ECONOMICS OF TESLA POWERWALL 2.0 WALL-MOUNTED BATTERY SYSTEM

Much confusion exists in the minds of lay people regarding having wall-mounted batteries or not. The below article shows the homeowner cost is at least 32 c/kWh to own the Tesla Powerwall 2.0 battery for 10 years. After the 10 years have elapsed, the unit is returned to Tesla for reprocessing, because it has outlived its useful service life.

 

Some homeowners with roof-mounted solar systems think such batteries can be used to shift their excess midday solar electricity to the evening hours, which would increase their self-use from about 0.33 to about 0.50.

 

However, using the Powerwall 2.0 for such shifting would cost about 32 c/kWh, on top of the cost of generating the solar electricity, which in New England would be at least 15.1 c/kWh (heavily subsidized), about 21.6 c/kWh (unsubsidized). 

It would be far beyond rational for a homeowner to use a Powerwall 2.0 unit for electricity shifting, unless it was provided and installed free of charge, and with no daily battery draining rights by GMP. 

http://www.windtaskforce.org/profiles/blogs/economics-of-residentia...

 

Green Mountain Power Leasing 2000 Powerwalls 2.0 Units

 

Green Mountain Power, a utility in Vermont, has a program to install 2000 Powerwall 2.0 units. GMP will install a unit at a residence, at a monthly leasing fee of $15, for 10 years.

- GMP owns the unit, and has the right to drain the battery during peak hours to reduce its ISO-NE charges for regional network services, RNS, and the forward capacity market, FCM.

- GMP peak demand is about 750 MW in late afternoon/early evening. If all batteries were fully charged, the GMP peak demand reduction would be 2000 x 5 kW = 10 MW; it may be less due to battery degradation in future years. See Note.

- GMP income from ISO-NE charge reductions = 10 MW x $94,230/MW, RNS + 1.2, reserve margin x 10 MW x $102,000/MW, FCM = $2.17 million/y. Regulation services income likely would be minimal, because the units are located on distribution grids. See table 1 of URL.

http://www.sandia.gov/ess/publications/SAND2017-6164.pdf

- GMP amortizing the $15 million investment at 5%/y for 10 years requires 10 annual payments of $2.11 million. See table 4. There are many other costs. However, subsidies are coming to the rescue. 

- GMP will receive 1) the benefits of the federal and state investment tax credits; 2) the tax savings from accelerated depreciation, 3) the tax savings from borrowed money, plus 4) any cash grants from the US-DOE, plus 5) any other cost shifting, etc., to artificially increase the profitability of the program. With enough subsidies even pigs can be made to fly. See Appendix.

- The GMP program has minimal benefits for the homeowner. See "Powerwall 2.0 Units as Backup During an Outage"

http://www.windtaskforce.org/profiles/blogs/high-costs-of-wind-and-...

NOTE: Vermont lay people likely will never get to see the GMP spreadsheet calculations that would show the year by year line items of costs and line items of benefits of this $17 million program, which would require an expensive staff for managing it. I would love to be a fly on the wall when GMP, the VT-Department of Public Service and the VT-Public Utilities Commission discuss these spreadsheets behind closed doors.

Powerwall 2.0 Units as Dampers: Solar output varies with variable cloudiness, which would excessively disturb distribution grids with many solar systems, as happens in southern California and southern Germany on a daily basis. A large number of Powerwall 2.0 units, or a single, large-capacity battery on such distribution grids would dampen the variations/disturbances. The cost of the single battery likely would be charged to all ratepayers, not to solar system owners who are the disturbers; just another form of cost shifting to make solar appear less expensive than in reality.

Powerwall 2.0 Units as Backup During an Outage: The residence owner could use the unit as backup for a few hours during a power outage, if GMP had not previously drained it. If fully charged:

- When new, 13.2 kWh would be available as AC.

- At end of year 10, 9.90 kWh would be available as AC.

Tesla Powerwall 2.0 Battery

Battery Operating Cost: The Tesla Powerwall 2.0, AC version, has a turnkey installed cost of about $8600

Amortizing an $8600 loan at 5%/y for 10 years requires 10 annual payments of $1210, for a total of $12100. See table 1.

