What Is Tesla Energy And Why Should You Care?

The promise of powering your life with solar energy and living off the grid has caused the solar industry to explode. The number of people who work solar jobs has doubled in the last five years. But the sun has one major downside as an energy source: it’s only available for roughly half of a 24 hour day. On an overcast day, it’s barely available at all. If you rely on solar power and expect to be able to watch a television show at night or heat your home during a storm without relying on your local energy company, that’s a problem.

 One obvious solution is coupling solar panels with home battery packs. During the day, your electricity needs are met by your solar panels. And any solar energy you don’t use charges your batteries. During the night or an overcast day, your home power system switches to battery power and uses that surplus energy. Viola: you have a reliable source of energy regardless of the time of day or the weather. Unfortunately, that solution runs into a new problem. 

 "The issue with existing batteries is that they suck," says Elon Musk. "They’re expensive. They’re unreliable. They’re stinky. Ugly. Bad in every way."

 Real World Batteries

As Chairman of pioneering solar company SolarCity, Musk wanted to find a solution. And he says he found it by using technology from his other industry-disrupting business: electric car manufacturer Tesla Motors. In 2007, he asked the Tesla Chief Technology Officer, JB Straubel, to research the possibility of attaching Tesla lithium-ion batteries to solar panels.

In April 2015, Musk announced the fruit of that request: a suite of batteries called Tesla Energy. Tesla calls the batteries “a critical step in this mission to enable zero emission power generation.” The centerpiece is Tesla Powerwall, a rechargeable lithium-ion battery designed to store energy in residential homes.

You don’t even need solar panels to benefit from Powerwall. In addition to storing solar energy, the batteries can also charge using energy from the grid. The idea is that you charge up your batteries at  night, an off peak time when energy might be cheaper, and then rely on your batteries for energy during the day. Your energy company is happy since you put less strain on the grid during peak hours. And you’re happy since you might pay less for power. Win win.

It could also keep your home running during a power outage. While your neighbors scramble for flashlights or run gas-powered generators during an extended power outage, if you have a Powerwall you could keep your lights and electronic oven on without a problem.

Tesla announced two versions of the Powerwall. There’s the 10 kWh model which can be sold to solar installers for $3,750, and a 7 kWh hour version that runs $3,000. However, that doesn’t include the costs of installation, solar panels, or an inverter. According to SolarCity, the real cost for the complete package is $7,340.

That price hasn’t kept early adopters away. Musk described the demand for the batteries as “crazy off the hook.” The first batch of Powerwalls are already sold out. If you want to get your hands on one, you’ll have to wait until the middle of the year. 

Under The Hood  

As Musk pointed out, this isn’t the first battery to ever be used in a home. But it might be the first to ever be designed specifically to appeal to the average homeowner. The most common energy storage system for homeowners who want to disconnect from the grid use lead acid batteries. These are the same type you have under your car’s hood. To get enough storage to make it worthwhile, you might need an entire room full of the bulky batteries.

In contrast, Tesla’s Powerwall batteries are as sleek and elegantly curvy as their cars. They’re heavy (about 220 pounds), but flat enough to be installed against a wall. Each unit measures about 33 inches wide, 51 inches tall, and 7 inches deep.

“It looks like a beautiful sculpture on the wall,” Musk said at the launch event in Los Angeles. “The fact that it’s wall mounted is vital. Because it means that you don’t have to have a battery room. You don’t have to have a room filled with nasty batteries. It means that a normal household can mount this in their garage or on the outside wall of their house.”

The Powerwall requires an inverter because it stores and supplies direct current (DC) electricity. Everything in your home runs on an alternating current (AC). The inverter takes the DC current and turns it into an AC current that can power your TV, blender, refrigerator, or any other home appliance.

Each battery can deliver 2 kWh continuously. How much is that? Let’s pretend that you have the 7kWh Powerwall installed, and you decide to switch on the air conditioning during a sweltering evening. Most AC units require about 1kw of energy. So that means that by turning on your AC, you’d consume half of the energy you could use at a single time. If your battery was fully charged, it would deplete in seven hours.

