The Winners And Losers In Tesla's Home Battery Plan

Tesla’s plans to use its new battery storage system to power homes will provide households with more opportunities to reduce bills. But it will also cause headaches for the electricity distribution companies.

The company’s founder, Elon Musk, announced recently that it had developed the Powerwall batteries that could store electricity generated from solar panels.

The idea is to store the energy generated during the day, when demand is relatively low, that can then be used to power a home during the evening when the demand is higher. It can also act as a backup supply during any power cuts.

The Powerwall battery packs come in 7kWh or 10kWh units and cost $3,000 or $3,500 respectively. Up to nine units can be stacked together to give a maximum 90kWh.

Musk made the announcement at a press conference that was powered entirely by batteries.

Musk told the audience that it was possible to place orders now for the units with delivery expected in the next three months.

Battery breakthrough

This will be a major development for the renewable energy sector – primarily solar photovoltaic (PV) – and provide the possible opportunity for consumers to move off-grid.

While it will be interesting to see how the distribution companies will react to that possibility, the ability to have three days of storage for a normal household will sound attractive to many.

The price of the Powerwall unit in the US is about a quarter of what is currently being charged for similar sized systems here in Australia. As such, they should become a standard accessory with most solar systems, with the price being similar to just the solar panel system five years ago.

Based on a recent Origin Energy invoice, an average four-person household uses between 20.9kWh and 21.6kWh of electricity per day.

Currently any excess electricity generated is sold back into the grid at a price negotiated between the retailer and customer (for those without feed-in tariff agreements), usually at around A$0.12kWh.

While providing some income, customers still have to buy electricity back in the evening at around A$0.27kWh, being the period of peak usage when everybody is at home.

Not all will benefit

For those without solar systems on their roof the story will only get worse when it comes to rising electricity prices.

In simplistic terms, the distribution companies charge a price for supplying electricity to your home based on the cost of their infrastructure divided by the number of kWh of electricity supplied.

If the number of hours supplied decreases – as more people adopt a solar solution – then the price must go up. People who don’t have solar on their roofs will be penalised.

These pricing policies are based on Federal Government rules. These need to be closely reviewed, given the changing landscape of electricity generation, with a much larger portfolio of renewable energy, particularly on-site generation.

Further, rules should be relaxed to allow rebates for solar to be allowed for rental properties – not just owner-occupiers. Another example of making those who can least afford the escalating electricity prices paying the most.

At a more local level, the distribution companies still need to invest more to allow customers who want to install their own systems to do so.

In some areas system constraints are resulting in applications to install solar PV systems being rejected by the distribution company as there area already too many systems installed and the grid cannot manage stability issues.

So not everyone who wants to install a new solar system – including Musk’s new Powerwall system – will be able to. That means those customers must continue to pay high retail electricity costs and miss out on savings enjoyed by others.

History has shown in recent years that with the reduction in the cost of solar PV systems there has been an exponential increase in the number of domestic residences adding systems.

The animation below, from the Australian PV Institute, shows the growth across the states and territories.

The continuing speculation of spiralling electricity costs will continue to add to the demand. It is an issue that needs to be addressed by both state and federal governments and with Musk’s latest announcement of affordable storage options we can only expect greater demand for on-site generation.

We are now approaching the next phase for domestic electricity generation and it has arrived at a time that has provided regulators little time to prepare. But prepare they must.

The ConversationCraig Froome is Global Change Institute – Clean Energy Program Manager at The University of Queensland.This article was originally published on The Conversation. Read the original article.



    Tesla battery would certainly be an advantage in Darwin where we have had power outages. An electric firewall is what we need.

    Back of the envelope calculations for the ACT, peak rate is 18.3c/kWh (there are some discounts available). Off peak is 9.15. If the 20kWh usage was half peak and half off-peak (hot water is a big consumer). So 10kWh saves $328/yr but the 10kWh battery costs $3500 (without installation I presume) at 5% interest costs $175. That takes about 16 years to pay off, the battery has a 10 year warranty. Only rough calcs, but the price still has to drop considerably before this becomes a no-brainer for normal residences, but not that far off.

      ACT sounds like they have no reason to move on this, but contrast that VIC where you must have a fixed rate around 29c if you have solar (some providers only). Note: $3500 is only todays prices, and as with solar it'll get cheaper over time and in Germany you can plug in your car to act as that battery storage unit and use it's power if you have no plans to drive the car.

      You're missing the point.
      The battery is for Solar PV owners, which means that it's there for covering cloud through the day, but more importantly to store your excess PV power for use in the night.
      ie for 8 hours a day you'll use power generated from your PV, and for another few hours at least (if not entirely overnight), you'll be using PV power stored in the battery.

