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Tesla Powerwall: What Does It Mean For Renewables?

tesla power logo

What is the significance of the Tesla Powerwall storage appliance and what does it mean for the future of energy and Tesla?  Travis Hoium covered a great deal in this Motley Fool article.  He points out that at today’s electricity prices the Powerwall is a boutique product.  It is not economical.  If you want backup, a generator is much less expensive.  In fact, the only justification for battery backup of this kind today is for niche markets with very high electric rates (such as Hawaii) and for commercial entities to reduce demand charges.  But Tesla introduced a battery backup solution for demand charges almost 2 years ago.  So what is Elon Musk up to?

There are 4 reasons for the PowerWall:

1) Market creation: The renewable energy buzz is strong right now.  For years, solar energy has been a niche market and the mainstream has been mildly curious about it.  Low prices, residential PPAs and great marketing by companies such as Solar City has mainstreamed solar.  Now the question in the public’s mind is “what about night time”.  Just as the Supercharger network solves a non-problem (at least for the vast majority of EV owners), Powerwall solves what is currently a non-problem for the renewables industry.  It is a product that manages public perception.  Musk doesn’t advertise but everything he does is marketing.  And powerwall is about marketing and technology development.

2) Technology Development Targeting Future Markets:  In electric cars the progression of products has been cleverly designed for Tesla to learn / create the technology for mass market products.  In storage they are following a similar road-map.  Tesla makes no secret of its auto road map.  The Roadster targeted a tiny boutique market of cool in order to develop a technology baseline for future plans.  The Model S was designed to teach the company how to mass produce cars in moderate volume.  The Model 3, due for release in 2017 is targeted at high rates of production and the mainstream.  Think of Powerwall as Tesla’s model S for their storage business.  The Powerwall equivalent of the model C will develop as battery prices are driven down by volume in the EV industry.

3) To Drive Grid Storage Policy Development:  With an operational real world example of the technology in the marketplace, policy makers have something tangible to give policy development traction and reduce their risk.

4) A Test Market Exists to Act as a Laboratory:  California’s Grid Energy Storage mandate pretty much assures a market of sufficient size that Tesla can do a real world test of Powerwall.  In other words, they can do a large pilot test without incurring significant, possibly any, losses.

What does it mean?  This is analogous to the introduction of the MacIntosh computer in the 1980’s.  The early Macs had questionable economics.  For the $2500 price tag you could buy a lot of hours paying someone to type and even do graphic layups of documents.  But most recognized immediately that the MacIntosh represented the template of the future.  While its economics were questionable initially, the passionate niche of early adopters assured that the paradigm shift took hold and offered the niche market needed to drive the technology to maturation.

Powerwall is not a technology breakthrough.  It is revolutionary only in its timing, who is doing it and the fact that Musk and company offers the leadership and credibility to disrupt the energy industry and lead us down a path to clean distributed energy.

Photo Credit: Tesla Developments/shutterstock

Clayton Handleman's picture

Thank Clayton for the Post!

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Discussions

Bob Meinetz's picture
Bob Meinetz on May 4, 2015

Clayton, what’s to stop someone from installing a tiny solar array, hooking up a natural gas generator, then selling their inefficient stored fossil energy back to the grid at net-metered rates?

Also, I see on you bio you’re a physicist and an engineer. What’s your training in these two disciplines?

Clayton Handleman's picture
Clayton Handleman on May 4, 2015

“what’s to stop someone from installing a tiny solar array, hooking up a natural gas generator, then selling their inefficient stored fossil energy back to the grid at net-metered rates?”

Not my area of expertise but off the cuff I think there are two problems with that.  First, I do not know whether you can purchase gen sets for home use that are enabled to synch to the grid.  If you do I would be interested to see a link.  Most backup generators that are hard wired in to residential and small commercial are just that, backup generators.  They have transfer switches so they cannot connect to the grid.  If you bypass the transfer switch it is a fight between the gen set and the grid and the grid always wins.

