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How close does Tesla’s Powerwall 2 come to ending the grid?


November 1st, 2016

This past weekend, Tesla’s Elon Musk unveiled a couple of new products he’s been teasing for a while: A new kind of roof that also functions as a photovoltaic solar system, and the Powerwall 2 home battery. While Mr. Musk didn’t give too many details about the solar roof tiles (except that they look real purdy and are nearly as efficient as current panels), we have a very good idea of what the Powerwall can do, so let’s break it down and see what we’ve got…

Why the Powerwall 2 is revolutionary

The original Powerwall battery was a great idea that needed work. The 7-kWh battery sold for $3,500 and required a separate power inverter to accept the DC input of solar panels. Our evaluation of the original Powerwall showed it had a lot of trouble paying its cost back, too. In short, it was expensive, under-powered and missing some pretty important features.

The Powerwall 2, on the other hand, can store 2 times the electricity for 1.6 times the cost—just $5,500. It also comes with its own inverter, which is an essential part of a home solar installation that itself makes up over $1,000 of the installed cost of a typical system.

So, is the Powerwall 2 finally the answer to all our solar prayers?

Yes and No. The Powerwall 2 makes it much easier to go off-grid, because it can hold so much power. You can keep your whole home powered for a day with a couple of fully-charged Powerwalls. So if you live with frequent blackouts or somewhere remote enough that you can’t get traditional electricity service, Tesla just made it dead simple to bring a powered-on style of civilization to you.

…and they’ll sell it to you for affordable monthly payments.

Of course, filling them up with solar power is the obvious way to go here, but with net metering in so many states, solar panels save you money whether you use the energy they produce or not, and your Powerwall batteries would just sit there, cost money and look pretty.

But what about states without net metering? There’s a big one in the sunniest place in the country, which also happens to be the home of Tesla’s new battery “Gigafactory”: Nevada. Folks there are not only without net metering, but they’re also subject to increasing monthly fees just for having panels on the roof. Can they save big money by installing Elon’s batteries and skipping the grid altogether?

We like to think we’re pretty good at financial analysis here, so we ran some numbers. First, we had to work with some assumptions based on the current state of solar in Nevada:

  • Energy needed for home: 28 kWh/day
  • Current Energy rate: $.12/kWh
  • Annual increase in electricity cost: 3.5%
  • NV solar fees: Per NV Energy net metering policy
  • Cost of installing solar: $3.50/watt
  • Added cost of 2 Powerwalls: $11,000
  • How the system is paid for: Solar loan, 15 years @4% interest
  • Solar tax credit: 30% of costs in year 1 ($7,875)
  • Years until Powerwall/Inverter replacement: 12 (warrantied for 10)
  • Solar system lifetime: 25 years
  • Annual panel degradation: 0.5%

With those numbers, here’s what we came up with:

Basically what you’re seeing above is the benefit of taking a loan for solar: a big windfall (tax credit) in year 1, then ongoing loan payments that exceed energy savings, until they end after 2031. Then, big savings until the system is no longer useful (25 years, maybe longer if it all works out right).

Looking at the side-by-side comparison, it seems the like Powerwall set-up is a great improvement over what you might pay to NV Energy over 25 years, but the difference in NPV (Net Present Value) is negligible. And you have to decide whether that ~$650 NPV is worth the things you might trade away, like say, the ability to use more than 28 kWh in a day, if you host a big party or need the A/C on stronger than usual.

You think smartphone battery anxiety is bad? Wait’ll you get a load (no pun intended) of this. And forget about having an electric car plugged in, because you’ll need a lot more solar to charge the ~55 kWh battery in Tesla’s Model 3, for example.

The grid still wins… for now

Put simply, the electric grid works better than anything else to give us what has become a basic need of modern life: nearly 100% surety that we’ll have electricity when we need it, no matter how much, for as long as we’re around. With the solar+battery set up we described above, you’re just giving up too much of that security.

But the Powerwall is a volley in the war over rooftop solar (and the companies that sell it), fired in the direction of utility companies like NV Energy. These batteries will only get cheaper, and even without exponential decreases, they’ll be down to about $150 per kWh by the time Tesla’s Nevada Gigafactory is at full strength in 2020.

A “Tesla Town” powered by solar and Powerwalls (credit One Step Off the Grid)

With pressure like this (and maybe a few regulatory victories along the way), we’ll be seeing increasing pressure put on utility companies to compensate solar owners fairly, or at least to compete in the marketplace. The future of battery storage like this is probably going to be neighborhood-sized microgrids with solar panels (or solar roof tiles) and battery storage on all the houses, which is set up to share power with whomever needs it.

It’s going to work like Tesla has always worked: at first, expensive toys for wealthy people, which make the company enough money to make cheaper versions, and so on. If Tesla can pull this off, they might someday end up as your electric company.

Last modified: November 2, 2016

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Ron

Also, thought i had read that the 30% tax credit only applies if you buy a system, not if you lease it. Is this not correct?

Ron

Hi Ben, I also would like to see an analysis breakdown over time if you just buy rather than leasing. I don’t care if the net present value becomes negative temporarily- I’m just interested in the long-run results of savings. Any chance you could show a comparative analysis based on outright purchase?

Bill Dondlinger

The Powerball two seems great but I can’t seem to buy one what’s going on I’ve put in my $500 and her nothing supposed to be January I even put in for the older style one and never heard a thing about it either

Syed Rafay Zahoori

Great & Wonderful……………………………….

Brian Dodd

If the basic economic problem is “ongoing loan payments that exceed energy savings”, does it make any better economical sense if you pay cash i.e. no loan?

Bbq

Most houses can easily withstand 100 KG on the wall.

Anonymous

A bigger risk to the planet by a long shot is if Trump gets near the whitehouse.

ian

Show me a battery which delivers electricity any where near as cheap.

Mark

The powerwall is an abject failure. It is too expensive, dangerous, not fit for purpose, to heavy to put on a wall, and too noisy in operation. Start using the Aquionh battery. Help save our planet from the disaster that is Lithium batteries.

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