      For my household with 5kW PV (Partially shaded) and Gas Hot water, Stovetop and Heating, it's not inconceivable that apart from very overcast days in the depths of winter we could be entirely electricity self sufficient with only the 7kW (daily cycle) battery. (and likely entirely self sufficient with two 7kW batteries). All without altering our habits.
      Adding another 2kW panels to our roof and a battery would almost definitely cover our usage.

      The economics probably aren't quite there, but it's very close for me to pull the trigger.

      As the economics get better, the only response power companies can use to try to balance the scales is to either pay more for the Feed in Tariff Solar export or crawl to Government to allow them to inexorably push up a compulsory service charge.

        I use around 25kw a day. Haha

          Time for some energy saving.

          I use around 3-4kWh/day. And don't have PVe.

          Solar hot water, installed already pre-purchase, hot water boost heating costs/0.25 = approx $10 (winter) this saves approx $100 per quarter, electricity $70, service charge $66, GST is the cream on the top.

          Just as with sewer/water, the service charge is very significant compared to usage.

          Last edited 28/10/15 2:40 pm

            Not with Powershop - you pay per unit of usage, the service charge and GST is inbuilt into that cost. So my unit or kw/hr charge is currently 24.5c.

            So my daily charge is roughly from $4 (weekdays) up to $6 (weekends).

            Now my context I have two fridges, a pool that runs two pumps for 3 and 8 hrs a day and any other stand by items, such as various computer equipment (routers, modem, switch), oven etc.

            If no one is home at all (we are away for holiday) the daily usage was $2-$3 a day - so roughly 15kw/units a day.

            I would love a 3kw solar system to cover the daily usage, but at the moment it is too expensive and not efficient or effective for a house in Melbourne to pay itself off over a far too long period.

            edit: we are 5 people at home

            Last edited 29/10/15 1:31 pm

      That is cheap in comparison to what some have here in QLD.

      Based on an Origin bill, there is a flat rate charge of 25.4c/kWh and if you are lucky you may have hot water on a controlled supply (off peak) of 18.5c/kWh.

      10kWh x 25.4c/kWh = $2.54 ($927.10/yr)

      Based on this it would take around 4 years to pay off the system (assuming 5% interest). For someone on that rate in QLD, it is an absolute no brainer, especially as a lot of your daily consumption actually happens in the evening (applicances, lighting, entertainment) or overnight (hot water systems).

        Guy, forget heating water with anything except Evac tube solar. Shop around (dont get ripped off by the main brands) you can get a great system for approx $2500+ install and without worrying about rebates etc. I had a system installed as mentioned 7 years ago and havent had any problems. Overcast backup is elec at peak rates but i have only paid $40 in total over the 7 years for power to cover the rainy days. Home has 3 people.

        Good! I was hoping someone would have an economic use for these other than Solar PV, is all too obvious, and the article failed to mention other scenarios. Solar PV is great if you have a roof. These panels have the potential to be useful for people who cannot install PV or solar water heating. In parts of the US, this is how these batteries are being viewed. Hawaii in particular, has been moving away from the grid because grid power is far more expensive than solar + battery, and because of the move to off-grid it is becoming more so.

        Last edited 05/05/15 4:15 pm

          Return on investment is too low for the power-wall to be used solely for grid tariff leveling (by most people), peak backfeed is deemed illegal (without onsite generation) at this stage.

          A 10kWh powerwall stores a whole $4 worth of electricity, at peak rates of 0.40c/kWh.
          Cost to purchase at 10c/kWh = $1 = $3 saving (best case, if avoiding peak rated entirely fort all the stored power)

          At US$3500 +exchange+installation(pick a number)+opportunity cost (over years) = approx AU$9500

          With 9-10 years payback, not too bad really, but that was only assuming 5% opportunity cost, compounded annually.

          Last edited 28/10/15 2:33 pm

      $3500 is USD too, which in the current climate means it'll be a fair bit more expensive locally assuming they don't get subsidised or anything like that.

      Last edited 05/05/15 11:07 am

      Woofwoof, I agree but you can take Hotwater calc off the consumption of electricity. Evac Tube solar water heating is far more efficient than PV cells or storing power so moving to solar hotwater is the first thing anyone should do before they start thinking of PV panels or storing electricity.

        Only if you have a roof :).
        If you have solar water, the smaller unit is a bit cheaper, the payback will be even longer, as your electricity bill is already smaller. There are probably smaller systems already available that cover some people's needs.

    @Craig an industry insider suggests to me that the current Electricity Infrastructure can't handle the surge in home generated power to the grid anyway. I think you'll find they'd be happy to have some on-site storage in the short term.

    The problems you raise are at least 10-15 years away, whilst the benefit are almost immediate. Good luck with trying to predict the future in this space.

    My prediction for the next 5 years is, people will still ignore positive opportunities for the environment, because they live in a very small bubble.

