ECONOMICS OF TESLA POWERPACK AND POWERWALL SYSTEMS

Turnkey Costs of Battery Systems    

 

Here are some low-cost battery systems from Tesla. The examples show the Tesla hardware cost, so-called “pack” price, is significantly less than the turnkey capital cost.

Most people are confused about the wide variation of “per pack” prices reported on by naïve pundits on various websites. Here are some clarifications

 

- Tesla has two categories of battery packs that are not comparable

- Powerpacks, capacity 100 and 200 kWh, that are not mass produced, are part of site-specific, custom-designed installations (usually for utilities), and have higher “per pack” costs, $/kWh

- Powerpacks for Tesla EVs, capacity up to 100 kWh, that are mass produced for assembly in Tesla EVs, and have lower “per pack” costs, $/kWh. As Tesla increases its production from 7000 EVs per week in December 2018 to 10,000 in 2019, the “per pack” price would decrease. See URL

https://insideevs.com/monthly-plug-in-sales-scorecard/

Example 1, Existing Medium System

 

The Powerpack v1.5, capacity of 100 kWh, has a Tesla bi-directional inverter with a capacity of 50 kW, turnkey capital cost $72,000 (FOB price $47,000, plus $25,000 for shipping from US to France, tariffs/taxes, installation, test operation, etc.), or $720/kWh.

 

https://en.wikipedia.org/wiki/Tesla_Powerwall

https://electrek.co/2018/01/10/tesla-powerpack-system-france/

 

Example 2, Existing Very Large System

The Tesla Powerpack 2 system in Australia, the largest in the world, has a rated capacity of 100 MW/129 MWh delivered as AC. The battery system feeds electricity to the grid or absorbs electricity from the grid to:

 

- Smoothen the variable output of the nearby 315 MW French-owned wind turbine system to minimize it “upsetting” the high voltage grid. Synchronous-condenser systems perform a similar function.

- Prevent load-shedding blackouts and

- Provide stability to the grid, during times other generators are started in the event of sudden drops in wind or other network issues.

 

The turnkey capital cost was about $66 million, or 66 million/129,000 = $512/kWh; this is a low price, because Tesla was eager to obtain the contract. Here is an aerial photo of the system on a 10-acre site.

 

https://www.mercurynews.com/2017/12/26/teslas-enormous-battery-in-a...

https://en.wikipedia.org/wiki/Hornsdale_Wind_Farm

Example 3, Very Large System, 2018 Prices

 

The “pack” price of Tesla Powerpack 1 and 2 units, for large installations, was about $250/kWh in 2018.

The “pack” price does not include the inverter and supporting hardware, shipping, taxes/tariffs, installation, test operation, etc.

The “pack” price is applicable to installations greater than 100 MWh equivalent to about 500 Powerpack 2 + 50 inverters.

The “turnkey” capital cost would be about $400 to $450/kWh, depending on site location and conditions. See next note.

This system is about the same size as example 2, and is 1000 times larger than example 1

Analysis of Alternatives

Most people have no idea how much it costs to use battery systems for electricity storage.

 

Three alternatives are presented. They are based on the turnkey capital cost, without subsidies and with subsidies. The net effect of the various subsidies is to reduce the turnkey capital cost, and the energy cost per kWh, by about 50% to 55%

 

The usual subsidies consist of:

 

Upfront federal and state cash grants,

Generous federal and state tax credits

Generous feed-in tariffs to attract out of state investors

Accelerated depreciation in 5 years

Deduction of loan interest from taxable revenues

Local property and school tax abatements

Grid extension and tie-in to the high voltage grid all or partially paid for by others

 

NOTE: No economic cost ever disappears. The various subsidies merely shift costs from owners to the general public; a political smoke and mirrors game to make solar (and wind) look good. The owners can claim: “Solar is competitive with fossil”. Nothing would be further from the truth.

Alternative 1: The capital cost is amortized at 5%/y over 15 years. That percentage is used as a benchmark, because an owner could merely invest in AT&T and earn at least 6%/y as dividends. The turnkey capital cost is assumed at a futuristic $400/kWh for a 100 kWh system. (The above Example 1 shows $720/kWh for a recent 100 kWh system).

 

Alternative 2: The capital cost is amortized at 9%/y over 15 years. That percentage is used, because electric utilities, as regulated companies, usually are allowed to earn at least 9%/y on investments. The turnkey capital cost is assumed at a futuristic $400/kWh for a 100 kWh system.(The above Example 1 shows $720/kWh for a recent 100 kWh system).

