Tesla Announces Powerwall

Tech today with Ken May

On March 31st, 2015, Southern California based electric automobile maker Tesla announced an interesting new product, named “Powerwall.” This is, essentially, a lithium-ion battery that goes on either the inside or outside of your wall. Up to 9 can be connected, and they cost $3,000 for a 7kWh model, or $3,500 for a 10kWh model. The idea is that one would use these along with solar panels to either supplement energy during peak times, or replace dependence on the grid altogether. Now, simply in terms of battery costs, these things are a steal for the specs they provide. However, that may not be enough to make the costs worth it. Let’s do a little math to find out.

The Powerwall comes with a 10 year warranty, which is extremely good for a battery unit like this. You don’t get half that in the computer industry typically, but they have a good track record here. If we assume 10 years use with the 7kWh battery, and only using 50% of the battery’s capacity each day, you get about 23-24 cents/kWh. This seems pretty reasonable compared to current energy prices, which average 13-21 cents /kWh, considering you also have a battery backup for your whole home. Of course, you’d need a solar panel solution to go completely off the grid, with SoCal Edison just as a backup, and that really adds to the overall cost.

Should you get on? It depends on your goals. This is a new, disruptive concept, and with time, the costs will go down, just like solar has. They are hoping for a 2x price reduction in 3-5 years, if not sooner. If you live in an area with regular outages, have expensive peak rates, or want to get off the grid, this is a good idea. People recently affected by hurricanes had problems getting gas for their generators, and the power was out for weeks. This would have been a very, very good alternative to that. California leads the nation in terms of low energy usage (must be the weather, huh?), and we are not prone to blizzards or hurricanes, so for us SoCal residents, we should probably wait a bit. One really cool thing about the presentation was that the entire press conference was being run off of these units.

I can easily see this as becoming standard on new homes. Apparently, the larger industrial models, called the Powerpack, already has an order from a utility wanting a 250mW installation. Non-utility customers include Wal-Mart, Amazon, and Target. Part of Tesla’s overall strategy here is that they are building a hug “gigafactory” to build batteries for their cars. This is a great way to make sure all those batteries get sold. Ultimately, I think many units will be sold to early adopters and the elite fans of Tesla that are out there. Whether this product succeeds or not, it is difficult to say, but it’s a strong step in the right direction.