Last night at 11pm ET, in keeping with Tesla’s poor choice of announcement times, Tesla announced a new line of a suite of batteries for homes, businesses, and utilities as well as a focus on Tesla Energy as an extension of their business.

I wanted to take a look at the home product, the Powerwall Home Battery, and understand what problems it may solve.

The Basics

First the Powerwall is an energy storage unit, or battery. It comes in two sizes today (although they can be stacked/expanded), 7kWh and 10kWh (see whats a kWh) and they cost $3,000 and $3,500 respectively. Note that these costs exclude an inverter and installation, both of which can be quite expensive and estimates are that those additions would double the total cost. Despite the different capacities, Tesla only lists a single weight at a whopping 220 lbs / 100 kg. It’s also not small at 52.1″ x 33.9″ x 7.1″ or roughly 3.5 x 3 feet.

The concept is simple, the battery charges up from your utility or solar panels and is ready when you need it.

Like Tesla’s other products (cars), the Powerwall only appeals to a certain class of citizen:

• Almost all will be living outside cities
• They will likely need to own their own property
• They are willing to spend upfront money to save the planet or save money over a long term horizon

Tesla is expanding their demographics for home users in that they can now sell a product at a much lower cost to people which could open up a larger market for them, but only if the product is interesting to that market.

Installation

Tesla notes that the cost of the Powerwall does not include the inverter or installation. An inverter like the ones SolarCity uses costs about $2,000 and then would require the electrical installation on top of that.

Installation will vary greatly based on your own home situation but these things can keep the cost down:

• Existing net metering
• Being already wired for a generator (battery replacing generator)
• Installation location of Powerwall would be near a solar (PV) system reducing cable runs, etc.
• Solar (PV) system has components inside the home as well as outside the home. Mine for example is completely installed externally so new lines would have to be run from inside the house to the outside to connect into it.

The problem with generating or providing power from a backup unit is where the power goes. You can’t arbitrarily feed power back into the grid or your own electrical system without risk of overloading systems and killing people.

You have to be careful with installation so you don’t kill people.

There needs to be something that can handle the electrical flow. You get that along with the net metering used with Solar (PV) installations, or with generator installs but otherwise that infrastructure is generally not present in homes today.

If you’re missing that kind of infrastructure then the addition of it can be costly and complex. You can have basic panels with manual switches like the picture here, or you can go to full automatic switches which add significant cost.

Finally some hulking people will need to mount that 200+ pound unit on some large available wall space with plenty of room around it for cooling and you’ll need to make it look nice so expect some costs around that.

Use

Tesla proposes two primary use cases for the Powerwall:

1. Time of Use (TOU) offset
2. Backup power

Lets explore these two potential uses.

Time of Use offset

In some states and countries they offer Time of Use (TOU) electricity pricing. The concept is simple: you pay different rates at different times of the day. During peak hours the rates are higher than they are at off hours. Many Tesla owners that live in areas that offer this take advantage of TOU pricing to charge their cars at lower rates.

Tesla owners take advantage of TOU pricing when they can to charge up for less.

Unfortunately TOU pricing is not widespread and here in Massachusetts its not available. So this potential benefit does not exist today but could be more widespread in the future with a lot of changes in regulation and stubborn electricity companies.

If you do have TOU pricing, perhaps you can benefit. First you need some additional controls around the Powerwall to tell it when to output power and when to charge back up. There are no details in how you would control that on Tesla’s site and how you would configure it for your own electrical company’s schedule.

Tesla provides no information on how you control and use the Powerwall.

The other concept in the TOU benefit for the Powerwall is that you’ll charge up at a low rate and use that to offset a higher peak rate.

It takes a long time to pay back based on TOU pricing.

Looking at one electricity company, Southern California Edison, their off-peak rate is $0.11 and their peak rate is $0.46 for a savings spread of $0.35 per kWh. The large Powerwall unit is 10kWh, so assuming you got the max output at the perfect time each day you would save $3.50 per day. The unit itself (without install) costs $3,500 so to pay for the unit itself with this benefit would take about 3.5 years. Add in the installation and you’re looking at closer to 5 years on a true payback on your investment.