      In future for town folk (crystal ball, dystopia), grid connection will be compulsory ($$, or the house will be condemned) and back-feed will be illegal, all solar installations will have to have onsite storage and/or a sufficient capacity dummyload to absorb all surplus power generated.

      That way the longevity of the grid will be guaranteed (with revenue), and the power conditioning hassles of micro generation will be avoided.

    This is tech that I will definitely be purchasing, You see, there is one other very important factor that many people do not consider. When I purchase electricity from a power company - where does the money go? Well, for the most part, it supports digging up more coal, or fracking. However, when I purchase personal PV and batteries, a part of that money goes toward researching more efficient PV and batteries, lowering the cost for other people. I currently have PV and right now I put more energy back into the grid than I draw from it. It costs me $200/quarter to take it, and they give me $30 for what I put in. So, once completely off grid not only will I have the satisfaction of knowing I'm supporting a sustainable future, I'm also finally able to say to the electricity and mining companies - 'F#$* You!'. Finally.

      also having a battery saves you in blackout situations which is notorious during storms in some areas

        Only if you have an offgrid/hybrid inverter with grid isolate, allowing safe islanding, else you will be as black as everyone else.

    You are all missingthat this does not come with an inverter to transform it into the correct current. An added cost. But i love the idea too.

    No more need for UPS, no worries if power goes out, no $600 worth of dead fridge/freezer food.

    for that alone you would love this.

      "Powerwall consists of Tesla's lithium-ion battery pack, liquid thermal control system and software that receives dispatch commands from a solar inverter. The unit mounts seamlessly on a wall and is integrated with the local grid to harness excess power and give customers the flexibility to draw energy from their own reserve." It connects to an existing inverter, I guess that only works if you have a single inverter and not micro inverters.

        This is awesome...ive just spent 8K on a 5.5KW system with one of the best inverters I could get, id happily spend another 3.5 to get access to off the grid power!

          hi mrljz
          As fantastic as the Tesla unit is there is no need to wait for Tesla to initiate Hybrid lift off. At risk of self promotion, we are already retro-fitting (in VIC) existing solar to hybrid right now. Our unique software and hardware sees a 6kWh pv solar operate with only the need for a 3kWh battery add on and the life of the batteries are engineered for about 16,000 cycles, (20+ years) (Cost is about $4500 for 3kWh)
          If you want to see real time facts on the efficiency click on gallery on our site, and follow the link.
          cheers and keep the thoughts coming

    Sad thing is its illegal to take your house off grid so even if you have one of these batteries and a PV system and are totally self sufficient you will still need to pay your daily service charge ( unless your in a rural area without electric supply )

      Yes, it absolutely sucks that we are forced by the State to keep paying money to electricity companies we no longer need.

      Still, I wonder if someone did go off grid, how would they know? Say you are moving and disconnect the power, and don't sign up with another power company.

      Really? What do they do if you don't pay your bill? Cut you off?

      Powershop. No daily charge as such. It is built into the kW /hr charge or as they put it - a unit price. So you pay 24c for a unit of power. This is your kW rate inclusive if any daily or service charges. So if you only use 10kw for the day you only pay for 10 units. No extra service fees etc.

      If anyone is interested I am happy to refer you must be Vic or nsw. It is controlled by a mobile app. Monitoring your usage hourly etc. $75 referral credit on both ours bills.

        well in NSW we pay a separate daily charge, $0.71 per day.

    And in the UK were the government still owns the power lines, the man I control want 100,000 batteries on the grid. The two times a day peak he has to push 110% production, that's every power station in UK. He estimates £1,000,000 savings if he can have 1-5% of the battery supply and run at 100% production every day.

    Once again, the renters will pay for the home owners to improve their life/wealth. The government should provide a subsidy to rental properties to ensure they dont miss out, and tax negative gearing properties to source the funding for it.

      typical "entitlement" attitude
      I work hard to build my asset portfolio who are you to decide that the government should take a bigger slice of what it already does!

        It's not entitlement - its about fair distribution of taxation to assist everyone. When a private owner can be subsidised to install solar panels, yet renters cannot, that's an imbalance. I cannot afford to enter the bloated real estate market (due largely to property speculators and investors negatively gearing), so I have to pay more in power bills now to subsidise private investment in solar panels/going off grid? That's not entitlement, that's just robbing from the poor.

          I make 65K a year and have still managed to buy an investment and my own home, im hardly what ANYONE would call rich. Its all about being smart with your money and putting in the hard yards, if property is too expensive for you then maybe you need to readjust your life. It is achievable.

          Like I said...typical entitlement attitutde

            It is excellent that you recognise your own entitlement attitude. This is the first step to self improvement.

          Thats called communism, it doesnt tend to work out well.

