The Democratisation of Energy

3rd May 2015

Two days ago Tesla announced the Powerwall which is essentially a Lithium Battery pack for the home that is wall mountable. That in and of itself is not revolutionary but it’s definitely interesting. (The presentation is only 18 minutes long and is worth a look before reading on if you haven’t already seen it). Elon had hinted at this back in February this year.

The presentation was a typical Elon Musk special. He has a nervous stage presence that comes across as honest and matter-of-fact that I find endearing and rare for a CEO. His suggestion midway through of fighting the urge to do a "billion dollars" little pinky finger against his mouth per an Austin Powers movie was a charming balance of awkward and hilarious that drew a smirk from me and I’m sure plenty of others.

The home model comes in a 10kWh pack and although not directly discussed in the presentation, also a 7kWh model for $3,500 and $3,000 USD respectively (given the relative cost/capacity ratios the 10kWh is the clear winner) of which a maximum of 9, 10kWh Power Walls can be chained together for a maximum of 90kWh of storage capacity.

Elon also announced the Power Pack, which is more like a 19" rack size equivalent for which each rack contains 100kWh, which no scalability limitations. Clearly the Power Packs aren’t meant for "easy" customer installation and hence cable sizing, distribution breakers etc would need to be customised per installation (hence no assumptions on maximum current and no need to limit at 90kWh). I have a few thoughts on the global scalability but let’s hold that thought for another post.

I saw many comments on Twitter along the lines of "but I still need solar panels" so yes, again Tesla aren’t supplying the complete solution (unless Solar City is available to you and it isn’t for everyone) but solving the battery problem is two-fold: Energy Density and Lifecycle-cost. As I discussed on Episode 2 of Pragmatic some time ago, the future of local electricity generation and the move away from centralised generation is the only sensible option as it solves so many issues, however the cost of doing so thus far has been excessive mostly due to the cost of energy storage.

Having done the sums myself a few times I can get about 7 Fusion 12V 40AH LiFePO4 deep cycle batteries for the same amount of money leaving some left over for some cabling and an enclosure: that’s only 3.4kWh of capacity (assuming parallel connection and you can source a 12V DC Inverter to do that job, but let’s just check the figures not practicalities). That makes the Power Wall about 3x more bang for your battery buck. That’s impressive. It’s actually cheaper than entrenched older wet-cell Lead-Acid batteries, which is a first for this application so far as I know.

As with all battery systems it comes with lifespan limitations based on how much you discharge it each cycle. Both models offer a 10 year warranty which I could probably believe on the assumption that it is correctly provisioned and the Power Walls aren’t driven to horrendously low DoDs (Depths of Discharge) so ensuring you get enough capacity to be comfortable matters to the lifetime of your battery pack. How much you provision is obviously a combination of how much you use, how much sunlight you get where you live and whether you’re grid connected or not. Your sums will vary.

Details on the Power Wall are still scarce but it’s unlikely to be a new battery technology but rather the advantage of building a Gigafactory for manufacturing Lithium Batteries means the economies of scale can be realised and drive the cost of the battery down. It does however provide an interesting potential insight into the pricing of the Tesla batteries in the Model S. (Another topic for another day?) Currently the Model S uses the Panasonic 18650 battery which has a good energy density of between 600 and 800 Wh/l but has less life expectancy than LiFePO4s do.

In terms of energy density LiFePO4 Batteries typically only have 220 Wh/l. Based on the dimensions of the Power Wall and assuming that only 1/4 or so of the volume is actual battery we get about 200Wh/l which suggests potentially a different battery to the Model S but without a teardown of a unit that’s pure speculation at this point, though it’s interesting to note.

Since the energy density problem isn’t a problem that they’ve solved here and we’re progressing on existing technology manufactured at scale then the only argument left is whether it’s worth the money. I looked into the cost-effectiveness of electric vehicles on Episode 52 of Pragmatic where we also discussed the price of electricity. I refer you to that episode for all the details but in short, according to this handy link in the USA it’s an average of 12c/kWh and 908 kWh/month (about 33kWh/day so let’s assume you have x2 10kW Power Walls and enough sunlight to handle 13kW of usage through the day and to fully charge your batteries too during that time) then $13k USD over 10 years for that grid-power is more than the double what the Power Wall would cost, but once you throw in the solar panels, installation costs plus the inverter unit it’s not going to save you money on the whole. On average. But electricity prices vary and so does usage so for some people it will be a cheaper option.

Based on my sums for my house here in sunny Queensland (yes it’s handy having all that sunlight) even with my Grid-connect inverter and 5.6kW of solar panels on my roof, I’m still shelling out $1200/yr on electricity. Using a local Fronius Symo Hybrid Inverter installers website and a straight dollar conversion, assuming 2, 10kWh Power Walls if I invested $15k AUD, and assuming the batteries lasted without fail for 10 years, I’d save $1k AUD. Of course, I’m cheating since I’ve already got the panels, but I’d be lying if I didn’t say I’m not extremely interested.

I’ve been looking at UPS systems for some time now and going off-grid is the ultimate dream - even if there’s a risk of household "range" anxiety on successive cloudy days. Another point: If I wanted to add an electric car someday and rely on home charging, I would be in trouble off the grid. I’d need more Power Walls and more solar panels to charge them as well. So I would be stuck on the grid. The math then isn’t quite so rosy but it’s damned close.

Tesla are trying to democratise energy. How long before Tesla release their own solar roofing tiles? Their own inverter units as well? If Musk is serious, you can bet it’s on the roadmap. And he’s serious. Opening up patents is an admission that he doesn’t need the money by protecting Teslas technology. He wants to change the world, to fix our dependence on fossil fuels. The numbers are beginning to stack up for many places around the world, including here for me. In coming months I’ll watch with great interest how the Power Wall unfolds in North America where it is admittedly a harder sell in most states, but I suspect it will be snapped up wherever electricity is not so cheap and I expect once the Gigafactory 1 is operational for a few years the prices will come down further still.

Tesla haven’t exactly "solved" the battery problem, but they have just made an appreciable dent in it.