Note that SoCol Edison is one of the most favorable companies in TOU pricing. In the other rare areas where TOU pricing is available the price gap between peak and off-peak pricing is much smaller. For instance in Wisconsin the spread is $0.13 and the breakeven (Powerwall unit only) is over 10 years.

Payback based on TOU can take 5-10 years.

There’s an argument if you have a Solar (PV) system that you could charge the battery up from the sun for free and get a faster payback, but that’s ignoring the costs of the PV system. People have either bought or leased a PV system and there’s a payback or ongoing cost for the power generation.

Backup power

The other stated potential use case for the Powerwall is as a backup power unit for your home. Again, you’d have to have the installation support this with the proper controls/shutoffs for the feedback cycle and to power only the essential circuits/devices.

Tesla’s site gives some good indications on what you could expect to run off it. Don’t expect to run your whole house. But a few key appliances, could run for a decent time off either battery. For instance your refrigerator could run for 2 days off the larger battery if it was the only device on the battery. This time could be extended if you could re-fill the battery from a solar system.

So for example, in the case of an extended power outage you may be able to run some key home services indefinitely with the proper size battery, the right size solar system and all the right shutoffs etc. and of course plenty of sun light.

The ability to re-fill from solar is a nice benefit, but the competition is a gas powered generator.

A 6.5kW generator can be had for for as little as $800. That generator can output 32,500kWh (50% load x 10 hours according that link). So thats 3x the power at less than 25% of the cost of Tesla’s offering. The cost for that power? About $15. The generator, unlike the Powerall, is mobile — you can take it camping, etc. Generators, since they’re used infrequently, have very low maintenance. Generators can be re-filled quickly and regardless of weather conditions (hurricanes, snow storms etc which are the likely times you will lose power).

Power as a power backup unit is a poor second to a real generator.

I have a Hona 6.5kW generator. My house has its own well, septic etc. When power goes out I fire up the generator and power the things I need. I have water, hot showers, heat (oil, fired by electric which is powered by the generator), lights etc. I have run for days off that generator in some of the worst weather conditions New England can throw at me. I’d argue if you’re serious about backup power then a generator is still the best option.

Powerwall, as a backup power option, is likely only a good fit for those who live in more temperate climates and that have a solar install.

What Tesla should have done

I can’t really comment on the commercial aspects of Tesla Energy and selling to businesses and utilities, so I won’t do that. I think Tesla should have continued to focus on vehicles with their energy products, but I don’t mean cars.

There’s a large market out there of lawn mowers, ATVs, snow mobiles, boats, etc. that could benefit from Tesla’s focus. These vehicles are painful to maintain, use more fuel than most would notice and fit in the sort of price range and demographics the Powerwall is intended for — the ‘burbs. Some vendors like Cub Cadet have already introduced electric versions of their mowers.

Tesla may not want to get into the business of building and selling lawn mowers, but a deep partnership with leading brand names like John Deere, Cub Cadet, Polaris etc to co-develop these more personal BEVs would be of a lot more interest to a much broader market and ultimately do more good for the planet as a whole.

Where should Tesla go with Powerall? I’d say get it added in as an option with every Solar install by any Solar company possible and ride the solar boom. Tesla is clearly already going down that path with the partners they’re listing today. Oddly SolarCity isn’t yet present. I don’t see a lot of good potential growth as a sale from Tesla directly to homeowners other than the initial wave of Tesla fans.

UPDATE: It seems some read this post as me being against the overall strategy Elon is outlining in moving away from fossil fuels, harnessing and storing free energy etc. That is not the point of this post. This post is about a consumer product that makes no sense and is not actually good for the consumers. If people wish to buy it for the good of the planet as a whole thats a different consideration and one each person can make on their own.