Will Tesla Revolutionize Your Electricity?

When Tesla announced the launching of the Powerwall in May 2015, it attracted a lot of attention and quickly sold out. With some proclaiming it as a disrupting innovation, we take a closer look.

What is the Tesla Powerwall?

The Powerall by Tesla is a lithium-ion home battery that can store up to 10 kWh and can be charged from the grid or from solar panels. While the idea of a home battery system isn’t exactly new, the Powerwall promises home energy storage at a never-seen-before low price and in a sleek, compact package. Achieving home energy storage that is both a practical size and affordable price has been a major obstacle for greater use of renewables such as solar, and has been elusive up until now. 

Will the Powerwall deliver on expectations?

With stocks already sold out until mid-2016, interested customers have plenty of time to think about purchasing the Powerwall before it becomes more accessible. In the meantime, here are a few things to take into consideration.

The Powerwall costs a bit more than $3,500

The $3,500 price tag for a 10 kWh Powerwall battery is relatively low, but this only one part of the total costs required to get it functional. The Powerwall, like all batteries, is direct current and requires a DC-AC inverter in order to be functional. Installation is also not included. SolarCity, a sister company to Tesla that installs rooftop solar panels, estimates the total cost to be around $7000.

You’ll be more self-sufficient, but not completely

At 10 kWh capacity, the Powerwall provides enough energy to last the average home about eight hours. Another complication: it can only deliver 2 kW power continuously, making it difficult to use multiple electrical appliances simultaneously. To leave the grid completely, some suggest that the average US home would need up to nine Powerwalls (for three days’ worth backup power, in case it’s cloudy).

The Powerwall could also work as an emergency backup power source in the event of a natural disaster. But this would require that it was fully charged before the natural disaster hit (the larger, 10 kWh is recharged once a week), and at the end of the day would make it a more expensive version of an emergency generator.

Word is still out on whether it will save you money

Some estimate the process of storing and using electricity from an installed Powerwall at about 15 cents per kWh. At this price, it probably doesn’t make financial sense for the Powerwall to be used by customers on Time of Use pricing (who could store electricity during cheaper hours and use the Powerwall during peak pricing periods). That being said, the Powerwall could be worthwhile for residential customers who already own their own solar panel system, or for those who live in areas with high rates and a lot of sun (think Hawaii).

Could it revolutionize the way electricity is distributed?

When Tesla founder Elon Musk announced the Powerwall in May 2015, he proposed batteries as a means of transitioning all transport, heating, and electricity generation to renewable sources. What does this mean for utilities? We see a few ways in which Tesla Powerwall could revolutionize the electric utility system as we know it:

A decentralized grid

Homeowners with their own home energy storage systems and generating capacity (in most cases, solar panels) would be less reliant on the current centralized grid system. Depending on how much electricity they produce and how much they can store, homeowners could leave the grid altogether. While it’s unlikely that the Tesla Powerwall spells the end of the centralized utility system as we know it (as we’ve outlined above, it’s still too expensive to be accessible for a large proportion of the population), greater customer uptake will certainly change how utilities operate.

This is also where the Tesla Powerpack comes in, a larger version of the Powerwall that could be used by businesses. If more businesses reduce their reliance on the centralized electricity grid, they could have a more considerable impact on how utilities operate.

Could batteries revolutionize how utilities operate?

What’s interesting In fact, utilities such as Oncor in Texas have already examined the possibility of installing batteries on to their grids. Utilities are interested in energy storage for several reasons:

• Reduced investments: In order to avoid blackouts, utilities need to have enough generating capacity to meet peak, not average, demand. This means that they need to invest in extra generating facilities/generation capacity that they don’t need all the time. In addition to this being an additional investment expense, firing up these facilities to meet temporary demand can also be costly.
• Grid reliability: Being able to store energy would allow utilities some reserve energy for moments when they have unusually high demand and/or unanticipated shortages. Some estimate that batteries’ ability to prevent blackouts could save residential consumers about $10 a year ($700 for businesses)
• Savings on power procurement: most electricity is currently bought and dispatched in real time, meaning that utilities buy electricity when they need it. This means that when there’s high demand for electricity, utilities often have to purchase power at higher prices. Being able to store power would allow them to purchase and store power at cheaper prices.

So how does the Tesla home battery deliver? With demand overwhelming Tesla’s supply and production capacity, at this point it’s still too early to tell how great of an impact this will have on your electricity system. However, Tesla’s competitors aren’t far behind; at the end of May 2015, Daimler and Mercedes Benz announced that they will launch their own line of home batteries before the end of the year. Watch this space.