Also, most net metering programs are just that, net metering.  They never allow you to sell back more than you use other than to carry it forward.  So in other words the best you can do is avoid the full retail cost of the electricity that you use behind the meter.  Some programs it nets out in a month, some in a year but the point is that the utility never is forced to purchase electricity at the retail rate beyond what is used behind the meter.

 

Willem Post's picture
Willem Post on May 4, 2015

Bob,

In Spain, some folks were caught “augmenting” their PV solar outputs with engine generators.

If Joe Blow with 10 kW reports 1500 kWh for a month, then Joe Smart Alec with 5 kW cannot report 1500, to get subsidies.

Bob Meinetz's picture
Bob Meinetz on May 4, 2015

Willem, why shouldn’t they, when solar facilities like Ivanpah are doing the same thing here in the U.S.?

It’s about time we liberated utility-owned grids from the utilitiies, and turned them into entrepreneurial free-for-alls. What could possibly go wrong?

Bob Meinetz's picture
Bob Meinetz on May 4, 2015

Clayton, where are you getting your information on net metering? That’s the first I’ve heard of restrictions placed on sales to the utility:

Net  metering  policies  were  introduced  to  encourage  the  growth  of  DG  systems  when  they first  came  to  market  years  ago.  While  net  metering  policies  vary  by  state,  customers with rooftop  solar  or  other  DG  systems  usually  are  credited  at  the  full  retail  electricity  rate  for any  electricity  they  sell  to  electric  companies  via  the  grid.  The  full  retail  electricity  rate includes  not  only  the  cost  of  the  power  but  also  all  of  the  fixed  costs  of  the  poles,  wires, meters,  advanced  technologies,  and  other  infrastructure  that  make  the  electric  grid  safe, reliable,  and  able  to  accommodate  solar  panels  or  other  DG  systems.  Through  the  credit, net-metered customers effectively are avoiding paying these costs for the grid.

http://www.eei.org/issuesandpolicy/generation/NetMetering/Documents/Straight%20Talk%20About%20Net%20Metering.pdf

Also, in regards to my earlier question: we’ve had many discussions on TEC and I never knew you were both an engineer and a physicist. You’ve completed degree programs in those disciplines where?

Nathan Wilson's picture
Nathan Wilson on May 5, 2015

“…net metering.  They never allow you to sell back more than you use …”

That’s an arbitrary distinction, and hints at a problem (i.e. a hidden subsidy).  I would argue that with a fair tariff design, there should be no need to limit the amount of electricity that a homeowner could pump into the grid (except to prevent overloading the circuit or to fairly implement curtailment); otherwise, the system won’t reach the most economical combination of residential, commercial, and utility-scale generation (which it must do in order for the transition to be acceptable to the poor).  In other words, “pro-sumers” should pay a peak-power-based grid access fee (to un-bundle from energy cost the fixed cost of the distribution grid and the backup-generation that everyone enjoys and counts on), buy energy at real-time retail price, and sell at real-time wholesale.  And the wholesale price would have to be higher for dispatchable or baseload versus non-dispatchable power (adjusted by a formula that accounts for the cost of utility scale storage and/or fossil backup and takes into account the effect of demand-response).

Administering such a system would be very complicated (i.e. very vulnerable to manipulation and lobbying), and all it could achieve (in absense of a storage cost miracle) is fossil fuel lock-in and unhappy electricity customers.

Clayton Handleman's picture
Clayton Handleman on May 5, 2015

This is a good source of unbiased information on Net Metering programs.  It allows you to access summaries of the actual programs.  It also provides all of the information you need to fully understand the policies in each state.

Your source, EEI, serves the investor owned utilities not their ratepayers or the general public.

In the early days of net metering a typical program would allow you to zero your bill for a given month but no more than that.  If you generated excess it was free to the utility.  There was not carrying forward your excess production and the utility did not write checks to PV array owners. 