Except actually, that assumes that the battery operates at 100% efficiency, which isn’t possible. Powerwall operates at 92% efficiency, according to Tesla’s press kit. Some energy will also be lost in the DC to AC inversion. So it might be more realistic to expect your battery to provide power for a bit under seven hours in the above scenario.

Of course, that’s assuming you didn’t turn anything else on. But that’s still pretty good. Most appliances use significantly less energy than an air conditioning unit. Considering that the battery is designed to support your current energy source, it’s plenty for most homeowners. For those who want more storage and capacity, multiple batteries can be installed together.

What’s In It For You?

The technology is cool, but how does that translate into the real world? Is it worth it?

The answer isn’t simple. And it partly depends on how you define “worth it.” The economics of the Powerwall was the subject of a public battle between Tesla Energy and a nonprofit think tank called The Institute for Energy Research (IER). In January, IER released an analysis claiming that it would take decades before an average homeowner would recoup the costs of the battery. 

Specifically, they claim a homeowner who gets the battery by itself can expect to earn back what they invested in the form of energy savings in around 38 years. If a homeowner couples solar panels with the battery, then the timeframe gets cut down to 31 years. As the IER points out, this is much longer than the Powerwall’s 10 year warranty.

Tesla shot back the following statement.

“The report done by the Institute for Energy Research is elementary, at best, and completely misses the value of the Powerwall. For one, IER assumes a fabricated rate structure without citing any source. Transparently, if a consumer were to have a rate structure defined in the article, then the payback calculation is indeed correct. However, very few people with this sort of rate structure are interested in Powerwall for financial reasons. They are interested for energy independence, backup security, environmental reasons and tech early adoption, none of which are taken into account.”

Tesla also pointed out that in some regions, such as Hawaii, the UK, and Australia, the payback timeframe is less than ten years. It would be effective in Hawaii because the Aloha State has the highest energy costs in the United States. There, a bill for 600 kWh of energy runs around $177. Someone on the mainland would pay around $72 for the same amount.

Interestingly, Tesla didn’t refute the idea that the battery doesn’t make economic sense for at least some consumers. Instead, it appears they are banking on homeowners to see Powerwall as a way to provide their homes with energy security, be less dependant on the grid, and protect the environment. And maybe it helps if people buy it just to show it off to their neighbors.

However, like all technology, the effectiveness of lithium batteries is expected to improve over time. Green energy expert Winfried Hoffmann predicts that the cost of stored energy will drop to as low as $0.06 per kWh by 2030. If that’s accurate, then home batteries like the Powerwall will suddenly be more attractive to homeowners who want to cut down on their energy costs.

Competition

Tesla Energy is the highest profile home lithium ion battery manufacturer. But the announcement of Tesla’s products have apparently inspired competitors, both big and small, to produce their own home batteries.

Samsung, the largest manufacturer of lithium ion batteries in the world, announced the release of 8 kWh and 5.5 kWh energy storage units in June. 

Last year electronics giant Panasonic launched a pilot program in Australia for their home battery, the dryly named LJ-SK84A. They have plans to expand sales of the battery to Germany, the United Kingdom, France, and other European nations. Panasonic, incidentally, is business partners with Tesla.

Smaller, more nimble companies have also jumped into the space. Orison, a San Diego based startup, offers a home battery that doesn't require an electrician to install. It doesn’t have as large of a storage capacity as the Powerwall, but homeowners can install it simply by plugging it into a wall outlet.

Though the landscape of home based batteries is looking increasingly competitive, Tesla is still going all in on lithium batteries. They’re currently constructing the mammoth Gigafactory 1 in Sparks, Nevada to produce batteries for Tesla Motors and Tesla Energy. When completed, it will be the second largest building in the world by volume. By 2020, it’s expected to churn out more batteries every year than were produced worldwide in 2013.

The Future Of Energy

Musk’s goal is as bold as it gets. He wants to see the entire world switch to renewable energy. Considering the world’s energy demand is a staggering 104,426 TWh a year and growing, that’s a tall order. But Musk doesn’t sound interested in accusations that he has his head in the clouds. “This is actually something within the power of humanity,” he said after introducing his vision for Tesla Energy. “We have done things like this before. It’s not impossible. It’s really something we can do.”