Exploring Tesla Powerwall and home batteries – worth it?

I just got a Tesla Powerwall … well, more like I’ve got a Tesla Powerwall ready to be installed. But with home batteries like this being so expensive, why would anyone want one? It goes beyond a simple "return on investment" discussion. In fact, there’s some really interesting programs that are launching right now that could help drive adoption. So let’s get into it.

My Tesla Powerwall isn’t doing much laying on my garage floor at the moment, but once it’s installed I’m planning on future videos to dive into my experiences with it and how it’s integrated into my non-Tesla solar panel setup. Be sure to subscribe to not miss that. But given how expensive these battery systems can cost I thought it was worth diving into why you’d want one, how they can make sense financially, and some of the intangibles that go beyond a return on investment.

We’re actually seeing more people jumping into residential battery energy storage systems like this, and it’s not too surprising why when you consider recent events like the California wildfires that knocked out power for millions of people.¹ Or tropical storm Isaias that left almost 3 million homes without power here in the northeast of the US.² Traditionally when there’s a power outage, solar arrays have to be deenergized to protect utility workers that may be sent to fix something like a downed power line. You don’t want your excess solar production keeping grid power lines electrified. When adding a battery to a home it has the ability to “island” itself off from the grid, so your home is consuming both stored and self-generated electricity. Basically, your solar panels stay on and are controlled by the battery control system.

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Here’s a good example from a home owner here in Massachusetts that has a Sonnen battery paired with solar. When tropical storm Isaias hit our area, it took out a tree causing a 36 hour outage. The blue line is how much energy they were using. The yellow line is their solar production. The red line is when the battery was discharging to power the home. And the purple line shows the battery’s state of charge. All the way at the top is 100% charged, and down at the bottom is 0%. You can see exactly when the battery kicked into gear and powered the home for the first 14 hours, then during the next day it recharged itself and powered the home from solar for the next 26 hours. An interesting note is the sawtooth pattern that you see in the purple line, as well as the solar power production looking intermittent … shutting on and off. The battery control system automatically turns the solar panel system off when the battery is near full and there’s too much power being generated for the house to use. The system alternated between powering from battery and recharging from solar to manage that load. It’s pretty cool.

Resiliency is a big perk of a home battery storage like this. It may be a little tricky to calculate the return on investment this way, but keep in mind that this home owner still had lights on at night and didn’t lose any food from a refrigerator losing power during the height of a New England summer. It’s also worth mentioning that many people install permanent gasoline or natural gas backup generators for situations just like this, and those cost an average of $3,700.³

But power during an outage is not the only reason to want a battery system. If you have solar power installed on your home, you might benefit from having energy storage to capture your overproduction during the day for use at night. With or without solar you can shift your grid energy usage to avoid expensive time-of-use rates: pay for grid energy when it’s cheap and pull from the battery when it’s expensive. And I’ll get into this in a little more detail in a bit, but you might be able to make a little money directly from your utility by letting them use your battery as part of a larger virtual power plant system.

When trying to choose a battery it can be difficult to navigate all of the different battery types, brands, installation costs, and incentive programs. The most prominent option out there, and it’s what I’ve got laying on my garage floor, is Tesla’s Powerwall. It’s an NMC battery pack, which means that it’s using a lithium nickel manganese cobalt oxide chemistry. It tends to have a higher specific energy, or energy density, compared to other chemistries, so it can store more per KG. However, it has a slightly lower power rating than some other chemistries, so there is a small trade off.⁴

The Powerwall has a usable capacity of 13.5 kWh and a continuous power supply of 5 kW, or up to 7 kW peak. When you first turn on an electric device there’s sometimes a brief spike of power draw, that extra peak in the battery will cover that. You can think of the power supply of a battery like water flowing through a hose: the diameter of the hose limits how much water can come out at once. The power supply has the same kind of limiting effect. So in my setup with one Powerwall, my battery backup is able to handle up to 5 kW, or 5,000 watts, of power draw at once. That means I wouldn’t be able to run an electric stove and AC at the same time considering they’d use more than 5,000 watts… my hose just isn’t wide enough. I’d need to add a second Powerwall to make sure I could cover that situation. And kWh are how many watts you’re using over time. If I ran a 1,000 watt oven from my Powerwall, I’d be able to run it for about 13.5 hours because the battery pack is rated for 13.5 kWh.

The other important things to consider when choosing a battery are depth of discharge, round trip efficiency, and what warranty it comes with. The depth of discharge is how far you can drain the battery before the manufacturer recommends recharging it.⁵ In the case of the Powerwall, it has a 100% depth of discharge … meaning that you could theoretically drain it completely, but that’s generally not a good idea for long term battery health.

The round trip efficiency is the amount of energy that can be used as a percentage of the amount of energy that it took to store it. This comes in at a 90% efficiency, which is excellent. And as for warranty, Tesla provides a 10 year or 70% of original capacity warranty.

Another popular NMC option is the LG Chem RESU. The 10H model has a 9.3 kWh capacity with a 5 kW continuous power output, which is similar to the Powerwall. It has a 95% depth of discharge rate and 94.5% round trip efficiency with a 10 year, 22.4 mWh energy throughput, or 60% of original capacity warranty.

