Tesla Motors, Inc. is venturing beyond the realm of eclectic cars. On April 30, the Palo Alto, Calif.-based electric automaker announced that it would soon be selling huge batteries that will allow consumers to stock up on electricity. The company’s Powerwall battery will light up the market at the suggested retail price of $3,000 for 7 kWh models. At 4 ft. high, 3 ft. wide, and 7 inches deep, the battery can be mounted onto walls inside garages, work areas, or wherever else might be convenient in a given household; it can even be stored outdoors as this sample essay will discuss.
Speaking on behalf of the Powerwall, Tesla CEO Elon Musk explained the battery’s potential with the following analogy:
“We have this handy fusion reactor in the sky, called the sun. You don’t have to do anything; it just works,” (Chappell).
The company is currently accepting orders for the batteries, which are expected to start shipping in late summer.
The product will be marketed to three types of consumers: those looking to store power for use in times of outages; those hoping to conserve energy consumption during peak-usage hours; and those who seek to free themselves from the commercial power companies altogether. The Powerwall is also believed to be a perfect power-supply option for homeowners who use solar panels, particularly during hours when the sun is down.
A home battery for the environment
At the official website for its Powerwall battery, Tesla explains that households generally consume less electricity during peak daytime hours, when solar energy production is at its height; whereas in the evening, homes without batteries are being resold excess solar energy from the power companies. The automaker calls this a
“mismatch [that] adds demand on power plants and increases carbon emissions,” (“Solar Powered Day and Night”).
The Powerwall is also being made in a larger, 10 kWh model that will sell for $3,500. However, these prices won’t cover installation or DC-to-AC power inversion. Nonetheless, Tesla’s price range for its giant batteries is much lower than the amounts that analysts had predicted; most notably NPR tech correspondent Steve Henn, who figured the product will sell for at least $20,000.
On a May 1 broadcast of the network’s Morning Edition program, Henn spoke with Tesla co-founder and CTO JB Straubel about the automaker’s vision for the storage of tomorrow’s electricity. Straubel observed that because electrical grids work without storage, power companies are forced to utilize backup plants whenever a surge in usage occurs. He referred to this as
“an entire market for energy transaction that has no inventory and no buffer,” all of which requires things to be delivered in the moment (Chappell).
Given all of the waste that this creates, his company hopes to make the Powerwall into an alternative for owners of homes, buildings, and factories.
Is the investment worth it?
The viability of Tesla’s Powerwall as a long-term money-saver has been called into question by certain analysts, including Forbes columnist Christopher Helman, who did a little math to break down the electrical mileage of the 10 kWh model:
“1,000 watts of current to your home for 10 hours,” (Helman).
Given the battery’s current asking price, Helman figured it would cost 30 cents per kWh for homeowners to free themselves from the grid by using the Powerwall, which he concludes wouldn’t be a sensible investment for anyone lacking a large enough solar system. Truth be told, it’s unknown at present whether consumers will see the battery, selling for four figures, as an investment that would pay itself back over the long run.
Taking a more optimistic, if guarded, approach is BBC American correspondent Richard Taylor, who said that he understands Tesla’s wish to place itself at the forefront of new battery technology, but stressed that the
“business strategy is a bit like the battery itself: high impact, but a slow release which will really only reap significant benefits over time,” (Taylor).
In any case, Musk’s announcement was greeted with enthusiasm by the stock market and fans of Tesla’s electric cars. Within a week of its unveiling, reservations for Powerwall had hit 38,000 in California alone, leaving the battery sold out into 2016.
Still, the product is drawing skeptics, including Lux Research analyst Dean Frankel, who said that the big battery could end up costing three-times its $3,000-$3,500 asking price once installation and ancillaries are added into the equation. He reckoned that with Powerwall there will
“likely [be] a price to the consumer of $7,000 to $9,000,” depending on the electronics deals that Tesla cuts with its installation partners (Mullaney).
