Tesla Stationary Storage Investors Thread

[erha]

I'm trying to look at the numbers for energy storage, and so far I'm only getting confused. Elon and JB (and a lot of people on this forum) seem really, really excited for energy storage. However, I can't really make the numbers add up.

I took a screenshot of my spreadsheet where I end up with 22 cents per stored kWh. (I assume a linear decrease in capacity of the battery and that the battery is worth 0 USD after 10 years. Putting in a couple of hundred dollars here, og assuming zero decrease in capacity doesn't make a huge change.)

The average electricity price in the US is about 12.5 cents. A combination of solar cells and battery is, as far as I can see, not financial viable at all. I tried to find rates for peak and off-peak, but couldn't find any good numbers. Can the difference be more than 22 cents?

UPDATE: I did this really fast, so there might be some errors in the calculations. The efficiencies are quite confusing for example. They are part of the total energy number. If you set all efficiencies to 100 % you end up with 18.4 cents/kWh, so it really doesn't matter that much.

 

[Robert.Boston]

Moderator's Note

There's is an excellent thread on this very subject (financial viability of PowerWall) over in the Energy, Environment & Policy section. I considered moving it over here, but it got started there by @wk057, who has installed a 191 kWh home storage system using Tesla Model S cell blocks, who is not a regular over here in the Investors forum. Rather than duplicate that discussion here, let's keep the financial analysis from a BUYER'S perspective in that other thread. Let's use this thread to discuss implications for Tesla and TSLA.

 

[Newb]

@erha: Thanks for the spreadsheet. I've got a comment on the underlying assumptions of your calculation: The battery will have a lifetime of 15-20 years, i.e. 5-10 years more than in your assumption, depending on the cycles, of course. Tesla's conservative estimate is that it will make "more than 3,000 cycles". So 3,000 is somewhat the guaranteed bottom line while 4,000 or even 5,000 cycles are likely, I'd reckon.

With your average cycle of 5,95 kwh and 4,000 cycles you end up with 23.800 kwh which is 16,8 ct/kwh. With 5,000 cycles you're at 29,750 kwh at 13,4 ct.

Your average US residential price per kwh is also underestimating the differences within the U.S.. Here's an interesting chart which shows that retail prices for electricity in Hawaii, New England states, Middle Atlantic and California are higher than the 13,4 ct and 16,8 ct respectively: EIA - Electricity Data

Current retail prices for electricity in Germany amount to $0.28-0.35/kwh.

@Robert: I think it's also important for investors to understand if Powerwall and Powerpack are viable businesses or not. And if so, where the potential customer bases are. Obviously, there are stark differences in retail prices for electricity from utilities across the U.S..

 

[bonaire]

What is the capacity after 3000 cycles and is the full state of charge to be used or is there a buffer on both ends (kinda like how they did the Volt)?

Many US states do not have a delta between day and night rates and the daily peaks are not every-day but a few days per year thus relying on regional "peaker plants" which are natural-gas fed extensions to the base load architecture of the grid power generators. Always keep in mind that batteries are not energy generators but actually energy users. Something like 15% of the energy used to charge them is lost during the charge/discharge cycle, more if you charge faster and draw faster. Advocating for batteries to help load shaving is one thing but batteries are net energy consumers. Standby power is a value in areas with a lot of power failures like India, Caribbean and other locales.

 

[Foghat]

I think the key to the market for tesla's powerwall is retail sales through its sales channels. That really boils down to Tesla's partners to effector deliver a great customer experience at attractive price points. Right now, Solarcity is the vast majority of powerwall's retail prospects.As such, I believe, the best indicator of powerwall success is to monitor solarcity's sales and customer response.

To me it feels like the solar panel industry back in 2007. You can produce a great panel, but if the larger market isn't buying, then you have a great product no one is buying. There has to be a compelling retail offer to make this really work, in my opinion.

 

[techmaven]

I'm trying to look at the numbers for energy storage, and so far I'm only getting confused. Elon and JB (and a lot of people on this forum) seem really, really excited for energy storage. However, I can't really make the numbers add up.

