Amidst all of the excitement surrounding the first Tesla Powerwall installations worldwide, Tesla made a surprising move behind the scenes: They stopped production of one of the Powerwall models. The 10kWh Powerwall dropped off the face of the Tesla website, without fanfare, or much of an explanation. So… what’s up with that? We’ll give you all the details.
A Quick Rundown on the Powerwall
The Tesla Powerwall is a lithium-ion solar 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.
Solar batteries are the simplest and best way to solve the solar energy glitch -- the fact that solar is an intermittent energy source (translation: 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 solar 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 solar 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.
Musk says every home with solar panels needs a solar 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 solar 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 solar 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 solar battery, solar households have this opportunity.
Instead of selling electricity back to the grid, solar 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 solar battery. Without a solar battery to store excess electricity, solar owners continue to throw money, and energy, at the power companies. Solar batteries keep electricity and money in the hands of the consumer.
Initially, Tesla introduced two residential Powerwall models: a 7kWh model, designed for daily use, and a larger, 10kWh model, made predominantly for back-up use (or, cycling no more than once a week.) The 7kWh model is most attractive for households with solar panels, who want to store the energy generated during the day for nighttime use. The 10kWh model was best for power security--knowing you’ll have electricity in the case that the grid goes down. As of last month, though, the number of residential models is down to one. Let’s get into why this happened.
Tesla’s Admirable Flexibility
First off, we have to give Tesla some credit for being flexible. Tesla Motors has shown this flexibility and commitment to perfection in the production of it’s cars, tweaking everything from battery sizes to door handles (in fact, if you own a Tesla Model S, there’s a good chance it’s unique from the ones made before and after it.) That same attribute is coming out in their solar battery division. Tesla saw that most people were going for the 7dWh model, so they decided to run with it. They put off the production and sales of the 10kWh back-up model, and focused all of their attention on the version that the most people were excited about. It’s a pretty great business strategy, actually.
But why was the 10kWh Powerwall less appealing to consumers? People want back-up electricity. There’s definitely a market for this. What about the 10kWh Powerwall wasn’t giving the people what they wanted?
We think the answer to this two-fold: People want more power*, and more bang for their buck. Let us explain.
Power to the People
One of the reasons the 10kWh Powerwall may be less appealing to consumers is the fact that it’s not optimized for daily use. Right now, the market for solar batteries is still in the high end of the market (you know, among the people who could afford solar panel installations in the first place.) For those who can afford energy storage, they want some serious power over its usage. They want to be able to use it every day. As we mentioned before, solar batteries supply a huge advantage to solar panel owners by letting them keep the power they produce during the day, to use at night when they need it the most. The 10kWh Powerwall just isn’t designed for this. It’s built to cycle only periodically, like once a week, in case the grid goes down, and your home needs emergency back-up. Daily usage simply isn’t an option. For those who are going in for energy storage, they’re going all in, and want to be able to use their stored energy wherever, whenever (namely, in their house, when they get home.)
So when Tesla started taking orders for both of the Powerwall models, everyone went for the one they could use every day (and by everyone, we mean it. Tesla had a huge demand for the 7kWh Powerwall as soon as it hit the scene.) And as some buyers figured out quickly, the Daily Powerwall can be used to give your house back-up power, if that’s what you need. It’s like getting the best of both Powerwalls. It’s no mystery why Tesla would want to focus on meeting the abundance of 7kWh orders before cranking out another option. A spokesperson from Tesla puts it this way:
We have seen enormous interest in the Daily Powerwall worldwide. The Daily Powerwall supports daily use applications like solar self-consumption plus backup power applications, and can offer backup simply by modifying the way it is installed in a home. Due to the interest, we have decided to focus entirely on building and deploying the 7-kilowatt-hour Daily Powerwall at this time.
But this is likely not the only reason why the 10kWh Powerwall wasn’t getting a lot of traction. As usual, things came down to money.
We Want More for the Money
Home batteries are awesome. Back-up power is awesome. Both are a big investment. And when it comes down to putting up the money to upgrade a home energy system, people want to make sure they’re getting their money’s worth. And that goes with everything we’ve been saying so far: for those who are able to invest in home energy storage, the Daily Powerwall gives you more freedom.
This freedom does come at the cost of some security. The 7kWh Powerwall, built to be cycled daily, has a bit less storage capacity than the 10kWh back-up model (hence the numbers in the description). Since the 10kWh Powerwall is optimized to store up electricity in case of an emergency, it has more storage power-- 3kWh more. To put that in perspective, that’s how much electricity a CFL light bulb uses in 5 straight days, or your vacuum cleaner after 3 hours (Yeah. Those two activities use way different amounts of electricity.) 3kWh definitely makes a difference, but most people are willing to put that difference aside.
But perhaps the biggest reason for the fall of the 10kWh Powerwall is because it doesn’t qualify for some state incentive programs, like California’s SGIP. The Self-Generation Incentive Program, hailing from California, has dedicated millions toward residential and commercial energy installations. This funding can be used toward the Daily Powerwall, but the 10kWh model doesn’t fit the bill. Regulators say that battery systems need to be able to cycle at least five times a week in order to qualify for SGIP funding. This leaves the once-a-week back-up model out. Since the Daily Powerwall boasts SGIP eligibility, it’s seen way more popularity in a state where solar and energy storage are growing like crazy.
But get this right: this doesn’t mean Tesla’s struggling. It’s energy division numbers are soaring, thanks for innovative, flexible leadership, and tough decision-making. The rise of the Daily Powerwall is just getting started.