The Electric Power Research Institute’s Mark Duvall sees things much differently, particularly in regards to Powerwall’s long-term savings potential for consumers in California: a state renowned for its renewable energy incentives. A resident himself of Half Moon Bay, Calif., he reckons that homeowners in the state could save an average of $2 per day on energy with the battery in place. For now, however, he doubts there’s as much savings potential in other parts of the country where state governments have failed to implement incentives on renewable energy (Mullaney).
Nonetheless, the Powerwall is being sold at only half the price of most power-storage systems, which have long been on the market. Tesla’s product is also reasonably priced in comparison to gas-run backup generators, which therefore makes it a cost-efficient alternative for the small yet significant number of homeowners who wish to use the battery as an emergency power system.
A power storage option
While it might take awhile before the Powerwall becomes economically practical for the average American consumer, the pendulum could shift in tandem with changes in utility rates. As energy companies start raising their rates on customers during peak hours of usage, a power-storage unit could seem like a better option for homeowners who live in areas that implement these rate hikes.
According to energy consultant Karl Rábago, utility corporations are now willing to buy energy from private users, and the big battery could be another means for generating this asset. The concept works as follows: a homeowner users his or her solar panel to create power, then stores that power when demand is low, but then sells it to a local utility when demands are at their peak.
As Duvall has pointed out, some utilities are allowing users to choose rates that fluctuate between peak hours and off hours, thereby allowing a homeowner to pay less for electricity on weekends in exchange for paying more during the busiest hours of the week. Under this types of plan, a user might avoid energy use during times of peak consumption in order to save money. Duvall figures that a plan like this could save a couple bucks daily for someone who shifts
“7 kWh of electricity use from peak to nonpeak,” (Mullaney).
Whatever the skeptics say, Tesla is far from the only company with an eye on the nascent power-storage battery market. A recent study conducted between GTM Research and the Energy Storage Association found that in 2014, the $128 million storage market had grown 40 percent over the prior year. GTM expects installations to triple during 2015 as part of a growth trend that could hit the $1.5 billion mark by decade’s end. According to the research firm’s SVP Shayle Kann, the logistics are ripe for the storage market because suitable
“economics already exist across a broad array of applications, and system costs are in rapid decline,” (Munsell).
It’s a trend that bodes well for Tesla, one of the chief entrants into the storage sector. Two other recent developments have the Powerwall maker well-positioned to ride the wave in this market; for one, the company has built an enormous gigafactory for battery making, which should help Tesla lower its prices more steadily as new products are unleashed. Secondly, the automaker has teamed with Solar City, an installer company that, according to GTM Senior Analyst Ravi Manghani,
“gives Tesla access to a bigger pool of customers, both residential and commercial, who are looking to deploy storage with or without solar,” (Mooney).
For the average consumer, however, prices on energy storage will need to see a significant decrease, and the market for products like Powerwall will need to expand before the technology becomes cost efficient and accessible for mass adoption.
Chappell, Bill. “Tesla CEO Elon Musk Unveils Home Battery; Is $3,000 Cheap Enough?” NPR. National Public Radio, Inc. 1 May 2015. Web. 20 May 2015.
“Solar Powered Day and Night.” POWERWALL | Tesla Home Battery. Tesla Motors. n.d. Web. 20 May 2015.
Helman, Christopher. “Why Tesla’s Powerwall Is Just Another Toy For Rich Green People.” Forbes. Forbes, Inc. 1 May 2015. Web. 20 May 2015.
Taylor, Richard. “Tesla unveils batteries to power homes.” BBC. n.p. 1 May 2015. Web. 20 May 2015.
Mullaney, Tim. “Tesla’s new bet: A home battery to slash energy costs.” CNBC.com. CNBC LLC. 7 May 2015. Web. 20 May 2015.
Munsell, Mike. “US Energy Storage Market to Grow 250% in 2015.” Greentech Media. Greentech Media, Inc. 5 March 2015. Web. 20 May 2015.
Mooney, Chris. “Why Tesla’s announcement is such a big deal: The coming revolution in energy storage.” The Washington Post. Nash Holdings LLC. 1 May 2015. Web. 20 May 2015.