Using a slightly higher cost for the install + inverter ($1,500), and adjusting for just inverter efficiency assuming the battery is charged using solar, the cost of the Tesla Powerwall is $0.195/kWh if it lasts 10 years, but only $0.10/kWh if it lasts 20 years. Going with 15 years, that's $0.13/kWh. Add to that the cost of your solar install on a per kWh basis. If you can get solar installed for $0.15/kWh, then the total could be $0.28/kWh. If you pay more than $0.28/kWh at peak times, then this could be worth it to you. The more Powerwalls you install, the more the installation cost and the inverter costs are spread out per kWh (inverter costs do not go up linearly per kWh and install costs are also a small increment per additional Powerwall).

If you use it for arbitrage with time of use rates (ToU), then you have to factor in the charging inefficiency loss, but still, if the difference between peak and super-off peak is more than, say, 15 cents, then it is worth it. Some people, especially businesses have to pay some hefty demand charges during the afternoons that do not show up on the "average price per kWh" numbers thrown about.

Here's the latest residential electricity pricing:

EIA - Electricity Data

Where I live, the price is too low for this generation of Powerwall to be economically interesting. But in Hawaii, it's almost 31 cents per kWh. Throw in the fact that this is actually backup too - most other backup solutions are essentially dead cost unless it is used. If it isn't used, then it's just dead money. I think there will be plenty of takers for this generation, enough to be production constrained. We'll see what gross margins Tesla has for this solution. It's probably priced about right... too high for those of us that have very low electricity rates, but low enough to attract customers that pay high demand charges, have intermittent power, or have high electricity prices. Once the Gigafactory starts up and the cost drops again, we go from interesting to a few specific situations that is still a humungous market to vastly more situations.

 

[bonaire]

techmaven, there is a chain-reaction approach to CA LoadShaving.

If CA businesses load shave, fewer annual GWh are imported into the state. I think it is 30% of CA used electricity is imported, as of 2013. It is a lot of energy and certainly dwarfs the planned SGIP projects overall, including the non-A.E.S. projects like natural gas generators and others.

If CA can self-generate enough (though, they are losing Hydro right now, fast) then importing drops and then external AZ and OR/WA generators selling to CA will lower their demand. That in turn lowers demand overall outside of the state. Every kWh saved in peak load in CA translates to extra capacity outside of the state. States surrounding CA have their own challenges, however. Lake Mead is drying up and Hoover Dam is going to have to shut down if water heights drop a bit futher. That is over 2 GW of power 24x7. Take a lot of solar to make up for something like Hoover Dam. 15-20 GW of solar arrays is quite large and maybe 35-45 Billion in costs at $2.5/W. And, with that much solar - do we use US-sourced solar or cheap-out and rely on China to provide such modules?

 

[FluxCap]

Using a slightly higher cost for the install + inverter ($1,500), and adjusting for just inverter efficiency assuming the battery is charged using solar, the cost of the Tesla Powerwall is $0.195/kWh if it lasts 10 years, but only $0.10/kWh if it lasts 20 years. Going with 15 years, that's $0.13/kWh. Add to that the cost of your solar install on a per kWh basis. If you can get solar installed for $0.15/kWh, then the total could be $0.28/kWh. If you pay more than $0.28/kWh at peak times, then this could be worth it to you. The more Powerwalls you install, the more the installation cost and the inverter costs are spread out per kWh (inverter costs do not go up linearly per kWh and install costs are also a small increment per additional Powerwall).

If you use it for arbitrage with time of use rates (ToU), then you have to factor in the charging inefficiency loss, but still, if the difference between peak and super-off peak is more than, say, 15 cents, then it is worth it. Some people, especially businesses have to pay some hefty demand charges during the afternoons that do not show up on the "average price per kWh" numbers thrown about.

Here's the latest residential electricity pricing:

EIA - Electricity Data

Where I live, the price is too low for this generation of Powerwall to be economically interesting. But in Hawaii, it's almost 31 cents per kWh. Throw in the fact that this is actually backup too - most other backup solutions are essentially dead cost unless it is used. If it isn't used, then it's just dead money. I think there will be plenty of takers for this generation, enough to be production constrained. We'll see what gross margins Tesla has for this solution. It's probably priced about right... too high for those of us that have very low electricity rates, but low enough to attract customers that pay high demand charges, have intermittent power, or have high electricity prices. Once the Gigafactory starts up and the cost drops again, we go from interesting to a few specific situations that is still a humungous market to vastly more situations.