Battery operating cost just to amortize the investment = $12100/(37800 kWh, Tesla warrantee limit) = 0.32 c/kWh; neglected are any operating and maintenance charges.

https://www.solarquotes.com.au/blog/powerwall-2-warranty/

Increased Internal Resistance and Loss of Capacity with Age

 

- As the battery ages, its internal resistance, milli-ohm, will increase (its charge loss of about 0.035 in year 1 will increase to about 0.070 in year 10).

- Its capacity to store electricity, kWh, will decrease by about 25%.

- The increases of internal resistance and losses of capacity are greater in early years than in later years. See sciencedirect URL, table 2.

 

Such decrease in performance adversely affects the 10-y battery system economics. See figure 7 in URL, which shows increased internal resistance and loss of capacity for only 40000 h, or 4.56 y

https://www.sciencedirect.com/science/article/pii/S030626191731190X

 

When new,

- Its round-trip, AC-to-AC efficiency = 0.890, i.e., about 11% of the AC electricity entering the battery is lost. See table 1.

- Its stored charge is about 13.5/0.7 = 19.28 kWh; not all charge is available for discharge.

- It can deliver 13.5 kWh x 0.978, DC to AC conversion = 13.2 kWh as AC.

 

At end of year 10:

- Its round-trip, AC-to-AC efficiency = 0.827, i.e., about 17.3% of the AC electricity, either from grid or solar system, entering the battery is lost.

- It can deliver about 13.5 x 0.75, degradation factor x 0.978, DC to AC = 9.90 kWh as AC.

 

The Tesla warrantee is for a degradation factor of 0.70, i.e., on the safe side.

The Tesla warrantee is for a 10-y electricity output of 137800 kWh or less; if greater, the warrantee is void.

 

Table 1/Age

New

10y

AC to DC

0.978

 0.978

Charge loss factor

 0.965

 0.930

Discharge loss factor

 0.965

0.930

DC to AC

0.978

0.978

AC to AC Efficiency

 0.890

 0.827

Detailed Spreadsheet Calculations

Amortizing the Capital Cost: Below is a calculation of amortizing the $8600 cost of the Powerwall 2.0 battery at 5%/y for 10 years

 

Table 1

Principal

Principal

Interest

Total

Year

$

$/y

$/y

$/y

1

8600

780

430

1210

2

7820

819

391

1210

3

7001

860

350

1210

4

6141

903

307

1210

5

5238

948

262

1210

6

4290

995

215

1210

7

3295

1045

165

1210

8

2249

1098

112

1210

9

1152

1152

58

1210

10

-1

1210

0

1210

12100

Loss of Round-Trip, AC-to-AC Efficiency: Below is a calculation of the battery round-trip, AC-to-AC efficiency decrease due to increasing internal resistance with age. Most of the aging takes place in the first 3 years.

Internal resistance loss factor is 1.000 - 0.965 = 0.035 in year 1, increasing to 1.000 - 0.930 = 0.070 in year 10, a 100% increase due to aging. The internal resistance worsens in subsequent years.

Sample calculation for IRF in year 2 = (IRF year 1 x 60/100) x (IRF year 1 - IRF year 10). See figure 7 of URL.

It is assumed the efficiency of the inverter does not deteriorate for 10 years, which is not true in the real world.

https://www.sciencedirect.com/science/article/pii/S030626191731190X

 

Table 2

Year

Aging %

AC to DC

IRF

IRF

DC to AC

Efficiency

1

0.0

0.978

0.965

0.965

0.978

0.891

2

60.0

0.978

0.944

0.944

0.978

0.852

3

70.0

0.978

0.941

0.941

0.978

0.846

4

80.0

0.978

0.937

0.937

0.978

0.840

5

85.0

0.978

0.935

0.935

0.978

0.837

6

90.0

0.978

0.934

0.934

0.978

0.834

7

92.5

0.978

0.933

0.933

0.978

0.832

8

95.0

0.978

0.932

0.932

0.978

0.830

9

97.0

0.978

0.931

0.931

0.978

0.829

10

100.0

0.978

0.930

0.930

0.978

0.827

Loss of Electricity Storage Capacity: Below is a calculation of the annual and 10-y output, kWh, of the battery system.

Each cycle assumes the battery starts fully charged and is fully discharged.

The battery annual output, kWh/y, decreases as it ages.

The 10-y output, kWh, slightly exceeds the Tesla warrantee value.

