The Numbers are In: The Immediate Success of Tesla’s Solar Home Batteries

by Andrew Meyer
March 9, 2016
Home Battery

The time has come for Musk and the Tesla team to report back with this quarter’s numbers.

Elon Musk’s unveiling of the new Tesla Powerwall solar home battery was followed by months of anticipation, with households and businesses worldwide waiting for a chance to install the state-of-the-art home energy technology. Finally, the wait is over, and Tesla Powerwall batteries have shipped out to geeked-out buyers. The time has come for Musk and the Tesla team to report back with this quarter’s numbers. The verdict? Business is good.

The Powerwall Home Battery

Home batteries are the simplest and best way to solve the solar energy glitch -- the fact that solar is an intermittent energy source, since the sun is not always shining. Experts from the fields of science, engineering, technology, and sustainability are all coming to the same conclusion: energy storage in the form of home batteries are the best way to launch residential use of renewable energy into the future.

Households with rooftop solar are taking their energy systems to the next level with home batteries. They’ll have to if they want to protect the value of the energy generated from their solar panels, according to Tesla CEO Elon Musk.

Tesla’s home battery model, the Powerwall, charges using electricity generated from solar panels. According to Musk, every home with solar panels needs a home battery.

“Without a home battery, excess solar energy is often sold to the power company and purchased back in the evening [at a higher price],” Musk argues “The mismatch adds demand on power plants and increases carbon emissions.”

If this sounds like a lose-lose situation, that’s because it is. Houses with solar who don’t also have energy storage like home batteries have no way to use the excess electricity generated during the day when the sun is shining and solar energy is in abundance. When households have solar energy they can’t use, it goes back into the power grid. Often, power companies pay households for giving back the extra power generated by solar, but not as much as they charge for the same amount of electricity later in the day, when people actually need it. Without a home battery, solar customers end up paying extra for the electricity they generated themselves, just like paying the power company to store the energy for them so they can use it later. Instead of giving more money to the power companies, why not just store it yourself? With a home battery, solar households have this opportunity.

Instead of selling electricity back to the grid, home battery owners get to keep their energy, and use it whenever they need it. This eases the workload of power plants, decreasing carbon emissions, and saves money for households with solar at the same time. Taking this into consideration, it’s hard to argue against Elon Musk when he says that all solar panel owners need a home battery. Without a home battery to store excess electricity, solar owners continue to throw money, and energy, at the power companies. Home batteries keep electricity and money in the hands of the consumer.

The Tesla Powerwall is a lithium-ion home battery that charges using electricity generated from solar panels. Lithium, the lightest of all metals, has the greatest electrochemical potential. This means that lithium provides the highest energy density per weight, far lighter and more efficient than the popular lead acid battery. The growth of lithium-ion technology has brought along with it many advantages. In comparison to batteries that have been popularly used in the past, lithium-ion batteries are cleaner, live longer, recycle better, and require much less maintenance.

Tesla’s Powerwall has gotten a lot of attention for sleek design, but the real headliner is its price. The 7 kWh daily cycle battery is available to installers for a mere $3K ($3.5K for the 10 kWh back-up model). The 220 lb, indoor/outdoor battery comes with a 10-year-warranty, so battery owners know that they not only have plenty of energy at night when the sun goes down, but reliable emergency back-up power as well.

What’s New About the Powerwall 2.0

At an event in Paris, Elon Musk announced that the new Powerwall (or Powerwall 2.0) will be coming out around July or August of this year, and promised a step forward in the home battery’s capabilities. Musk didn’t give many details about the new technology Powerwall 2.0 will possess, but we’ll tell you everything we know:

Though the current Powerwall has an impressive lifecycle, Elon Musk has hinted that the new Powerwall’s lifecycle will be even longer.