The solar industry lobbied hard for carry forward net metering so that if you went over, you could carry it forward to the next month.  The idea being that you would not sell to the utility but you could use your solar array to reduce your bills down to zero.  The thinking went in places like New England that people would not gain the benefits of their summer excess in the winter.  The idea of carry forward was, in most peoples mind, so you could fully offset your usage.  This was at a time when volumes were much lower than they are now.  The idea was to create a demand environment whereby there would be a market to drive PV into a lower price regime.  It was / is well known that for every cumulative doubling, the cost of solar modules drops by about 17%. 

Many net metering programs have volume restrictions so that the PV remains a small fraction of the overall load for the utility.  So the impact is small.  Now that volumes have gotten much larger and the PV generation is becoming a non-trival fraction of the generation in some areas, I think it is healthy and inevitable that mechanisms will be updated to address the changes.

Missouri offers a good example of net metering.  You can read about it here.  They address what you are concerned about and call it Net Excess Generation.  They also talk about the carry forward provisions and a sunset on credits that are carried forward. 

You can easily poke around the DSIRE database to get a more complete understanding of the details of varous net metering programs that are in force around the country.

Joe Deely's picture
Joe Deely on May 6, 2015

Here is one thing it means.

Initially a drop in the usage of simple cycle gas peakers. Eventually, the total elimination of simple cycle gas peakers.

 

Joris van Dorp's picture
Joris van Dorp on May 6, 2015

This is analogous to the introduction of the MacIntosh computer in the 1980’s.”

I don’t believe it is.

The MacIntosh computer was in all respects a complete replacement of the conventional desktop PC. A Macintosh computer moreover did not contain particular special materials and was not particularly heavier or bulkier than the PC it replaced. It’s higher cost was not a function of the cost of the raw materials used to make it, but mostly a function of the added design and software capabilities, as well as the small market it served (high-income consumer market). There were also some hardware differences initially (not today), but this was not the main driver of cost.

Solar + storage does not credibly replace conventional stable centralised baseload power generation. If it is scaled to such an extent that it does effectively perform identically to a conventional stable generator, then its materials requirement would be an order of magnitude greater than the existing conventional alternative. Hence, its cost will also be and order of magnitude greater. Only a full-blown miracle in electricity storage technology development will change this situation. Hence, there is no analogy whatsoever to the MacIntosh exampe.

Willem Post's picture
Willem Post on May 6, 2015

Some people think the TESLA units would be complementary to households with EVs.

A plug-in EV would consume about 12,000 mi/yr x 0.30 AC kWh/mi = 3,600 AC kWh/yr, as measured to the charger, which would provide 3,312 DC kWh/yr to the EV batteries, if the charger AC to DC efficiency is 0.92*.

A NEW 2.7 kW PV solar system in New England would produce 2.7 x 8,760 x 0.143 = 3,382 AC kWh/yr, or about 3,382/0.92 = 3,676 DC kWh/yr (no PV inverter losses), which would remain greater than above 3,312 DC kWh/yr, even after about 17 years of PV panel aging.

* Inverter efficiency is about 92% from 20% to 100% of inverter rated output, about 50% at 10% inverter output, about 10% at 2% inverter output. Ergo, the 3,382 AC kWh/yr may be less, because PV solar systems operate many hours at less than 20% of rated output.

TESLA Battery Unit: If a wall-mounted, 10 DC kWh, TESLA battery unit, costing $3,500, plus installation, is provided, the DC output of the above 2.7 kW PV solar system could be assigned to the TESLA unit.

Round trip DC loss of the TESLA unit would be about 8%, i.e., about 3,676 x 0.92 = 3,382 DC kWh/yr would remain greater than above 3,312 DC kWh/yr, even after about 4 years of PV panel aging!! A greater than 2.7 kW PV solar panel system would be needed to offset the lack of PV panel aging margin.