Table 3

Year

Cap loss

AC in

Efficiency

AC out

Cycles/y

Output

%

kWh

kWh

kWh/y

1

0.0

14.8

0.891

13.2

365

4818

2

11.0

13.8

0.852

11.7

365

4288

3

15.0

13.3

0.846

11.2

365

4095

4

17.0

13.0

0.840

11.0

365

3999

5

19.0

12.8

0.837

10.7

365

3903

6

21.0

12.5

0.834

10.4

365

3806

7

22.0

12.4

0.832

10.3

365

3758

8

23.0

12.2

0.830

10.2

365

3710

9

24.0

12.1

0.829

10.0

365

3662

10

25.0

12.0

0.827

9.9

365

3614

39652

Tesla warrantee

37800

GMP Powerwall 2.0 Program: Below is a calculation of amortizing the $15 million investment of the program at 5%/y for 10 years.

 

Table 4

Amortizing $15,000,000 investment at 5%/y for 10 years

Table 1

Principal

Principal

Interest

Total

Year

$

$/y

$/y

$/y

1

15000000

1360351

750000

2110351

2

13639649

1428369

681982

2110351

3

12211280

1499787

610564

2110351

4

10711493

1574776

535575

2110351

5

9136717

1653515

456836

2110351

6

7483202

1736191

374160

2110351

7

5747011

1823000

287351

2110351

8

3924011

1914150

196201

2110351

9

2009860

2009858

100493

2110351

10

2

2110351

0

2110351

21103510

APPENDIX 1

Various Subsidies for Wind and Solar

Because of the various subsidies, taxpayers and rate payers are forced to pay 1) higher monthly electricity bills, 2) higher prices for goods and services, and 2) taxes to finance various subsidies for wind, solar and other RE producers. Here is a partial list:

 

- The federal ITC, 30% of the qualified portion of the turnkey capital cost. The federal ITC is an upfront, tax credit that can be applied against any of owner’s taxes.

- The state ITC, usually a percentage of the federal ITC. The state ITC is an upfront, tax credit that can be applied against any of owner’s taxes.

- The federal production tax credit, PTC, of 2.4 c/kWh for the first 10 years of operation, a subsidy of 2.4/5 = 48% of the US average wholesale price. No wonder owners are crowing about underbidding traditional generating plants. For example, in areas with good winds, low construction costs and low operation and maintenance costs (Texas, Great Plains), if an owner’s cost is 7.3 c/kWh and he deducts 2.4 c/kWh as PTC, then his bid price could be 4.9 c/kWh, which is sufficient to get the contract, in most cases, and “competitive” with traditional plants.

- The federal and state tax savings due to rapid depreciation write-offs in about 5 to 6 years, much more rapid than normal utility equipment write-off schedules of 10 to 20 years. Having tax savings earlier, instead of later, is financially more advantageous.

- The exemption of equipment purchases from the state sales tax and from the education property tax.

- Selling wind electricity at generous feed in tariffs of about 9 - 10 c/kWh in areas with high capital costs and low capacity factors (CFs), such as New England.

- Selling solar electricity at generous feed in tariffs of about 13.5 - 14.5 c/kWh in areas with high capital costs and low capacity factors, such as New England.

- Selling renewable energy credits, RECs, which lower the utility purchased RE energy cost by up to 50%.

- Loan guarantees by the federal and state government, which lower the interest rate of the funds borrowed from private entities, because the federal and state government assume the risk of the loans.

 

APPENDIX 2

Vermont has an anemic, near-zero, real-growth economy, which does not produce enough tax revenues year after year, partially due to the huge RE giveaways, such as: 

 

  1. Federal and state ITCs; upfront giveaways to offset any taxes. 
  2. Federal and state taxes not paid due to rapid depreciation write-offs during the first 6 years 
  3. Federal and state taxes not paid due to loan interest deducted from taxable profits.
  4. School portion of property taxes not paid; households have to pay more.
  5. State sales taxes not paid on some solar system components.
  6. ALL electricity sold to utilities at 13 - 14.5 c/kWh (large-scale, field-mounted solar, mostly owned by multi-millionaires); NE midday wholesale prices are about 6 c/kWh.
  7. Excess electricity sold to utilities at about 19 c/kWh (residential, roof-mounted, mostly owned by rate payers); NE household rates are about 19 c/kWh.

