Powerwall 10kWh - source telsamotors.com

Telsa 10 kWh Powerpack is a Gimmicky Niche, That I Still Applaud

Telsa recently announced their 10 kWh Powerpack at the cost of $3,500 per unit, a price that blew the minds of some initial critics saying the price would likely be nearly four times as high. But what it did more so, was force many Americans who watched the release to really reflect on how much energy they consume. You want to know how much most Americans consume? The answer is a sh**-ton.

The bottom-line is that we consume far too much (not news to most). But these batteries allowed us too add perspective to this consumption using these 10 kWh batteries as a “physical-ish” gauge. The average US home uses 940 kWh a month, or roughly 31 kWh a day. That’s slightly over three full capacity, fully charge Telsa Powerpacks per day. So let’s imagine you pony up for four Telsa powerpacks at the cost of $14k + tax + installation + inverter. Let’s call it an optimistic $20,000 for the battery setup. Well you also will need some way of charging this with alternative energy or whats really the point other than a glorified battery backup?

So maybe you drop another $30k (after credits) on a 10kW solar installation (which is sadly below the median installation cost in the US, which is $4.50/watt). So now you have $50,000 in your 10kW solar, 40kWh battery alternative energy system. That 10kW solar component should produce about 40 kWh a day, which just happens to be your theoretical battery capacity. But how much is this system actually going return financially?

If you used 40 kWh everyday and refilled it every single day (or sold the excess to the grid) you would roughly net $4.40 of energy per day. Making the rough break-even 11,363 days (31.13 years). This amount would be reduced by increasing energy costs (which are unknown), but it’s like it’s in the 25+ year range. Again, assuming you are generating 40 kWh every single day.

Let’s consider this inflation of energy costs a little more, since it is so heavily used in the solar industry to convince people to buy systems. Assume that the $4.40 a day in energy will go up with 3% yearly inflation and that all the of the systems will last 25 years with complete capacity and efficiency (which is virtually impossible since the batteries are rated 20 years and panels always lose efficiency). You would generate approximately $58,553 (including inflation) of energy production over those 25 years. That’s an optimistic non-inflation adjusted $8,553 over 25 years. A return of roughly only .6%. In reality, you are likely to have a loss given these facts. In other words, we’re still not there. These batteries if anything, confirm yet again, that with all of our innovation we lack the ability to “get it done” when it comes to solar.

Elon Musk is right when he talks about existing battery systems being too complex. Frankly all of it is too complex. Let’s talk about the factors in this example that are critical.

  • Solar panels efficiency loss over their lifetime
  • Solar panels lifetime (largely unproven and varies brand to brand)
  • Actual production of Solar Panels (the difference between 4kWh per day and 3.6 kWH is critical)
  • Inverter Lifetime
  • Battery Lifetime
  • Battery Efficiency Loss
  • Cleaning of Solar Panels
  • Lots of “co-mingling” between components that could cause issues.
  • Lots of industry is largely unproven over long period of time
  • Learning curve for users to understand how the system works

All of this for what? A realistic return of about 0% or maybe even a loss?

Let’s be honest, this is a niche. It’s for the nerdy person who wants their house to be energy sleek. “Oh your house isn’t powered by the largest fusion reactor in our solar system?”

Solar will never really take off until it becomes financially viable. The minute solar panels offer a real return, there will be hardware shortages because the demand will go off the charts.

Many solar companies have a target of $1 per watt installed by 2020. I find this goal, a pile of unrealistic bull. There of course is a reason why $1.00/watt is so vital. It makes solar financially viable.

What if the installed cost was $1.00 a watt? Well let’s frame it this way, how much does a watt of capacity generate per year in value? The answer is roughly .004 kWH a day or 1.46 kWh per year (this varies tremendously based on countless factors). That 1.46 kWh’s value is roughly $.16 (16% of the $1.00 a watt).  Meaning over 25 years, the panel could in theory $4 of energy before factoring in efficiency losses. Let’s be a little more conservative and say it’s more like $3 over the same 25 years (when factoring in losses, inverter costs, system costs, cleaning, etc.).

Suddenly the return is 4.5% a year (not factoring in inflation for energy either). Now all of the sudden, solar is a real contender. It’s viable. But let’s step back for a minute and think about this though. That goal of $1.00/watt is great, but we’re currently at 4.5x that. How is solar going to drop that substantially in just 5 years? Also, can we talk about the factor that the solar industry always has lofty goals that are always “5 years away?”

So why do I “applaud” Telsa for this battery pack that supports systems that aren’t financially viable? Because this is a key component in starting real progress to become financially viable. It adds discussion and progress in a field that desperately needs it. One small criticism of the battery packs though is their operating temperature range of -4F to 110F. That range doesn’t seem wide enough for places like Ohio (arguably on both ends of the range).

 

 

 

 

 

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