 

It is assumed:

 

- The utility has “time of day” rates

- Nighttime rate of 10 c/kWh (10 pm to 6 am)

- Peak-time rate of 30 c/kWh (5 pm to 8 pm).

- Battery system degradation is 10% over 15 years

- Battery system life is 15 years

- Round-trip, AC-to-AC efficiency is 90%

 

Results:

 

- If no subsidies, the cost of electricity storage would be 14.8 c/kWh at 5%/y amortization and 17.9 c/kWh at 9%/y. See table 1

 

- If the above subsidies were applied to effectively reduce the capital cost by about 50%, the cost of electricity storage would be 9.3 c/kWh at 5%/y amortization and 10.9 c/kWh at 9%/y. See table 1

 

- Total cost = Amortizing + Electricity loss

 

- Charging gain = Discharging revenue - Charging cost = (0.30, peak hours x 100 kWh/d) - (0.10, nighttime hours x 117.6 kWh/d) x 365 x 15 = $99,838/15y

 

- Net gain = Charging gain - Total cost

 

The battery system would be profitable, with:

- A futuristic battery price of $400/kWh

- Subsidies equivalent to reducing the turnkey capital cost by about 50%

- A very large differential in electric rates for “nighttime” and “on peak”

The batteries and likely other items would need to be replaced at the end of 15 years.

 

Table 1

No Subsidies

No Subsidies

 Subsidies

Subsidies

Alt. No. 1

Alt. No. 2

Alt. No. 1

Alt. No. 2

5%/y

9%/y

5%/y

9%/y

Battery capacity, as AC

kWh

100

100

100

100

Turnkey capital cost

$/kWh

400

400

200

200

Turnkey capital cost

$

40000

40000

20000

20000

Amortized, 15 y

$/mo.

316

406

158

203

$/y

3796

4869

1898

2434

Amortizing cost

$/15y

56937

73027

28469

36514

.

Electricity entering the battery, as AC

kWh/d

117.6

117.6

117.6

117.6

Round-trip, AC to AC efficiency

0.85

0.85

0.85

0.85

Electricity leaving the battery, as AC

kWh/d

100.0

100.0

100.0

100.0

Charge/discharge frequency

Cycles/y

365

365

365

365

Electricity loss, AC to AC

kWh/15y

96618

96618

96618

96618

Battery charging electric rate

$/kWh

0.10

0.10

0.10

0.10

Cost of electricity loss

$/15y

9662

9662

9662

9662

Total cost

$/15y

66599

82689

38130

46175

.

 

 

 

 

 

Throughput/y, year 1

kWh

36500

36500

36500

36500

Degradation, 10% in 15 years

0.10

0.10

0.10

0.10

Throughput/y, year 15

kWh

32850

32850

32850

32850

Average throughput/y

kWh

34675

34675

34675

34675

Life

y

15

15

15

15

Lifetime throughput

kWh/15y

520125

520125

520125

520125

Average cost of storing

$/kWh

0.128

0.159

0.073

0.089

.

Various other costs; O&M, etc.

$/kWh

0.020

0.020

0.020

0.020

Total cost of storing

$/kWh

0.148

0.179

0.093

0.109

 

 

 

 

 

 

Peak time electric rate

$/kWh

0.30

0.30

0.30

0.30

Charging gain

$/15y

99838

99838

99838

99838

 

 

 

 

 

 

Net gain

$/15y

33239

17149

61708

53663

 

Alternative 3: Powerwall 2.0

 

Many homeowners think they can make money by charging a wall-mounted, Tesla Powerwall 2.0 from the grid during late night hours when electric rates are low, say 10 c/kWh, and using the electricity during the peak demand hours of the next day when electric rates are high, say 30 c/kWh.

 

Here are some operating parameters of the Powerwall 2.0.

 

Table 2/Powerwall 2.0

 

Usable electricity

 13.5 kWh

Round trip efficiency, AC to AC

 10%

Continuous supply

  5 kW for 2.5 h

Continuous supply

1 kW for 13.5 h

Peak supply

 7 kW

 

Tesla estimates the installation of a Powerwall 2.0 will add $800 to $2,000 to the Tesla $7800 hardware bill. However, this estimate doesn't include the cost of house wiring upgrades, taxes, permit fees, or connection charges.

https://www.tesla.com/sites/default/files/pdfs/powerwall/Powerwall%...

