The Tesla Powerwall home power storage unit is an exciting innovation, and it can save certain consumers real money on their power bills. Below, we list three ways Tesla’s new battery can create real home energy savings.
Tesla Motors announced the release of its new Powerwall home battery on April 30th, 2015 to widespread excitement. The battery is billed by Tesla as “energy storage for a sustainable home.” Pre-orders of the battery, according to Tesla CEO Elon Musk, were “crazy off the hook.”
In fact barely a week after the Powerwall’s release, Tesla had taken more than 38,000 pre-orders for the battery. Just a short time later, the battery had sold out through 2016, bringing in nearly $800 million for the company.
Not everyone was excited by the Tesla Powerwall’s release. Forbes blogger Christopher Hellman published an article titled, “Tesla’s Powerwall is Just another Toy for Rich, Green People.” His argument is that the Powerwall is nothing more than old technology repackaged, built on the backs of taxpayers through government funding.
1. Tesla Powerwall Money Saver #1: Powerwall Off Peak vs On Peak
The Tesla Powerwall should be able to save money for some consumers by storing cheap energy at night. Consumers can then use that electricity during the daytime when the power rates are high.
For example, Southern California Edison charges daytime power rates of $0.36/kWh in the winter and $0.46/kWh in the summer. Year round, the utility charges $0.11 for power during nighttime hours. Owners of a Tesla Powerwall could therefore charge their home batteries at night when power’s cheap. They could then use that cheaper power to run their homes all day when electricity from the grid is more expensive.
This Tesla money saving trick won’t work everywhere. In an article for SeekingAlpha.com, Ryan Reiber explains that in states with less than a $0.18kWh difference between the cost of daytime power and nighttime power, the operating cost of the Tesla battery will eat up any savings.
So how long would it be before a Tesla Powerwall in a Southern California Edison home paid for itself? According to the U.S. Energy Information Administration, the average American home uses about 11,000 kWh of power annually. Saving an average of ten cents per kWh year round, the battery would save $1,100 a year in the average home, just by doing the off peak to on peak conversion.
The 10kWh Powerwall is available from Solar City for $5,000 installed with a 9 year lease. At that rate, the Tesla Powerwall would pay for itself in less than five years.
How Many Tesla Powerwalls Would an Average Home Need?
According to Bloomberg Business News, the average house would need eight Tesla batteries running side by side to provide 10kWh of power all day long. Since eight Powerwalls would cost $40,000, any energy savings would be cancelled out by the high costs of purchasing and installing the eight batteries.
However, others point out that few homes need power all day long. Most homes use the most electricity only in the morning and the evening. Some experts estimate a typical home would need only two or three Tesla Powerwalls to meet their energy needs.
Figuring on a cost of $15,000 for three Powerwalls installed, it would still take 13.63 years for the batteries to pay for themselves in energy savings, even in areas with high power costs. However, use of tax deductions and credits can help ease the costs of purchasing and installing a home battery.
For instance, the federal Residential Renewable Energy Credit gives consumers a 30% rebate on solar electric systems and fuel cells. That alone would lower the cost of installing three Tesla Powerwalls to $10,500, cutting the pay-for-itself time to 9.5 years for the batteries. That’s assuming the Powerwalls were installed as part of a solar power system. State and local incentives can reduce initial costs still more.
Tesla Powerwall Money Saver #2: Solar Energy Buyback
Rooftop solar owners could store inexpensive nighttime power from the grid in a Powerwall for daytime use. Then during the day, they could sell all their generated solar power to the grid to get the highest rates the market offers. Meanwhile, they can run their homes from power stored in their Tesla batteries during the day.
Many states allow customers to sell power they produce back to the power company through a process called Net Metering. Rates vary state to state, but in some areas the pay for power generation can be quite high.
For example, Carl Baldino of New Jersey produces enough electricity from his rooftop solar panels to power his entire home. He also sells enough surplus power to the grid to earn $3,000 a year. Baldino’s money doesn’t come directly from selling his electricity at market rates, but from renewable energy credits from the state’s clean energy program. If Baldino owned a Tesla Powerwall, he could sell the bulk of his generated solar power to the grid instead of selling only part of it. He could then run his home on inexpensive power purchased from the grid at night and stored for daytime use. In this way, a consumer with a rooftop solar system like Baldino’s could boost their energy earnings significantly with a Tesla Powerwall.
Tesla Powerwall Money Saver #3: Homes With Solar Can Avoid the Grid Entirely
Many consumers with rooftop solar systems currently generate most of their power during the middle of the day. Unfortunately, most homes have the most need for power during morning and evening hours when solar power production is relatively weak. The result for many home solar energy producers is that they’re forced to buy power from the grid to supplement their solar systems.
A Tesla Powerwall could help store power from rooftop solar production sources during high sun hours for morning, evening and nighttime use. This in turn would save money for people with solar systems who would otherwise have to buy expensive electricty from the power company.
How Tesla’s New Powerwall Battery Will Save Consumers Money On Electricity – SeekingAlpha.com
How Much Electricity Does an American House Use? – U.S. Energy Information Administration
Tesla’s New Battery Doesn’t Work That Well With Solar – Bloomberg Business
Selling Power Back to the Grid – Bloomberg Business