Great analysis, man.

 

[jhm]

In awe of Elon Musk’s wonderwall – a utility killer | Business Spectator

Interesting article from Australia on Tesla's potential to be a utility killer.

 

[Bgarret]

In awe of Elon Musk’s wonderwall – a utility killer | Business Spectator

Interesting article from Australia on Tesla's potential to be a utility killer.

This is an older article from scientific American about cell phone towers in India and globally - the numbers are staggering and I think Tesla just hit a price point that in 2013 they were hoping for by 2020.

Why Cellular Towers in Developing Nations Are Making the Move to Solar Power - Scientific American

 

[vgrinshpun]

Thanks, got it. It is on p.78 of the Manual, Bill AB 2267 approved back on 9/28/2008.

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The Summary Table includes kWh, not kW. kWh are obtained by multiplying kW by two, to account for the fact that Tesla battery kW rating is based on 2hr discharge.

While double checking my math, however, I discovered a typo in the formula used for calculation of total kWh in 2014. The correctly calculated total kWh in 2014 is 73,448, not 36,724. The updated table:

The California SGIP spreadsheet is updated weekly, so I decided to check what changed in two weeks since I downloaded the spreadsheet originally. There was total of 4 added commercial projects with total of 3,200kWh of battery capacity. The power ratings of these projects are 1000kW, 300kW, 200kW and 100kW

 

[Gerasimental]

The California SGIP spreadsheet is updated weekly, so I decided to check what changed in two weeks since I downloaded the spreadsheet originally. There was total of 4 added commercial projects with total of 3,200kWh of battery capacity. The power ratings of these projects are 1000kW, 300kW, 200kW and 100kW

Thanks for digging and sharing again. 3,200kWh at 1600kW rated power, all in multiples of 100kW, certainly sounds very Tesloid.

 

[30seconds]

Interesting read on slicing the economics of power wall by market

Tesla Battery Economics: On the Path to Disruption

 

[Matias]

Yobigd20 has info regarding pricing of powerwall

http://www.teslamotorsclub.com/show...e-Event/page90?p=997966&viewfull=1#post997966

 

[ZachShahan]

I'm trying to look at the numbers for energy storage, and so far I'm only getting confused. Elon and JB (and a lot of people on this forum) seem really, really excited for energy storage. However, I can't really make the numbers add up.

I took a screenshot of my spreadsheet where I end up with 22 cents per stored kWh. (I assume a linear decrease in capacity of the battery and that the battery is worth 0 USD after 10 years. Putting in a couple of hundred dollars here, og assuming zero decrease in capacity doesn't make a huge change.)

The average electricity price in the US is about 12.5 cents. A combination of solar cells and battery is, as far as I can see, not financial viable at all. I tried to find rates for peak and off-peak, but couldn't find any good numbers. Can the difference be more than 22 cents?

View attachment 80064

UPDATE: I did this really fast, so there might be some errors in the calculations. The efficiencies are quite confusing for example. They are part of the total energy number. If you set all efficiencies to 100 % you end up with 18.4 cents/kWh, so it really doesn't matter that much.

Your post/question brings up several points for me all at once:

1) I think the presentation from Elon was spot on, but I also think people who don't know the market well are going to be confused by it... That's a lot of people. (See point #2 below.) And that may even have a bit of a backfire effect when people get turned off to the idea of storage and then don't realize in 2 or 3 years that it has gotten much cheaper. Let's hope not...

2) Yeah, these Powerwalls don't yet make sense for the average home. They're not going to save most people money. But Tesla isn't saying they will and it isn't targeting the average home. SolarCity's first blog about this was focused on Hawaii. The price of electricity there is sky high, and I've seen that solar can save the average homeowner there over $60,000 over 20 years. The main utility company has been blocking rooftop solar connections for years, because it doesn't want to lose its massive profits (the argument it puts forth is that the grid can't handle that level of intermittent solar power, but don't buy it until the penetration level is 20-30%, which it isn't close to). With Powerwall, SolarCity can now offer homeowners who go solar a way around the utility which will still save them a ton of money.

