How Tesla's Powerwall Stacks Up to Other Energy Sources, By the Numbers

By Gizmodo on at

By Dan Steingart

I think about big, cheap batteries for a living, so I stayed up late and listened to the Tesla announcement. My first thoughts: These are fantastic prices for a uninterruptible power supply—but still expensive as day to day electricity.

Editor's note: UK pricing structure has not been confirmed, so the prices in this article are US market prices directly converted into GBP.

In terms of what is available compared to current market prices, this is a good deal. £232/kWhr for a 10 year battery. Doesn’t include an inverter but it’s everything else required: cells, pack out, and power electronics. In 2015 this is a lot of battery for the money. Slam dunk as an uninterruptible power supply. All numbers below assume an electrician owes you a favour—and an inverter.

How Tesla's Powerwall Stacks Up to Other Energy Sources, By the Numbers

Specs from Tesla’s Powerwall product page. This is the battery designed for home use

Digging into the detail highlights the challenges that the system will face against fossil fuels. This isn’t Tesla doing anything wrong, this is the challenge of the current state-of-the-art technology. Weekly cycles at a spec’d discharge rate of a 5 hour basis (2kW for 5 hours). 10 years of weekly cycles is a real number, just over 500 cycles at an 80% DoD. The problem is the cost structure hurts here, if the battery is used to its spec’d amount it works to £0.43/kWhr-cycle, or over 5 times the market rate for electricity in the state of New Jersey, and this doesn’t account for the generation that has to go into the battery. Even with heavily subsidised solar that’s a combined £0.46/kWhr-cycle. Using the battery less makes it cost more based on its intended metrics: it’s just an unfortunate coupling of batteries.

So this is the best case scenario near maximum utilisation, if you use the battery less over 10 years you pay more per cycle (analogous to buying more land or insurance than you need). If you buy the battery that’s a sunk cost as well, so with the time value of money it’s more like (very roughly) £0.46 to £0.49/kwhr-cycle. There is an extended warranty with pricing details on that whicare unclear but my guess is that it’d be hard for Tesla to make any money if the number dropped to below £0.33/kwHr-cycle. I’m making things up now so I’ll stop beating this point.

On a per-kW basis installed it’s roughly 10x the cost of a standard generator system, not accounting for the price of fuel. Assuming fuel is £0.02 to £0.03/kWhr and the generator setup is 20% efficient, the cost of energy is 4x to 8x, depending on hours of use.

In rough numbers: at this cost you either need 10x the cycle life to compete with a generator setup at full utilisation. In order to compete with utility pricing of electricity you need 10x the cycle life at 1/3rd the cost.

Playing armchair investor: They probably did this to hedge against people not buying enough cars to saturate Gigafactory supply in the short turn. Despite my notes above about the challenges of the $3,500/£2,312 plus inverter, to be a part of the Tesla brand speaks to my id if not my ego.

Overall, if Tesla can deliver on what they claim here, it’s an important line in the sand for this market, and it can only force prices down. Until now Sony and Panasonic have been selling similar systems for 3x the price, with little market uptake.

Everything above is subject to revision. Time makes this stuff more clear.

Dan Steingart is an assistant professor in Mechanical and Aerospace Engineering and the Andlinger Center for Energy and the Environment at Princeton University. His team listens to what batteries want and then helps them cope with what the world wants.