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Tesla's Household Battery: Costs, Prices, and Tradeoffs
Technologist Ramez Naam (hat tip to Tyler Cowen's "Marginal Revolution" blog) has taken a look at the economics of Tesla's new wall-mounted household battery system, and concludes that it's "almost there," at least for many places in the world -- and seems to already make sense in some. From his analysis: For some parts of the US with time-of-use plans, this battery is right on the edge of being profitable. From a solar storage perspective, for most of the US, where Net Metering exists, this battery isn’t quite cheap enough. But it’s in the right ballpark. And that means a lot. Net Metering plans in the US are filling up. California’s may be full by the end of 2016 or 2017, modulo additional legal changes. That would severely impact the economics of solar. But the Tesla battery hedges against that. In the absence of Net Metering, in an expensive electricity state with lots of sun, the battery would allow solar owners to save power for the evening or night-time hours in a cost effective way. And with another factor of 2 price reduction, it would be a slam dunk economically for solar storage anywhere Net Metering was full, where rates were pushed down excessively, or where such laws didn’t exist.
That is also a policy tool in debates with utilities. If they see Net Metering reductions as a tool to slow rooftop solar, they’ll be forced to confront the fact that solar owners with cheap batteries are less dependent on Net Metering. ... And the cost of batteries is plunging fast. Tesla will get that 2x price reduction within 3-5 years, if not faster.
I don't know how this guy wrote the entire article without realizing it, but as Tesla explained in a Bloomberg article the cost of the 10 kWh battery's full installation plus inverters is $7100, not $3500, if you buy outright, and $5000 if you lease. It's just way too expensive. Battery tech needs to come down to under $100/kWh to become more mainstream, and solar panels need to drop to about half or even less of what they are now.
Tesla batteries use a lot of lithium. They haven't announced what this thing uses, but a Model S battery pack uses 25kg of lithium. Assuming it's around thr same amount, then you get 40 packs for every metric tonne of lithium produced. Global lithium production is around 34,000 tonnes, most of which is ear marked for cell phones. Ramping up production is hard because mining lithium is expensive and difficult. Therefore if this thing starts getting any actual sales traction, then the price of lithium will skyrocket, affecting any chance of the price of the PowerWall coming down.
Time will alter everything. Reality is, the more batteries produced the cheaper they will become and much more interestingly, the more batteries installed, the fewer people paying for electrical mains infrastructure, the much more expensive per user it becomes. That economic boulder rolling down a hill, faster and faster and faster, inevitable. Tesla still needs to do a complete system, ready to install by franchised installers (ensure quality installs), keep it simple. Not to forget, the Tesla power pack would be a strictly utility device, much like adding air conditioning, or a verandah, it adds capital value to the property. So forget the incumbent PR=B$ about measuring it against electricity charges because that is only part of it's value, it has real capital asset value and that value also needs to be added in, to more effectively compare it what is in affect rent and burn (rent your part of the infrastructure and burn your capital inputs).
Chaos - everything, everywhere, everywhen
Musk knows that to reduce the cost of EVs, the cost of making batteries has to go down, and the easiest way to do that, AND the best way to build up infrastructure, is to ramp up production.
That's what this is all about - not about making money, at least in the short term. Tesla just needs to have sales drive (and justify) the increase in production, and when the price of making those batteries drop, EV sales will become more attractive to a larger customer base, thus ramping up production more... rinse, lather, repeat.
OTOH, in a real crisis, that might be the last 20 gallons of gas you get your hands on for a good while. The solar powered system refuels itself.
in the ice storm of 1998, we were without power for 10 days. Honda is my friend....
Solar in the ice and snow strikes me as a dicey proposition
People want to get off fossil fuels. Its not a matter of which is more cost effective. Its a matter of how affordable solar and battery is. Its clear the technology has nearly arrived such that if a middle class household wanted to get off the grid, off coal, off gasoline for their car... they can do it and afford it. Even if its still more expensive, its within their reach where it wasn't before.