            So subsidies to mining corporations, taxes to build hospitals, the solar panel rebate - are they all communism as well? I don't think you have a full understanding of what the concept of communism is.

              No i didnt mention those things, you did and i agree taxation does not equal communism, but if you cant afford to buy a house then that is your problem not mine, if i could support a partner at uni whilst i was on apprentice wages and still buy a house then any employed person who makes the right choices can afford a house, maybe you need to move areas? Or quit drinking/smoking?
              But either way you are not entitled to every rebate available. Communism (not that it has ever worked) is about equal distribution of wealth, you say it doesnt matter who you are you deserve solar panels, because everybody is equal right, well "some animals are more equal than others"
              I understand communism just fine.

                I can tell you now that electricity prices will drop, but connection prices will skyrocket. This is how the problem of renters getting $1000 bills while home owners get $0. It's already a problem now, but will become massive in the coming years.

            It's actually called Socialism which does not equate to communism.

          There is already plenty of distribution of taxation to help the less fortunate, however, if you are middle class earning 50-60k complaining then yes, it will be about entitlement. While I don't disagree regarding reducing/cutting tax breaks to negative gearing, I do not agree with your sentiment regarding distribution of taxes.

          Plenty of high income earners pay on average 38c to the dollar in taxes and to get to where they are there had been lots of tears and sweat (e.g. my best friend is a surgeon, 10 years out of university, working over 60h a week, on call in the middle of the night, yet still "only" earns 180k a year, has to pay over 50k in taxes after deductions). If you want equality why don't we have a flat tax rate instead of a progressive tax system? There will be no pleasing of everyone in any tax system, there will always be winners and losers. The first step should be taxing all the multinational corporations dodging massive amounts of taxes instead of hunting down.

          The truth is solar systems are optional right now, if you are worried about a few hundred dollars each quarter then you should actually be worrying about your energy consumption. Our electricity costs are pretty much on par with other developed nations, while high is not unmanageable at this stage.

      Well, there is a solution, that Malcolm floated a few months ago, get a better job, become a landlord and win big time.

      Don't worry positively gearing property is the dream of every landlord, negative gearing is only viable during asset accumulation, it doesn't produce a real return for many years in most cases.

    "Not all will benefit" is wrong.

    You should have changed this to "Not all can go solar without without battery". Your whole premise was focused around people not being able to install "SOLAR" not batteries. If anything, this breakthrough "ENABLES ALL TO INSTALL SOLAR" because you do not need provider approval, aka off the grid.

      unless you rent...

        Who cares? Renters can look for buildings WITH solar. Or better yet, go buy.

        Just because I pay for a bus ticket does not entitle me to change the bus. The price and choice entitles you to catch a taxi.

    Wondering if those in apartments can use a battery to store off peak grid electricity for use during peak periods? Would that be viable?

    Haha, everyone bitching about the price isn't good enough yet... It's renewable energy... Shouldn't we be doing this for our kids futures!!!!

      no, why, only if it makes economical sense.

      CO2 isn't the only big baddie out there, poverty exists as well, I know which I would prefer.

    as someone who is building a new house in the next year or so this is very exciting news!

    Hopefully the batteries inside these can last a long time otherwise it will be a pointless exercise :(

    Actually, people that install batteries for time-shifting of power (either grid-generated or solar-generated) will help lower electricity supply prices for all consumers. 50% of the price you pay (according to Queensland estimates anyway) goes to pay for the poles and wires. Much of the grid maintenance and build-out is just to cope with peak demand. Time-shifting of power reduces peak demand, as it averages load out throughout the day. With less peak load, the requirement to build capacity is lessened, which reduces the overall grid costs.

      I don't understand why people don't see the actual reason these have been introduced.
      While @danhalford is correct, there is more to it than just the reduction in capacity the powerlines have to be built to for handling peak load periods. The fact is, this is an essential business decision for Tesla Motors and has little to do with the price the home user pays for electricity. Currently there is no way that Tesla can have their cars become mainstream as the load the cars would put on the network when everyone came home would be additional to normal peak usage levels and will cripple the network. Therefore by introducing this technology, the Powerwall can provide the necessary charging load during peak times to offset the additional network load. This allows the cars to be distributed throughout the masses without having to wait for the electricity companies to upgrade assets.

    Of course the whole idea of this energy storage thing is to encourage people to save the planet by using solar energy as opposed to other means, so it makes sense that the people who already have solar panels will benefit the most!

      that's a cynical take, don't you have the slightest suspicion that there are capitalist motives at work here?

      Musk must sell giga-batteries from giga-factory, because he can't shift enough giga-cars, voila, pack (probably lower quality cells) into a giga-THULE roof top carrier and call it a powerwall (to be rebranded giga-wall). Elon only has your best interests at heart, he wagers billions of dollars out of absolute altruism.

    Ding dong the grid is dead.

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