[Update: Since I wrote this post (on the day the Powerwall was announced) Tesla have added some technical details that open up the possibility of installing the Powerwall for a much lower price than this blog post estimates. But – and it’s a big but – the cheaper installation will not allow you to go off grid. More details on the alternative install option here]
So Tesla has just announced a 10kWh home battery pack that costs US$3,500 (AUD$4,500) . The Tesla PowerWall will mount unobtrusively on the wall of your home and store your solar energy, so you can use it at night or when the grid goes down.
Lots of twitterers are proclaiming that Renewable Energy utopia has arrived. You’d be forgiven from thinking that, thanks to Tesla founder Elon Musk, all we have to do to divorce the grid is shell out three and a half grand.
Look – I don’t want to piss on anyone’s parade. This announcement is massive in lots of ways which I’ll get to soon. But you won’t be able to go off grid for that kind of money (yet).
Here’s what Aussie homeowners should know about the Telsa Powerwall
The really exciting stuff:
1) Battery Cost
The PowerWall was announced as a 10kWh Lithium Ion (Li-Ion) battery, packaged in a failsafe enclosure with a 10 year warranty. How does this compare with current battery costs? Let’s start talking Aussie dollars. At AUD$4,500 for 10kWh we are looking at $450 per kWh of storage. But… that’s for the “Backup Power” model which appears to be designed to only discharge the batteries on the rare occasion that the grid goes down.
What we are interested in is the US$3000 (AU$3800) ‘Daily Cycle’ model that claims 7kWh of storage which can be used every day. That works out at AU$550 per kWh of storage.
The best wholesale price of good quality batteries that I’ve seen in Australia is about $500 per kWh.
So why all the hoopla over what looks at face value like a 10% increase in cost?
Let’s go a bit deeper. Today, for $500 you get 1 kWh of storage with a Sealed Lead Acid Battery. This lead acid battery will last 1,200 cycles, or about 3 years, if it is used daily – according to its spec sheet. But to get 1,200 cycles out of it you can only discharge it by 60%. So the ‘useable kWh’ of the $500 lead acid battery is actually only 0.6 kWh.
The Tesla details are a bit sketchy, but if they are claiming 7kWh of storage with a daily discharge, then I’m assuming that is almost all usable (i.e. there is probably closer to 9kWh of batteries in the sexy white box and they never get discharged by more than 80% as per other Li-Ion batteries).
So to get 1 kWh of usable storage in a lead acid battery you are looking at spending closer to $800. This makes the Tesla more like 2/3 the price per ‘usable kWh’ compared to good quality sealed lead acid batteries. Not bad. But wait, there’s more…
2) Battery Life
The Tesla battery comes with a 10 year warranty and an optional 10 year extension. This is huge. Most lead acid batteries come with a 1 year warranty. Let’s assume the battery gods smile upon you and your lead-acid battery lasts as long as it’s specification (1,200 cycles). You have only got 3-4 years out of it until you need a new one.
If your Tesla battery is going to last 3 times longer, then its practical cost over 10 years is actually less than a quarter of a comparable lead acid battery. Now we’re talking!
If you buy individual lead acid batteries, you need to mount them in an enclosure. Then you need to wire all the terminals together. According to Australian Standards, this box should be outside. A compliant battery enclosure costs at least $650. Add the cost of putting the batteries in and wiring them up and you are looking at a total of $1,000 extra to house the batteries. With the Tesla PowerWall, the enclosure is included.
Also it is failsafe. Batteries sometimes explode. The Tesla batteries are surrounded by a chemical ‘gel’ that sucks the heat out of them if there is a fault and ‘thermal runaway’. This failsafe mechanism should allow you to put the PowerWall indoors without the worries you’d get with a conventional battery enclosure.
How does all this add up?
The Tesla PowerWall is offering Aussies 7kWh of usable, daily battery storage for $3,800.
Good quality sealed lead acid batteries in a proper enclosure would cost around $9,000 for the same amount of usable kWh. If they were discharged every night, they would need to be replaced at least once in a 10 year period, taking the total price closer to $17,000 (I’m assuming you reuse the cabinet).