 

Here is an estimate of turnkey capital cost of a Powerwall 2.0

 

Table 3/ Powerwall 2.0

$

Tesla Powerwall 2.0, FOB factory

 6700

Supporting hardware

 1100

Total Tesla hardware

8700

Shipping, installation, etc.

 2000

Likely turnkey capital cost

   9800

 

Here is the cost of electricity storage of the Powerwall 2.0.

- Amortizing is at 5%/y for 10 years.

- No subsidies and with subsidies.

 

With subsidies equivalent to reducing the turnkey capital cost by about 50%, and a very large differential in electric rates for “nighttime” and “on peak”, the battery system is profitable. See table 4

 

Table 4

No subsidies

Subsidies

Powerwall 2.0

Powerwall 2.0

5%/y

5%/y

Battery capacity, as AC

kWh

13.5

13.5

Turnkey capital cost

$/kWh

726

363

Turnkey capital cost

$

9800

4900

Amortized, 15 y

$/mo.

104

52

$/y

1247

624

Amortizing cost

$/15y

12473

6236

.

Electricity entering the battery, as AC

kWh/d

14.85

14.85

Round-trip, AC to AC efficiency

0.90

0.90

Electricity leaving the battery, as AC

kWh/d

13.50

13.50

Charge/discharge frequency

Cycles/y

365

365

Electricity loss, AC to AC

kWh/15y

4928

4928

Battery charging electric rate

$/kWh

0.10

0.10

Cost of electricity loss

$/15y

493

493

Total cost

$/15y

12966

6729

.

Throughput/y, year 1

kWh/y

4928

4928

Degradation

15y

0.10

0.10

Throughput/y, year 15

kWh/y

4435

4435

Average throughput/y

kWh/y

4681

4681

Life

y

10

10

Lifetime throughput

kWh/15y

46811

46811

Average cost of storing

$/kWh

0.277

0.144

.

Various other costs; O&M, etc.

$/kWh

0.020

0.020

Total cost of storing

$/kWh

0.297

0.164

.

Peak time electric rate

$/kWh

0.30

0.30

Charging gain

$/15/y

9362

9362

Loss (-)/Gain (+)

$/15y

-3603

2633

 

Daily Electricity Shifting: The difference in time of day rates, c/kWh, would have to be very high to make daily electricity shifting profitable. See table 1 and 5

 

Table 5/Daily charge/discharge

No subsidies

With subsidies

Assume late night rate, c/kWh

10

10

Assume peak hour rate, c/kWh

30

30

Supply from wall meter, kWh

14.85

14.85

Cost of wall meter supply at late night, $/d

1.49

1.49

Supply from battery at peak hours, kWh

13.50

13.50

Value of battery supply at peak hours, $/d

4.05

4.05

Gain, $/d

2.565

2.565

.

 

Cost of storage, c/kWh 

0.297

0.164

Cost of storage, $/d

4.00

2.21

Loss (-)/Gain (+), $/d

-1.44

0.35

INVESTING IN AT&T IS MUCH MORE PROFITABLE THAN INVESTING IN POWERWALLS

 

The AT&T stock price is about $30, and the dividend is $2.04/share, for a yield of 6.8%/y. AT&T increases its dividend by about 2%/y.

 

- The “investor” in the Powerwall 2.0 would have a 10-y old unit that would need to be replaced.

- The investor in AT&T shares would have his 326.7 shares and would continue to receive dividends each year.

- Investing in AT&T at least 2.031/0.35 = 5.8 times better than investing in Powerwalls, plus it requires no subsidies

 

Year 1

Year 15

Capital = Powerwall cost

9800

9800

AT&T price/share, $

30

30

Shares

326.667

326.667

Dividend, $/share

2.040

2.499

Average income

Dividend income, $/y

666

816

741

Lifetime income, $/15y

11121

Income/d by investing $9800 in AT&T

2.031

Income/d by investing $9800 in a battery

0.035

AT&T times better battery

5.8

NOTE: Dividend increases at 2%/y

APPENDIX 1

The NE grid is divided in zones, each with LMPs* that vary minute by minute throughout the year.

 

* LMP = locational marginal price.

 

The cost of the electricity loss of batteries depends on when the batteries were charged.

 

If charged from 10 pm to 6 am, the LMPs would be about 2.5 - 3.5 c/kWh

If charged around noontime, the LMPs would be about 6 - 7 c/kWh

If charged during late afternoon/early evening (peak demand hours), the LMPs would be about 7 - 8 c/kWh

 

APPENDIX 2

Edmunds, in California, has been performing a long-term road test of a Tesla Model 3 since January 2018. Here are the latest results from the Edmunds website.

https://www.edmunds.com/tesla/model-3/2017/long-term-road-test/2017...