Where is the advantage of the TESLA unit?

TESLA also offers 100 DC kWh units, which can be wired together. The utility should be using those units to stabilize its distribution grids with significant PV solar system capacity.

If the house is equipped with a 4.9 + 2.7 = 7.6 kW PV solar system, the house and plug-in electricity are offset; the plug-in is assumed to operate only on electricity.

Mark Heslep's picture
Mark Heslep on May 6, 2015

Joe –  thermal backup can operate indefinately and accomodate the odd long term outage or the regular seasonal one in areas where that occurs.  Battery storage never can.  Maintenance of a near full load conventional backup capacity is one reason high penetration of intermittents has an exhorbitant cost. 

Bob Meinetz's picture
Bob Meinetz on May 6, 2015

Willem, are you including internal resistance losses in the 8% round trip DC loss?

Bob Meinetz's picture
Bob Meinetz on May 6, 2015

Clayton, thanks for your invitation to “poke around” the DSIRE database, but I don’t have time to search out specific references for you. If you make a claim, it’s your responsibility to back it up.

Physicists and engineers are meticulous about that kind of thing. Which leads me to my next question: why are you conspicuously avoiding revealing the qualifications which enable you to include yourself in those groups? That’s relevant. If readers don’t have the right to qualify claims – or even opinions – of what they’re reading, it doesn’t have a lot of value.

Out with it. What’s your training?

Joe Deely's picture
Joe Deely on May 6, 2015

Mark,

Not exactly sure how your comment relates to mine regarding gas peakers.

Usage of simple cycle turbines has already been in decline and this large amount of new storage will accelerate that trend. 

Solar City is already looking to do this. See here.

  • Any utilities or grid operators interested in exploring storage benefits such as peak shaving, frequency regulation, and voltage support should contact us. I’ve recently created a Grid Engineering Solutions department made up of some of the brightest minds in power systems engineering, and its mission is to help solve the challenges preventing the shift from the grid that we currently have, to the grid that we need.”

Further information on replacing peakers with battery storage can be found in this study.

 

Willem Post's picture
Willem Post on May 6, 2015

Bob,

The 8% roundtrip DC loss is in the TESLA data sheet.

Round trip for a lead acid battery it is about 19%, i.e., 10 fed, 9 stored, 8.1 discharged,

Clayton Handleman's picture
Clayton Handleman on May 6, 2015

This was intended to be a reply below.

Clayton Handleman's picture
Clayton Handleman on May 7, 2015

Bob,

I noticed there is nothing about you other than a reference to a web development company.  But that site does not list names.  Is it the company you are president of.  I also noticed that the only reference to you on Google is one TEC post and a thorium web site pops.  Quite a feat to cleanse the web of your doings or to do so little that Google has nothing on you.  Anonymity combined with antagonism and flooding the site with hostile posts is exactly the pattern one would expect to see from someone paid to degrade the conversation on a widely read renewable energy site.  My credentials are easily found with a web search on my name.  No doubt you already knew that.  Your multiple posts and drama regarding my background further begs the question who are you and what is your agenda? 

I am happy to share that I have a B.A. in physics and minor in mathematics from Washington University and an M.S. Physics from Purdue university.  In graduate school I worked on particle detectors that were used at fermilab. My work upon leaving was with MIT Lincoln Laboratories in radar systems, signal processing, scientific programming, ultra high speed data acquisition, semiconductor testing, hybrid circuit design and fabrication, bare chip CCD testing and semiconductor simulation along with supplemental graduate and undergraduate coursework in radar systems, embedded systems, signal processing and control systems gave me the skillset of an experienced EE but without the formal degree.  Missing from my resume was power electronics.  I was hired by Ascension Technology and developed a grid tied module integrated inverter rounding out my resume. 

If you have any further concerns about how I represent myself please take them up with TEC. 