 

The state giving ITC money (extracted from already over-burdened taxpayers) to the tax shelters of multi-millionaires, who own the larger systems, and not collecting taxes due to rapid depreciation write-offs, etc., has resulted in contributing to chronic budget deficits.

 

The state legalizing above subsidies has resulted in higher NE electric rates than they would have been.

APPENDIX 3

New England Wholesale Prices

The annual average wholesale price has been about 5 c/kWh since 2009, due to low-cost nuclear, hydro and gas.

Average midday prices, when solar is most active, are about 6 c/kWh, due to low demand

Average late afternoon/early evening prices, when solar is minimal, are about 7 to 8 c/kWh, due to peak demand; prices may be up to 10 c/kWh on very rare occasions.

Average late evening/early morning prices are about 3 to 5 c/kWh
http://www.windtaskforce.org/profiles/blogs/subsidized-solar-system...

APPENDIX 4

Wind and Solar Conditions in New England: New England has highly variable weather and low-medium quality wind and solar conditions. See NREL wind map and NREL solar map.

 

https://www.nrel.gov/gis/images/100m_wind/awstwspd100onoff3-1.jpg

https://www.nrel.gov/gis/images/solar/national_photovoltaic_2009-01...

 

Wind:

- Wind electricity is zero about 30% of the hours of the year (it takes a wind speed of about 7 mph to start the rotors)

- It is minimal most early mornings and most late afternoons/early evenings (peak demand hours), especially during summer

- About 60% is generated at night, when demand is much less than during the late afternoons/early evenings

- About 60% is generated in winter.

- During winter, the best wind month is up to 2.5 times the worst summer month

- New England has the lowest capacity factor (about 0.262) of any US region, except the US South. See URL.

https://www.eia.gov/todayinenergy/detail.php?id=20112

 

Solar:

- Solar electricity is strictly a midday affair.

- It is zero about 65% of the hours of the year, mostly at night.

- It is minimal early mornings and late afternoons/early evenings

- It is minimal much of the winter months

- It is minimal for several days with snow and ice on most of the panels.

- It varies with variable cloudiness, which would excessively disturb distribution grids with many solar systems, as happens in southern California and southern Germany on a daily basis.

- During summer, the best solar month is up to 4 times the worst winter month; that ratio is 6 in Germany.

- New England has the lowest capacity factor (about 0.145, under ideal conditions) of any region in the US, except some parts of the US Northwest.

 

Wind Plus Solar:

 - Wind plus solar production could be near zero, if a multi-day wind lull were to occur, with snow and ice on most of the panels, as frequently happens during December, January and February.

 

If we were to rely on wind and solar for most of our electricity, massive energy storage systems (GWh-scale in case of Vermont) would be required to cover multi-day wind lulls, multi-day overcast/snowy periods, and seasonal variations. See URLs.

 

http://www.windtaskforce.org/profiles/blogs/wind-and-solar-energy-l...

http://www.windtaskforce.org/profiles/blogs/vermont-example-of-elec...

http://www.windtaskforce.org/profiles/blogs/seasonal-pumped-hydro-s...

http://www.windtaskforce.org/profiles/blogs/electricity-storage-to-...

http://www.windtaskforce.org/profiles/blogs/pumped-storage-hydro-in...

http://www.windtaskforce.org/profiles/blogs/wind-and-solar-hype-ver...

 

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Comment by Willem Post on June 16, 2018 at 11:35pm

Marshall,

I am an energy systems analyst with some decades of experience, now retired.

It took me a while to figure it out the battery issues and write about it.

Just reread the article until it becomes clear.

I will be adding some sections to show more of the economies.

GMP is the only gainer here.

It gets all these subsidies, and if it still does not pay, GMP just adds its costs to the rate base, all as decided behind closed doors.

If the public knew more of the RE shenanigans that are going on in Montpelier there would be demonstrations.

Comment by Marshall Rosenthal on June 16, 2018 at 10:18pm

The above economic breakout, as daunting as it is to follow, looks like voodoo economics, creates further dissension between the rich and the poor, cannot help this struggling nation, places an increased burden on rate and tax payers, and is a huge "rort" (Anzac slang for a quasi-legal scam). Do I understand this correctly?

First Prize

NE Book Festival

 

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 (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  http://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?"  http://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.” http://www.pinetreewatchdog.org/flaws-in-bill-like-skating-with-dull-skates/

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