May 01 2015

Tesla Introduces the Home Battery

Innovative billionaire, Elon Musk, is introducing the first product designed to be a home battery for the average home – the Powerwall by Tesla. This is a large but shallow and stylish lithium ion battery meant to be attached to the wall of a garage or basement. There are two versions, a 10kWh for $3,500 and a 7kWh for $3,000. That puts it in the range of a typical large home appliance.

This is an interesting move, and is earlier than I anticipated such a product would hit the market. I wonder if the market is ready. There are some indications that it may be.

For the homeowner there are two primary uses of a large home battery, one large enough that you can actually run your home, at least for a while. The first is as a backup device for when the power goes out. That in itself would be a useful function, as anyone who has ever lost power to their home can attest. Even if the power goes out for 12 hours or so before being restored, that is long enough to lose everything in your freezer. A day without power is a massive inconvenience, and can even be dangerous in the dead of winter, which is when most power outages occur in my part of the country. It doesn’t take long for the house to plunge into freezing temperatures.

The second use is as a method for using solar or wind produced energy more efficiently. Peak energy use does not coincide with peak sunshine. Right now that is not a big deal, as homes with solar installation are mostly just giving their solar produced electricity to the grid and then pulling from the grid as needed. However, as solar penetration increases we may get to the point that it is a significant contribution to the grid.

In the last year or so solar power has been really taking off. We have reached a tipping point where solar power is economically feasible. Also, many companies are offering leasing plans. In essence they use your roof to install solar panels, then they sell the energy to you cheaper than what the utility company is charging. You get to decrease your energy bill with no cost up front or maintenance cost. Or you can invest in the solar panels, own them and own the electricity they produce.

However, there are some problems with this burgeoning industry, and homeowners need to be very careful. There are reports of predatory solar leasing companies who pressure homeowners to install solar with misleading claims and hidden fees. For example, homeowners may be responsible for maintenance, may have escalating fees, the company may even put a lien on their property and sell the loan to another company. Often homeowners don’t find out about such liens until they try to sell their property. The solar leasing market is therefore a bit dangerous, so be careful before you lease, and be particularly wary of any high-pressure sales. Lawmakers are starting to take action to regulate the industry, but this has not happened yet.

In any case, the amount of solar being installed is rapidly increasing. It seems that Musk believes the growing solar market is creating a potential home battery market. This does make sense – you can capture solar energy during peak sun and use that energy during peak use, or to recharge your electric car overnight. This is likely to be the model we will get to as renewable (but not on-demand) energy production increases.

There are also advantages to the grid. In an ideal world energy production would be flat – production would be equal to overall demand and would chug along at a steady rate. However, demand has peaks and troughs. This means that production and the grid have to be scaled for peak demand, which will then go unused during off-peak.

Batteries solve that problem – if there are enough of them. Batteries can buffer the peaks and troughs, flattening them out. Batteries also help those managing the grid to load balance more efficiently.

Large numbers of huge batteries can be used to buffer production and load balance the grid directly. However, home batteries will also help, if there are enough of them. If a home is pulling energy from their home battery during peak, that is less energy they are pulling from the grid.

Even without solar energy, a home battery can be charged during off-peak hours and then used during peak hours. It is possible that pricing of electricity may change so that utilities can charge more for on-peak electricity than off-peak, therefore the homeowner could lower their electricity bill by buying electricity when it is cheapest to use during the expensive peak hours.

In short, batteries are a very good thing for the homeowner, the grid, and energy utilities. The question is – are they good for the environment?

If the only consideration was their effect on energy production then the answer is yes, adding large battery capacity to the grid adds efficiency and is ultimately a good thing. However, we also have to consider the cost and environmental impact of producing, replacing, and disposing of all those lithium ion batteries. This is exactly why I thought the home battery was not quite ready for prime time. Is the current lithium ion battery up to the task?

Now that the specs on the Tesla battery are out, I would like to see a hard analysis of the overall cost and environmental impact of these batteries. I don’t think we can assume that they will be a good thing for the environment in the end.

Lithium ion batteries also have a potential to overheat and catch fire. This could be a very dangerous thing if you have a large battery attached to your home. I would like to see some safety data on the battery as well. Perhaps a built-in fail safe would be appropriate.

However – it may create a market for the home battery, feeding the industry and leading to improvements. If we are not past the tipping point now, we will get there eventually – that point where a home battery is a no-brainer, a win-win all around. Once we get past that tipping point, market penetration will explode. The Tesla Powerwall may turn out to be to home batteries what the iPhone was to the smart phone.

We’ll have to wait and see. For now the product is too new to answer all my questions.

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