3) There are similar stories in Australia, Germany, and California -- all markets that Tesla has said it is initially targeting. As battery costs come down, the markets where this is competitive will increase, but these markets already offer a lot of room for sales. Furthermore, Tesla is offering its battery systems through sites like Treehouse where offgridders can also purchase them, since they are generally now the best option for that market.

4) As others have noted, the home unit is a great marketing tool. It's utility-scale offering is *really* competitive, and i think that's where it has the most potential for revenue. A *lot* of utilities could benefit from Tesla's storage offering. That said, I think this market is also riskier. There are some other battery startups quoting really low prices (Alevo - $100/kWh; Eos Energy - $160/kWh;... Others with potentially breakthrough technology are expected to be marketing their products soon... we'll see). Whether these competitors are legit is another question, but that is where the risk comes from. Even so, Tesla's product is proven, cheap, and will come down in cost. That has me very excited. And I'm quite sure Tesla will have a healthy revenue stream from this market. Look at how it's doing in California already.

5) I don't care who you are (general "you," not you specifically), you don't know who's going to lead in the energy storage market. But Tesla is looking like a decent bet.

fun times.

Update: Oh yeah, 6) I don't think most people will buy these with cash. Either through a lease or loan, they will finance them via a small monthly payment.

- - - Updated - - -

Interesting read on slicing the economics of power wall by market

Tesla Battery Economics: On the Path to Disruption

Surprisingly great article from Gizmodo... and turns out it was a repost.

The very last line is hugely wrong, but looks like the author found that out based on the updates at the top of his piece: http://rameznaam.com/2015/04/30/tesla-powerwall-battery-economics-almost-there/

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Sure, go ahead, you can use the table (of course, I'd appreciate a reference to the TMC thread ). Looking forward to read the piece. So far I have no clue about cost of energy storage systems in the U.S.

Thanks. Definitely! Always do.

 

[bonaire]

The best (better?) way to handle Hawaii is to get Panasonic to actually make the PowerWall in Japan and ship in large numbers to Japan now before the GF is done. The price is actually too low for the benefit that can be found in Hawaii. Those with Grid Tied arrays can cut the cord sooner rather than later. Many homes are small and 20 kWh (2 units) would work fine in many cases. If they can get two units at $7000 plus inverter @ $2K plus labor at $1k, it is a viable solution as long as they have a dump circuit for once the batteries are full (like a water heater).

 

[jhm]

The best (better?) way to handle Hawaii is to get Panasonic to actually make the PowerWall in Japan and ship in large numbers to Japan now before the GF is done. The price is actually too low for the benefit that can be found in Hawaii. Those with Grid Tied arrays can cut the cord sooner rather than later. Many homes are small and 20 kWh (2 units) would work fine in many cases. If they can get two units at $7000 plus inverter @ $2K plus labor at $1k, it is a viable solution as long as they have a dump circuit for once the batteries are full (like a water heater).

I like this idea of manufacturing PWs in Japan. I wonder if Japan might be a good market too. Then of course there is Australia and lots of Pacific islands to ship batteries to. The Indian subcontinent would be better reached from Japan than Nevada.

 

[daniel Ox9EFD]

If Tesla is not constrained for the type of batteries that go into the power pack, this means Panasonic is not constrained. Could we talk about the possibility of Tesla giving permission to Panasonic to get into the power pack business too? It would make perfect sense for selling to Japan, since Japan has a foot in solar, as well as remote Islands.
It could be like the Nissan-Renault alliance, both sell cars but they divide market share.

 

[jhm]

Japan Plans to Pump $700 Million Into Energy Storage : Greentech Media
Japan is subsidizing energy storage to the tune of $700M. All levels, residential, commercial, and industrial.

 

[daniel Ox9EFD]

It would be funny if Tesla shipped packs to Japan. Those batteries would make some round trip...