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 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...