 

A recent road test of the Tesla Model 3, performed by Edmunds, showed 1388 miles of driving in California, some of it on hills

 

- Wall meter consumption was 30.2 kWh/100 miles.

- Vehicle meter consumption was 25.17 kWh/100 miles.

- The charging/resting time loss was 16.7% to 21.29%, much greater than the 15% assumed in these articles.

http://www.windtaskforce.org/profiles/blogs/replacing-gasoline-cons...

http://www.windtaskforce.org/profiles/blogs/replacing-gasoline-cons...

- The charging/resting time loss was over 20% with different drivers and different road trips.

- EV drivers know little of the charging/resting time loss; they rely on the lower numbers of the EV meter.

- February, March and April were not shown, because of missing data. See table 6 and URL

https://insideevs.com/monthly-plug-in-sales-scorecard/

 

Table 6/Tesla Model 3

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Odometer

1388

2922

3937

5237

6009

6659

7679

9329

10307

11174

Test travel, miles

1534

1015

1300

772

650

1020

1650

978

867

Wall meter, kWh/100m

Lifetime average

30.20

30.90

31.70

31.70

31.40

31.80

31.70

31.00

31.10

30.80

Veh. meter, kWh/100m

Lifetime average

25.17

24.83

25.03

25.09

24.76

24.70

24.49

Best fill, period

20.00

28.50

28.60

28.00

26.70

25.60

25.60

Best fill, lifetime

25.60

25.60

25.60

25.60

25.60

25.60

25.60

25.60

25.60

25.60

Charge/rest time loss

5.03

6.57

6.77

6.61

6.24

6.40

6.31

Charge/rest time loss, %

16.66

20.92

21.29

20.85

20.13

20.58

20.49

APPENDIX 3

Validating the Amortizing Method: The amortizing method of determining battery energy costs can be applied to wind and solar systems as well.

 

Its validity can be demonstrated by applying it to a private investor-owned, 1000 kW, field-mounted PV solar system, of which the production would be sold to GMP, a Vermont utility owned by a Canadian/French company, under the Vermont Standard Offer program, at about 11 c/kWh for 25 years, after a competitive bidding process.

 

- Competitive SO bid prices for PV solar are well known. See note.

- The capital cost is amortized at 9%/y over 25 years. That percentage is used, because electric utilities, as regulated companies, and owners usually earn at least 9%/y on invested capital.

- Applying an effective capital reduction of 57%, due to subsidies, leads to electricity costs, c/kWh, close to recent SO bid prices. See table 7

 

The bid SO prices have been gradually decreasing from 30 c/kWh about 7 years ago to about 11 c/kWh in 2018, due to:

 

- The continued decreasing trend of turnkey capital costs. That decreasing trend appears to have bottomed out in New England.

- The various subsidies, direct and indirect, effectively reducing the capital cost by at least 57%.

 

Table 7 shows:

 

- The electricity cost is 25 c/kWh, no subsidies

- The electricity cost is 10.8 c/kWh with 57% subsidies, which is close to recent SO bid prices of about 10.97 c/kWh. See note and URl.

 

NOTE: The MartinBrookPV project, placed on line December 2018, receives 0.1097 c/kWh for its production for 25 years under the Vermont SO program.

http://www.vermontstandardoffer.com/sop-production/2018-standard-of...

 

NOTE: No economic cost ever disappears, per Economics 101. The various subsidies merely shift costs from owners to the general public; a political smoke and mirrors game to make solar (and wind) look good. The owners can claim: “Solar (and wind) is competitive with fossil”.Nothing would be further from the truth.

Table 7/PV Solar

No Subsidies

57% Subsidies

System capacity, kW

1000

1000

Capacity factor

0.145

0.145

Hours/y

8766

8766

Life, y

25

25

Degradation, 10%

0.1

0.1

.

 

 

Production year 1, kWh/y

1271070

1271070

Production year 25, kWh/y

1143963

1143963

Average production, kWh/y

1207517

1207517

Lifetime production, kWh/25y

30187913

30187913

.

Turnkey capital cost, $

3000000

1290000

Amortizing at 9%/y for 25 y, $/mo.

25176

10826

Lifetime payments, $

7552800

3247689

.

Cost, $/kWh

0.250

0.108

APPENDIX 4

PV Solar Plus Battery: Below is a table with turnkey capital costs to give New Englanders some idea of the financial impact of “going green”.