There are other Li-Ion battery solutions out there for homeowners from the likes of Bosch and Sony, but last time I checked these were over $12,000 for 10kWh of usable storage in a safe enclosure.
So the Tesla announcement (if they can deliver on the promise) looks like it has reduced the cost of 10 years worth of quality batteries for your home by at least two-thirds.
That is awesome.
So can you now go off grid for AU$3,800 ?
Short answer – no.
While adding batteries to your home has just got a whole lot cheaper, it is not that cheap. Here’s why.
The PowerWall does not include a battery inverter.
The PowerWall contains batteries that use DC electricity. Your home uses AC electricity. You need an inverter to convert between the 2, just like you need an inverter for your solar panels. In fact the battery inverter needs to do a lot more than that, it also needs to integrate the batteries with your solar panels, your home circuits, and the grid. The sophistication of the control and regulation systems required to make this all work smoothly and safely cannot be underestimated; there can be a hell of a lot going at any point in time especially if you have multiple energy sources which can vary their output, and loads which obviously vary a lot too as we go about our daily life.
So you’ll need to add a Powerwall-compatible battery inverter that can do all this. The Tesla press pack says that they are working with a number of inverter manufacturers. I expect a compatible battery inverter to cost around AU$4,000 (disclaimer: that is a Wild Assed Guess).
Add in the cost of installation and GST, and you could be looking at around $10,000 total to buy and integrate the Tesla battery pack and battery inverter into your home solar system.
I fully expect Tesla to be working on their own inverter. In fact they’ll probably integrate it into the Powerwall for a fraction of the cost of a third party box.
But for now, I expect the inverter + installation + batteries to add up to around $10k in Australia.
But what about going off grid?
Notice what I just said: you should be able to add the batteries to your home for $10k. I did not say you could go off grid for $10K.
I think that staying connected to the grid (AKA Hybrid solar) is a much better solution – even with Tesla’s cheap batteries.
If you go off grid, you’ll need a lot more batteries, and you should also think about a source of backup power if you can’t top up from the grid. That starts to get expensive very quickly.
The disadvantage of keeping the grid connection is that you have to pay a daily grid connection fee. For most people that is about a dollar a day. A dollar a day that most people would rather not pay. Luckily there is a way you can stay connected to the grid and avoid these fees (AKA have your cake and eat it).
You see your connection to the grid can actually turn a profit for you – if your battery inverter is smart enough. What am I going on about? I’m talking about another announcement today that you might have missed.
There is a little Aussie company in Canberra called Reposit Power. They have developed software that can be uploaded to a battery inverter. This software talks to the National Electricity Market, and does deals with them. To cut a long story short – it lets you trade your solar + battery power on that market instead of getting a piddly 6-8c from your Feed In Tariff. Sometimes the cost on the wholesale market goes up to $13.50 per kWh (yes – you read that right!). If you can pump a few kW out in those peak times you are well on the way to offsetting your grid connection charges. This is not vaporware. I saw it up and running on a farm near Canberra a couple of weeks ago.
Reposit power announced today that the Tesla PowerWall will come with their software pre-installed on some compatible battery inverters. This may well mean that you can keep connected to the grid, with the benefits that brings of backup power and sharing of excess solar, while the software on your battery inverter turns a profit which will offset some – if not all – of your grid connection fees.
That’s big news indeed. Many people think the energy utopia is grid disconnection. It’s not. You wouldn’t disconnect your computer from the internet, and you shouldn’t disconnect your home from the grid.
The benefits of lots of solar+battery systems all connected together – sharing power and flattening power spikes – are much greater than lots of off grid solar systems working in isolation. Now, with the smarts being developed by the likes of Reposit Power – coupled with the affordable battery systems that Tesla have announced – solar owners will be able to profit from staying on the grid. And that’s much better for the soul than railing against the injustice of 6c Feed In Tariffs and cutting the connection in a fit of anger. Grid connected solar with batteries has just become unstoppable. Bring it on.