Here’s a little background on lithium-ion battery lifecycles: Lithium-ion has a significantly higher cycle life than lead acid in deep discharge applications. This means that lithium-ion batteries can support a higher number of complete charge/discharge cycles before their capacity falls under 80%. Recent data shows that a lead acid battery would have to be 2.5 times larger in capacity than a lithium-ion battery to get comparable cycle life.

The difference in cycle life is even greater in extreme climates. In warm climates where the temperature hovers around 90 degrees Fahrenheit, the difference in cycle life between lithium-ion batteries and lead acid models is huge. In these extreme temperatures, it takes less than 1000 charge/discharge cycles for lead acid batteries to drop below 80% in retention, while lithium-ion batteries wouldn’t see that much of a drop until at least 2000 cycles. This huge jump in battery lifetime is an exciting development for consumers who don’t want to worry about their battery capacity dropping when they need power the most.

The exact details of Elon Musk’s Powerwall 2.0’s lifecycle have not been released yet, but we’re excited to see some new advances in lithium-ion battery technology.

A Bright Future

Elon Musk wrote a letter to shareholders this week, giving them an update on the growth and reception of the expanding Tesla Energy division. The letter was full of good news. Musk told shareholders that “We are on track for a steady increase in gross margins throughout the year as volumes ramp up and costs reduce, allowing a positive cash contribution to Tesla overall even with rapid growth.” From the moment Elon Musk announced the development and production of the Powerwall solar home battery, Tesla Energy’s margins skyrocketed. The Energy division, which relies mainly on the sale of the Powerwall home battery and the larger Powerpack battery, is projected to achieve positive gross margins for the foreseeable future, and this is despite some major investment in division growth. That’s exactly what shareholders wanted to hear.

Rapid Growth

That “rapid growth” Musk referred to? Probably has a lot to do with the new Gigafactory. The Powerwall 2.0 will be produced in Tesla’s new Gigafactory, located outside Sparks, Nevada. The new Tesla factory is a masterpiece of new energy technology usage. Musk says that the Gigafactory was “born of necessity,” and will be able to supply enough battery storage to uphold all of Tesla’s production. The Gigafactory is not yet at full capacity, but Elon Musk has promised that “by 2020, the Gigafactory will reach full capacity and produce more lithium ion batteries annually than were produced worldwide in 2013.”

These batteries, like the Powerwall 2.0, will be made at a lower cost because of Tesla’s commitment to creative uses of renewable energy in manufacturing, reducing waste byproducts, and building a factory big enough to house all of the manufacturing process under one roof. With all of this combined, Tesla expects that the cost of each battery will be driven down 30% by kilowatt hour. Not. Bad.

The Gigafactory itself has a goal of achieving net-zero energy status. In other words, the factory will produce the same volume of energy as it uses over the course of a year.

Australia and Europe called “First Dibs” on the Powerwall

J.B. Straubel, Tesla Motors’ chief technology officer, reported that he was was feeling good about the rate of solar battery production. “Production started off as planned in the Gigafactory in Q4. Deliveries are on track. We’re starting shipments of Powerwalls and Powerpacks worldwide… we feel really good with where we’re at.”

So where, specifically, are the Powerwalls at? Right now, mostly in Australia and Germany (though the U.K. is seeing some action as well.)

Australia is way ahead of the worldwide solar game, so it’s no surprise that Tesla has focused on Australia as one of the premier target markets. Some forward-thinking Australians, like Sydney’s Nick Pfitzner, have been tracking the Powerwall’s progress, and waiting first in line for a home battery of their own.

Nick Pfitzner, along with his wife and two children, live in the Sydney Hills District. Nick works in the Information Technology biz, and has been dreaming of his own solar energy fortress since the Powerwall’s unveiling last year. Finally, his dream has come true. The Pfitzner family chose the 7 kilowatt hour Powerwall model, and had the battery installed along with new solar panels. (Click here to read more about the first Powerwall installations.)

The growth of the home battery industry is just getting started,

but there’s never been a better time to take advantage of this groundbreaking technology. We have a front-row seat to the home battery revolution.

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