An alternate to the NMC battery chemistry is LFP, or Lithium Iron Phosphate, and examples of that format are the Sonnen Eco and Enphase Encharge. LFP batteries have a slightly lower specific energy, but a higher power output. The Sonnen Eco comes in configurations that range from 5 to 20 kWh capacities. And between 3-8 kW of continuous power output. It has a 100% depth of discharge rating and an 86% round trip efficiency. And as for the warranty, the Sonnen has a 10 year, 10,000 cycle, or 70% capacity warranty.

And there are even more batteries like the Generac PWRCell, Panasonic EverVolt, and Electriq Power PowerPod. I’ll provide a link in the description to my website that has more details on different batteries and their stats. It’s not a comprehensive list, but covers some of the bigger options out there.

But there’s still a big looming question … cost. No matter what route you go, all of these options are expensive right now. The Powerwall costs between $9,600 – $15,000 to purchase and install. LG Chem’s Resu 10H falls in somewhere between $9,500 – $13,000. Sonnen starts around $10,000, and can be expanded in 2.5 kWh increments which would increase price accordingly. Like I said … expensive. But remember, a backup generator can cost you thousands of dollars and is only used during a blackout, where home batteries provide value 24/7.

And this is also where incentive programs can really come into play to make not only the economics make sense, but to also help the broader community. In California there’s the Self-Generation Incentive Program (SGIP), which has a budget of $1 billion to fund the program through 2024. Single family homes are eligible for an $850/kWh rebate. This should cover about 85% of the cost of the average energy storage system. And if you live in a multi-family home, or qualify for additional help, the program will cover $1,000/kWh or about 100% of the cost.

In Massachusetts where I live, there’s the Solar Massachusetts Renewable Target Program, or SMART, which pays participants based on the amount of energy they produce. The program has a battery storage adder, which depends on the size of the solar panel system and the battery it’s paired with, but it can add between $0.02 – $0.07 back per kWh of electricity. And while there’s not a rebate payout like California, there’s a MassSave Heat Loan program that you can use to pay for the battery system, which will get you a 7 year loan up to $25,000 at 0% interest.

And the utilities in the New England area, which are Eversource and National Grid, have created their own incentive program called Connection Solutions. This is a really cool program that’s creating a virtual power plant by using thousands of home battery installations as one massive battery to handle peak loads on the grid. I’ve applied to get my Powerwall included into this system, which will pay $225 per kW of your battery’s average contribution during summer events and $50 per kW during winter events. Tesla does take a 20% cut for managing the dispatching of Powerwall, but Sonnen manages this service free of charge for their customers. The utilities limit the number of events to 60 in the summer and 5 in the winter, and each event is 2-3 hours long. For a typical battery capable of 5kW continuous contribution, that could earn about $1,375 per year while enrolled in the program. For a single Powerwall, that would almost cover the cost of the Powerwall itself over 5 years.

Going back to the Massachusetts homeowner with the Sonnen battery, he’s enrolled in this program. And on this chart you can see what it looks like when the system taps into the battery. The utility made sure his battery was fully charged and then started to drain it at the beginning of the peak event, which was 4:00pm. This tapped the battery out by the end of the event, which was around 7:00pm, and then the grid filled up the battery to about 20% charge until the next day when his solar panel system filled it up the rest of the way.

The most interesting part of this particular program is that it was created by the utilities in an effort to save themselves money, and the payouts are coming from the benefits the program provides. Pilot programs like this have shown a lot of promise. Green Mountain Power launched a similar program in Vermont that paid back in a big way. In 2018 the network of batteries reduced consumption during New England peak hour, and saved about $600,000 in capacity fees. In 2019 after adding more batteries to the system for about 10 MW of capacity, it saved about $900,000 from a single hour of operation in a late July peak. So you can start to see why utilities are willing and able to offer to pay customers to contribute to systems like this. In fact, National Grid in Rhode Island offers $400 per kWh during summer events in the Connected Solutions program. Maybe I should move to Rhode Island.

Building onto that basic concept is a broader standard called Clean Peak that is starting to get rolled out in some governments. Massachusetts is the first state in the US to enact the Clean Peak Standard and it looks like Arizona might be next. In a nutshell, it’s a mandate that requires a certain percentage of a state’s energy come from renewable sources during peak demand. The nuance there is the “peak” of clean peak. Just adding solar panels won’t cut it because that won’t provide direct power during peak events, which usually occur in the early evening when people start turning on lights and cooking dinner. In order to hit those mandates states will need methods to store that renewable energy to use during peak, which is where battery storage comes into the picture. Programs like Connected Solutions are laying the groundwork for utilities to start building up those energy stores as part of the mix. One study has shown that after the initial setup costs of Clean Peak, that Massachusetts looks to save over $400 million this coming decade for ratepayers. Not to mention the massive savings in CO2 emissions.

If you look around the world you’ll see even more programs similar to these. In Germany there’s a solar storage incentive for systems below 30 kW that can cover 30% of the battery systems cost.⁶ And in the UK you’ll find the Smart Export Guarantee (SEG), which will earn money for exporting stored electricity back to the grid. How much you’ll get, and if you can get it, depends on the supplier, but you might see between 4-6p/kWh.⁷

Two factors are going to play a big role in battery adoption in the home: continuing to drive down battery prices, and smart utility and government policies and programs. As more pilot programs like Connected Solutions start to show the value that home energy storage can bring to a community, we’ll start to see greater adoption. It’s going to be interesting to see how this evolves over the next few years.

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