 

The PV solar system, 5.6 kW, is the same for two battery alternatives:

- One Powerwall 2.0

- Two Powerwall 2.0s

For each alternative, the turnkey capital costs are determined for AC-coupling

 

The distinction between DC and AC coupling determines whether the battery stores power directly from the PV panels or first converts it to AC power and then stores it. The AC coupling is more versatile, as it allows AC charging from both the PV panels and the grid.

 

Table 6 shows turnkey capital costs. Those costs will vary depending on where the systems are located in the US.

https://www.greentechmedia.com/articles/read/how-much-does-a-roofto...

Table 6/PV Solar + Battery

Capacity Cost

AC Coupling

$/kW

$

PV system

5.6 kW

3800

21280

Powerwall 2.0

5 kW/13.5 kWh

9800

AC coupling

1800

PV + Battery at the same time

32880

If battery is added later

3500

Total

36380

.

PV system

5.6 kW

3800

21280

Two Powerwall 2.0s

5 kW/27 kWh

19600

AC coupling

1800

PV + battery at the same time

42680

If large battery is added later

3500

Total

46180

 

 

 

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Comment by Willem Post on February 2, 2019 at 11:43am

Dan,

Thank you for your comment.

I made some changes and additions and refinements as a result

Comment by Dan McKay on February 2, 2019 at 8:17am

 Many of the new schemes from the alternative energy(AE) groups are leveraging high cost devices against peak hour wholesale energy prices. Once the low lying fruit is taken, the shaving of peak energy leads to lower prices, the erosion of reliable plant outputs and higher distribution prices ( unless the AE owners are made to paid for use of distribution in conjunction with the loss revenue to distribution with behind-the-meter generation). 

   The first fight in Augusta is the re-establishment of net billing, which, for rooftop solar generation, is , by far, the most lucrative arrangement and doesn't need batteries.
Comment by arthur qwenk on February 1, 2019 at 8:53pm

Such a deal!

Only the energy legislators of Maine would consider it.

Hannah Pingree on the Maine expedited wind law

Hannah Pingree - Director of Maine's Office of Innovation and the Future

"Once the committee passed the wind energy bill on to the full House and Senate, lawmakers there didn’t even debate it. They passed it unanimously and with no discussion. House Majority Leader Hannah Pingree, a Democrat from North Haven, says legislators probably didn’t know how many turbines would be constructed in Maine."

https://pinetreewatch.org/wind-power-bandwagon-hits-bumps-in-the-road-3/

 

Maine as Third World Country:

CMP Transmission Rate Skyrockets 19.6% Due to Wind Power

 

Click here to read how the Maine ratepayer has been sold down the river by the Angus King cabal.

Maine Center For Public Interest Reporting – Three Part Series: A CRITICAL LOOK AT MAINE’S WIND ACT

******** IF LINKS BELOW DON'T WORK, GOOGLE THEM*********

(excerpts) From Part 1 – On Maine’s Wind Law “Once the committee passed the wind energy bill on to the full House and Senate, lawmakers there didn’t even debate it. They passed it unanimously and with no discussion. House Majority Leader Hannah Pingree, a Democrat from North Haven, says legislators probably didn’t know how many turbines would be constructed in Maine if the law’s goals were met." . – Maine Center for Public Interest Reporting, August 2010 https://www.pinetreewatchdog.org/wind-power-bandwagon-hits-bumps-in-the-road-3/From Part 2 – On Wind and Oil Yet using wind energy doesn’t lower dependence on imported foreign oil. That’s because the majority of imported oil in Maine is used for heating and transportation. And switching our dependence from foreign oil to Maine-produced electricity isn’t likely to happen very soon, says Bartlett. “Right now, people can’t switch to electric cars and heating – if they did, we’d be in trouble.” So was one of the fundamental premises of the task force false, or at least misleading?" https://www.pinetreewatchdog.org/wind-swept-task-force-set-the-rules/From Part 3 – On Wind-Required New Transmission Lines Finally, the building of enormous, high-voltage transmission lines that the regional electricity system operator says are required to move substantial amounts of wind power to markets south of Maine was never even discussed by the task force – an omission that Mills said will come to haunt the state.“If you try to put 2,500 or 3,000 megawatts in northern or eastern Maine – oh, my god, try to build the transmission!” said Mills. “It’s not just the towers, it’s the lines – that’s when I begin to think that the goal is a little farfetched.” https://www.pinetreewatchdog.org/flaws-in-bill-like-skating-with-dull-skates/

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