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Tesla Powerwall
The new Tesla Energy Powerwall home battery on display at an event at Tesla Motors in Hawthorne, California, US. Photograph: Patrick T Fallon/Reuters
The new Tesla Energy Powerwall home battery on display at an event at Tesla Motors in Hawthorne, California, US. Photograph: Patrick T Fallon/Reuters

Will Tesla's home battery really transform our energy infrastructure?

This article is more than 8 years old

Powerwall leads the way in solving the problem of energy storage, but the $3,000-plus price raises questions about its economic viability

“The goal is complete transformation of the entire energy infrastructure of the world,” Tesla founder Elon Musk told reporters as he launched the electric car company’s new home power storage battery on Thursday.

“This is actually within the power of humanity to do. It is not impossible.” Electricity storage is the “missing link” in weaning the economy off fossil fuels, said the entrepreneur with characteristic understatement.

But the ticket price for Musk’s energy revolution is $3,000 (£1,981). So even if homeowners want to sign on and save the world, can they afford it?

Energy storage is seen as a vital piece of the decarbonisation puzzle, and this is perhaps why the Tesla announcement has been greeted with wide media coverage and excitement from the tech sector.

The past few years have seen incredible upheavals in energy markets driven by the rise and rise (or more appropriately fall and fall) of solar power.

The costs of photovoltaic panels has dropped so much in recent years that in 2016 solar power will reach grid parity in 36 US states in 2016. In the Australian state of Queensland rooftop solar has become such a force that fossil fuel burners have had to pay others to pick up their extra generation during times of traditionally high demand.

These incredible steps forward have been tempered by solar’s major limitation - it doesn’t work when the sun isn’t shining. Hence the need for an affordable way to store the power until the night-time demand spike. The world’s largest private bank UBS told its investors last year that storage was the key to a future in which large carbon-spewing power stations were redundant.

To meet this demand, battery prices have been steadily dropping. Tesla’s Powerwall represents a further improvement, said Dr Jonathan Radcliffe an energy storage expert at Birmingham University, but for anyone watching their bills, the technology remains economically unsupportable.

“It’s a good development to see the costs coming down for this sort of battery and I think the idea of having distributed energy storage could be quite important in some markets and really contribute to deploying small-scale renewables,” said Radcliffe.

But he said the reality for consumers trying to balance bills was that the Tesla battery was still not worth the up front cost. “The battery they promote for daily cycling is 7kWh. Electricity costs in the UK are about 15p per kWh, so you’re holding about £1 of value in this £2,000 wallet.”

Radcliffe said the cost to charge the battery would be around around 8p per kWh. This is the cost of off-peak grid power or solar power (once you count the original costs of solar panels). This reduced the value of the energy held in the unit to 49p, meaning the owner would need to fully drain the battery 4,000 times to recoup their outlay. Even with this unlikely energy use scenario the Powerwall would take 11 years to pay for itself, he thinks.

“I think the costs are probably still too high to make it a realistic investment, a financially viable investment. I guess the first people they are looking at to buy it are the early adopters who aren’t too worried about the actual costs but want to have this latest bit of technology,” said Radcliffe.

The dropping price of batteries
The dropping price of batteries. The Tesla Powerwall costs $300/kWh – before installation costs. Photograph: Bloomberg

Radcliffe’s rough calculation gives a sense of the cost reduction Tesla will need before consumers will consider buying the product. But it does not account for the under-advertised upfront costs of the Powerwall.

“Price excludes inverter and installation,” reads the Tesla press kit. According to Roger Kemp, a professorial fellow in engineering from Lancaster University, the battery will also need a switch to be installed in a home’s fuse box to stop power feeding into the grid during a blackout – which can harm electricity company workers and cause imbalances in the grid.

“This would take an awful lot of rewiring and a few days of an electrician’s time,” he said. “The total add-ons probably come to much the same price as the battery itself.”

Kemp said the UK’s regulatory situation was particularly unfriendly to the technology as it does not include a variable tariff that favours those that can shift their electricity demand to off-peak times. Consumers would be unwise to invest in the technology before the UK’s rollout of smart meters is underway.

“If we don’t know what’s going to happen in terms of future tariffs then I certainly wouldn’t be investing in it, because it’s not at all obvious whether its going to be financially beneficial,” said Kemp.

Tesla’s other big sell is energy security. The batteries will “bring peace of mind to those who live in areas prone to storms or unreliable utility grids” by supplying a few hours of back-up power during power outages. But $3,000 is a lot of candles.

“In most markets, that doesn’t really happen enough to justify spending quite a few thousand pounds to put in that sort of battery. If you’re that worried you could much more cheaply put in a small diesel generator,” said Radcliffe.

The energy storage revolution is coming and Musk and Teslaare in the vanguard. But consumers will only make this switch if Tesla (or someone else) makes it an economic no-brainer.

More on this story

More on this story

  • UK electricity grid holds back renewable energy, solar trade body warns

  • Renewables revolution is unstoppable – except in the UK

  • Tesla's batteries could be bigger business than electric cars – Elon Musk

  • Ecotricity boss writes plan to make four fifths of UK power renewable by 2030

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