 

 

Nathan Wilson's picture
Nathan Wilson on May 7, 2015

Clayton, I would encourage you not to interpret questions about your background as a personal attack (and questions about information sources are always fair).  One of the things I enjoy about TEC is the diversity of the authors, which include many clean energy enthusiasts, business people, as well as technical people knowledgable in renewables, fossil fuels, and nuclear energy.  We all have biases which are shaped by our backgrounds, so as a result, transparency about those backgrounds is a good thing.

Another good thing about TEC is the extremely light hand of the comment Moderater.  Unfortunately, this means that there is a double standard, in which post authors are held to a higher standard than commenters (e.g. authors are required to post a photo, but commenters are not).  Even so, TEC articles typically have good discussions in the comments; comments don’t have to come with a pedigree to be valid and valuable.

Tom Plant's picture
Tom Plant on May 7, 2015

It’s an interesting first generation entry into the storage market. And it’s pretty.

There is tremendous benefit to the grid in being able to absorb demand spikes in the battery and sheilding those from the grid. That also releives the ratepayers of paying for additional generation to meet those demand spikes.

There’s an opportunity in the markets that will exist, to arbitrage power when the grid needs it. I think there’s an additional benefit of providing an alternative to net metering for solar owners in an uncertain policy environment where there are continual attacks on net metering policies.

I think Tesla has missed a couple opportunities – 1) only having DC in is great for solar systems, but if you want to grid tie your battery, you will need to buy another inverter. 2) only having AC out limits the potential efficiency of a system that could stay DC (to power lights, electronics, motors, etc…) from the solar generation to the consumption with no inverter losses. 3) Increasing intelligence in the battery to actively manage demand would be another great DR resource that could be sold to the utility along with volt/var optimization capabilities.

I think those missed opportunities are true from the information I could gleen off of the website. But it’s limited information – if someone has more info, would love to hear it.

Clayton Handleman's picture
Clayton Handleman on May 7, 2015

Thanks Nathan,

The tone and source were what was at at issue for me, not the specifics of the request.  I think spirited dialog is good and I think it is fine to be anonymous.  Just not both at the same time.  While commenters have a lower bar for personal disclosure I find it very troubling when adversarial commenters hide behind the Internet’s veil of anonymity.  

Regards,

Clayton

Joris van Dorp's picture
Joris van Dorp on May 9, 2015

The PowerWall is Cool. Tesla is Cool. Elon Musk is Cool. Cool customers with Cool money to burn will buy the PowerWall and help Musk be a ‘succes’ and a ‘leader’ of sustainability.

Uncool average people with an uncool hand-to-mouth existence with not be affected by the PowerWall, except in one way. They will pay higher taxes in order to support the subsidies for the ‘Gigafactory’, the solar PV net metering, and the Cool Tesla product tax breaks which help allow the Cool people buying Tesla and other Cool ‘green’ subsidized gadgets to save money.

Mark Heslep's picture
Mark Heslep on May 9, 2015

The PowerWall is Cool. “

Too modest:  “Crazy, off the hook cool according to the Elon.  Aparrently there’s no stopping the Cool. 

Joris van Dorp's picture
Joris van Dorp on May 12, 2015

Whether he is able to sell because it is cool, or cost effective is irrelevent, it helps.”

I suppose that’s where you and I disagree most completely. Anything which (purportedly) improves the environment, but does not do so cost-effectively, does not help. In fact, it worsens the situation, especially when precious public funds are used to create an illusion of cost-effectiveness.

There is only one technology which cost-effectively improves the environment (and much more besides) and that is nuclear power. History proves this, despite the lies from the anti-nuclear movement. When anti-nuclearism finally dies sometime in this century, that is when global environmental protection will become a real possibility. Before that time, nothing will change and nothing will help.

Joris van Dorp's picture
Joris van Dorp on May 12, 2015

The cost difference is a wash”

If only it was. If renewable energy was cost-effective, there would be no climate problem and no energy problem and this website probably wouldn’t even exist. 

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