch the announcement and read more about Tesla Energy by clicking this link.

Images courtesy of Tesla


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