Power(wall) to the people!

May 2nd, 2015 by

Does Tesla’s offer of cheap electricity storage put the writing on the wall for fossil fuels and nuclear power?

Technology seems to advance in two ways. Small incremental changes and big leaps – the game changing innovations which fundamentally change the way we do something. Sony spent a decade refining the Walkman™ then Apple repackaged the MP3 player into the iPod.

Curiously, the big leaps rarely seem to come from companies with the long industrial histories of product refinement. More often it’s outsiders without the backstory or product baggage who have the space and audacity rethink a problem and propose a new way forward.

Prior to the iPhone, Apple had no experience of developing mobile phones and so wasn’t burdened with a notion of what a mobile phone should be like. Plus Steve Jobs had a remarkable ability to reimagine existing technologies into new products which most of us didn’t even know we wanted, and now struggle to live without.

Elon Musk is one of those ‘outsiders’, (even if he lacks Jobs’ pizzaz when it comes to product launches). The founder and CEO of Tesla Motors, Musk made his name and money in software (Zip2 and Paypal), before setting his sights on building, amongst other things, better cars.

Tesla Model S

Tesla’s Model S – all electric sedan

A glance at Tesla’s latest offer, the Model S, is enough to confirm that this is a car with a software rather than hardware pedigree. It bristles with innovation and just as Apple had no problem ditching keypads on mobile phones, Tesla dropped the internal combustion engine to build an all electric car, not for the sake of going electric but ‘because it’s better’.

Enter Tesla’s latest product – the Powerwall. Essentially a domestic battery pack for storing up to 10 kWh of electrical energy. Tesla is touting this as a way to shift electricity supply and demand. For homes with solar PV systems most of the electricity generated will be produced during the middle of the day, and most of the requirement for electricity will be in the morning and evening. The Powerwall enables you to store the electricity produced when you are out for use when the PV system is generating less, in the morning and evenings, or at night when it’s producing nothing at all.

Tesla also envisage the Powerwall being used to avoid having to buy peak rate electricity, by charging up at night, with off-peak and cheap rate electricity, and supplying this stored energy in the day.

Tesla Powerwall

Tesla’s Powerwall – 10kWh home electricity storage

The first generation of the Powerwall is $3500 for the 10kWh version (there is a 7kWh model for $3000) and critics pointed out that the grid electricity is still likely to be cheaper for many US householders. But aside from the fact that it is a fraction of the $13,000 price tag anticipated, that misses the point and the significance of what Tesla is doing.

For one thing the cost of the home system is certain to fall in real terms and also likely to fall relative to the price of grid electricity. Besides, the cost doesn’t seem to have deterred buyers; Tesla has pre-sold the first batch before making a single unit.

What Tesla is really selling householders is independence and autonomy – the opportunity to be free of the electricity grid and to use all the electricity generated when you want. In fact, like Apple with the iPod, Musk has taken an existing idea – battery storage, and repackaged into something consumers understand and want ‘the Powerwall’.

Alongside the Powerwall Tesla is also producing the utility scale Powerpack – 100kWh battery blocks that are grouped in packs from 500kWh to 10MWh+. It’s this which has really set the market buzzing and lead analysts to describe it as ‘disruptive’ with headlines such as ‘Did Tesla just kill nuclear power?’.

At scale  the concept of electricity storage really starts to make sense. The installation cost falls to $250 per kWh for the Powerpack, and operational costs of 2¢per kWh are being mooted. If true that’s a game changer. Bear in mind that the UK Government has signed an agreement to guarantee (the dollar equivalent of) 16¢per kWh for power generated the nuclear reactor proposed at Hinkley Point.

Cheap electricity storage also creates potential to defer investments in generating capacity which is exciting developers and investors alike. Electricity demand varies throughout the day. In the UK demand climbs by about 13GW between 6.30am and 8.30am. Generators and suppliers have to gear up to meet this peak demand, which means there is excess capacity at other times. This fluctuating demand, and inability to store electricity, creates a colossal (if well established) headache requiring a host of expensive technical and financial mechanisms to fix.

The use of battery storage to service peak loads would mean that generators could invest in fewer power plants, and reduce the need for the ‘fast-start’ generators which are less efficient and more expensive to operate. Grid level storage could also defer investment in transmission and distribution infrastructure designed to serve peak loads. This is particularly pertinent for large scale renewables, which are being delayed in the UK due to constraints in network capacity.

Tesla Powerpack

Tesla’s 100kWh Powerpack

Consider a 1MWpeak field scale PV system. On average this should generate around 850,000kWh per year in the UK (more in southerly latitudes). As it stands the distribution network would need to be capable of dealing with peak outputs from the system of 1MW, even though most of the time the output would be considerably less than this. If the annual total output was produced evenly over a whole year the output falls to around 100kW – hardly a technological challenge. In reality flexible storage would allow the electricity generated to be used in a much smarter way, matching demand as required and potentially attracting a much higher price for the electricity produced.

In the end this will come down to money and whether the market buys into this ‘idea’. In the US wind plus battery storage is being discussed as a ‘nuclear killer’. In the UK the Conservative Government is backing fracking, and new nuclear to provide replenish an ageing fleet of reactors.

Neither of these options will be quick to deploy, (consider the logistics of getting fracked gas from pad to pipe). By contrast wind and solar plus storage could be very quick. If it can be delivered at lower cost than new fossil fuel and nuclear generation that would really put the writing on the wall.


Tesla Powerwall. Click here.

Tesla Powerpack. Click here.


Written by

Environmental consultant, facilitator, founder & Director of Climate Works Ltd.