Tesla's Powerwall - with solar it could slash power bills. But is it worth it?
http://www.businessspectator.com.au...-solar-it-could-slash-power-bills-it-worth-it
OK, so Tesla have now blasted down the cost of getting a large home energy storage battery, but what’s it worth to you?
There are quite a large number of variables at play that influence this equation although no doubt there’s a few smart bunnies developing web-based calculators to help you work it out reasonably precisely. But in lieu of these calculators being ready, here’s some very rudimentary analysis.
Firstly, we need to understand how the addition of storage might change a household’s consumption profile. The battery’s value is derived from its ability not so much to get you off the grid (the cost of the infrastructure is largely sunk, so it makes sense to utilise it) but rather to shift demand in time to reduce the need for new network capacity.
The chart below prepared by AGL Energy staff based on 3000 Sydney households’ electricity consumption shows the average electricity demand per household by time of day; for both the maximum peak demand day (in black) in 2010 and the overall annual average profile (in grey).
Source: Productivity Commission taken from AGL Energy analysis
The trick will be for the battery to help lower the height of the curve. This should reduce the need for new network capacity but also reduce the need to bring on more expensive power generation. That’s what’s required to lower the overall power system’s costs.
However, for the purposes of today’s article let’s focus on the individual household. Households see somewhat different incentives based on current tariff structures. Where there are pricing structures that vary between peak and off-peak periods the battery allows the household to shift demand for grid imports out of the peak period.
Now a battery can help a household to do this whether or not they have a solar system installed. However, because a solar household will often only get just 6 cents per kilowatt-hour for the power they export to the grid, while off-peak power tends to be at least twice this cost, batteries provide a bigger arbitrage opportunity for households that have a solar system installed, particularly a large solar system that exports a large proportion of its generation.
Below I’ve charted an adjusted profile of a household’s annual average consumption profile (the AGL data actually appears unrealistically high and has been adjusted downward by 0.5kWh in every hour). Then I’ve overlaid a rough approximation of the profile once a 5kW solar system has been installed (red line). As you can see you end up with a large dip around midday when the system fully offsets the household’s entire consumption and exports a large surplus. Then in green I’ve shown the possible effect you could achieve if you were to install two of the Tesla Powerwall battery packs, giving 14kWh of storage.
Figure 2: Average annual household power consumption profile including solar and also storage.
Source: Climate Spectator analysis
Essentially, the storage system allows the household to use up all the power they would have otherwise exported at 6c/kWh, and instead use it to completely offset grid imports from 7am (hour 7) until 11pm (hour 23). The price of the power that has been offset during this period varies greatly depending on the network distribution business, power retailer and tariff structure selected.
To take an example of a tariff structure which provides the greatest reward for energy storage I’ve charted the cost impact of the consumption profile using the Ausgrid time-of-use tariff, but haven’t taken into account lower rates during the weekend for simplicity. This tariff structure (once retailers add their costs) provides a different price for 'Peak' (50c/kWh for 2pm-8pm), 'Shoulder' (20c/kWh for 8pm-10pm and 7am-2pm) and 'Off-Peak' (12c/kWh for 10pm-7am).
Without storage the very large amount of exports from the solar system provide only a very small reduction in the power bill due to the small 6c/kWh export payment, while still leaving the household with a large hit over the evening (the line in blue). Storage allows the household to shift its 11.6kWh of exports into obliterating almost its entire electricity bill by taking out consumption during the entire peak period but also almost the entire shoulder period as well (the line in red).
Figure 3: Hourly profile of electricity cost to household with solar and solar combined with Powerwall storage.
The final result is that rather than paying a power bill of $1200 per year (excluding the fixed connection charge), they instead pay about $220 for a total saving of $980.
So is this enough to justify the cost of the battery system?
Probably not if you primarily care about maximising financial returns.
Adjusting for the exchange rate, two 7kWh Powerwall units at publicly quoted US pricing will cost $7500 in Australian dollars. If we then assume $1500 for the inverter, about $1000 for the charger and $800 for installation and retailer margin, that gives a total cost of $10,800. This cost is impressionistic, it may cost more, but is hard to judge given no one is offering to install a Powerwall system in Australia as yet.
So you’re looking at 11 years to get a simple payback on the Tesla Powerwall, one year longer than the warranty.
However, there are plenty of people who don’t care about purely maximising financial returns. They get emotional value from being at the leading edge of technology, or by snubbing the power company. These people are hopefully numerous enough to build scale and learning to bring down the costs of these energy storage systems.
In addition there is value to the power system as a whole, not just the individual household, from such storage systems exporting power to the grid at times when grid capacity is constrained. Also, the cost of servicing rural customers around Australia via the grid is in fact far higher than the price they are charged. These mean there are niches where the Powerwall’s value may in fact be greater than just the avoided power bill cost to the individual household.
