Making Cents of Tesla’s Powerwall

Jessica by Jessica Steely

Imagine a power outage in your neighborhood, but your lights are on and your refrigerator’s running. Or perhaps you don’t have to buy expensive peak-day electricity? Elon Musk’s new Tesla Powerwall, released in April, promised these luxuries. The sleek and futuristic look of the wall-mounted batteries was designed to be affordable for the average homeowner. It’s available if you have a solar array or not, whether you want to use the battery on a daily basis, or have it available for a backup situation.

So, is the Tesla Powerwall a fiscally responsible choice or an expensive novelty?

Let’s take the case of the daily use model. Say, you’re on a net-metering program with your local electric tesla-powerall - tah-dahutility company. This summer’s peak rate is .32 cents per kWh (May 1 through October 31: Weekdays, 1-7 PM) and the off-peak rate is .13 cents per kWh. The winter partial-peak rate is .15 cents per kWh (November 1- April 30; Weekdays, 5-8 PM.) There’s no peak rate in winter, and the off partial-peak rate is .14 cents per kWh. The Powerwall designed for daily use, holds 7 kWh and costs $3,000. If you use the Powerwall battery during peak-times when electric costs are higher, you will save $1.33 per day during the summer and .07 cents per day through the winter. At this rate, it could take you over 16 years to break even. The unit has a 10-year warranty, so even within the projected product lifespan you can’t expect to break even.[1] But with upcoming new regulations on power production, energy costs are likely to increase and the price recovery period could change significantly.

Now, let’s look at the units designed specifically for backup usage. These models carry 10 kWh of backup Tesla Powerwall -Housepower with an available average draw of 2 kW. Their cost: $3,500. These batteries are compared to a small generator that runs on gas or propane. A generator that produces equivalent output can be bought from your hardware store for $500 to $1,500. With propane at roughly $2.24 per gallon and gas at $4.25 per gallon, the cost to run these backup generators is variable. Again, it is likely to take longer than the 10-year warranty period to break even on the unit.

A couple of additional caveats to consider: If your demand surpasses the needs of a single battery, each of the models of the Powerwall can be installed in a bank of up to nine batteries. They can also be installed in conjunction with a solar electric array. But if the unit is installed outside of a solar electric system, you will have the additional cost of purchasing an inverter to convert the electricity from AC to DC for usage and storage. It is worth acknowledging that the battery, designed to cycle on a daily basis, could provide the added utility of serving as an emergency backup.

From a financial perspective when compared to the alternatives, the Tesla PoTesla Powerwallwerwall is not the most economical response…yet. However, the sense of being part of a progressive movement, having a renewable energy backup and helping to reduce the strain on our utility grid, has attracted more than 38,000[2] reservations for the Tesla Powerwall in the first week of its announced release. It’s projected to be sold-out by mid-2016. I doubt we have seen the last from Tesla’s technology center, but I do look forward to what’s next.

 

[1] Rates are based on PG&E Tier 1 Residential Time-Of-Use Service Electric Schedule E-6 effective March 1 2015  http://www.pge.com/tariffs/tm2/pdf/ELEC_SCHEDS_E-6.pdf

[2] Bloomberg Business Tesla’s Battery Grabbed $800 Million in Its First Week, 5-8-2015 http://www.bloomberg.com/news/articles/2015-05-08/tesla-s-battery-grabbed-800-million-in-its-first-week