Why Tesla’s new battery is kind of a big deal


‘We have this handy fusion reactor in the sky called the sun’: Elon Musk talks up solar’s potential at the launch of Tesla Energy. Photo: YouTube

Billionaire Elon Musk is in the business of big ideas, from electric cars to space travel. But his latest venture, affordable batteries to power homes and industry, might be the biggest yet.

What is the Powerwall, and the Powerpack?

On April 30 Musk unveiled two new batteries that can store electricity from either the grid or a renewable energy source like solar.

Plug in: the new Tesla Energy Powerwall home battery.

Plug in: the new Tesla Energy Powerwall home battery. Photo: Reuters

The Powerwall is a compact, wall-mounted, rechargeable, lithium-ion battery designed for homes and small businesses. Most existing systems for home power storage use lead-acid batteries, which require much more space and, in some cases, maintenance.

Powerwalls will come in a range of colours and two sizes – 7 kilowatt-hour and 10 Kwh. The units can be stacked together to increase power capacity. A typical four-person Victorian home uses between 16 and 20 Kwh a day, depending on the season.

The Powerpack, meanwhile, is a larger unit designed for utility scale, and can store 100 Kwh.

Energy in action: Elon Musk's Tesla Energy presentation was powered entirely by solar power stored in Tesla batteries.

Energy in action: Elon Musk’s Tesla Energy presentation was powered entirely by solar power stored in Tesla batteries. Photo: YouTube

What’s the appeal?

The Powerwall can be used for “load shifting” in the home, and also to provide back-up power in the event of an outage.

Load shifting is about spreading energy use for maximum benefit. For instance, if electricity costs more  during peak periods, it makes sense for the household to charge the battery during off-peak times when the price is low, and then switch to battery power when tariffs are high.

For households with solar, unused extra power is often sold to their power company. With a battery, however, they can store the excess power generated during peak production times in the middle of the day, and use it after dark when demand is greatest. One Australian alternative technologies website calculated a single battery could cut use of mains power to 8 per cent a day. .

Another advantage for Australians is that power companies pay households less for their excess solar energy than they charge them to buy power.

What makes them different to other batteries?

There are batteries that can match the Powerwall’s performance, but what has people’s jaws dropping is the price.

When Musk announced the 7 Kwh and 10 Kwh units were priced at $US3000 and $US3500 respectively (plus installation), his audience erupted with applause. Some had been expecting a price point in the tens of thousands.

Tesla is building a $US5 billion, 10-million-square-foot “gigafactory” in Reno, Nevada that will allow mass-production of the batteries and keep costs down.

What does it mean for big power companies?

Many pundits argue the utility-scale Powerpack will be more disruptive than the home battery.

Electricity companies typically need to be able to generate enough power to serve their customers during peak periods. Yet off-peak usage is generally only about a third of the maximum, and it is costly to ramp-up generation to meet daily peaks.

Battery storage gives power companies additional reserves to draw upon, meaning they don’t need to invest as much in generation capacity. In addition, they increase the reliability of the grid with back-up power.

Studies in the United States have shown using batteries in this way will save power companies money, potentially bringing down electricity prices for consumers too. Some have suggested that, at scale, the technology will be more cost-effective than building new power plants.

And for renewable power companies, having storage capacity means being able to overcome the problem of an intermittent and unpredictable power source.

What does it mean for business?

At scale, Tesla’s batteries become even more compelling, and there are already plenty of companies lining up to prove it (Musk’s presentation was run completely on stored power).

Retailer Walmart and cloud storage provider Amazon Web Services are already using them to improve the reliability, and reduce the costs of, their power usage. Eleven of Walmart’s California stores have been trialling the batteries, and AWS says it eventually wants to power all its infrastructure with 100 per cent renewable energy.

In terms of the industry size, one US study showed energy storage grew 40 per cent to $US128 million last year, with three times as many installations expected in 2015.

GTM Research forecasts the overall market will be worth $US1.5 billion as soon as 2019.

But even Musk himself doesn’t want to go it alone – he is encouraging competition.

The jewel in the crown is that all Tesla’s technology is open source, so anyone can reproduce it.

Can it really make living ‘off the grid’ an affordable reality?

A single Powerwall isn’t big enough to power your whole home. If you’re willing to pay for it, the batteries can be stacked next to each other to increase capacity, but there’s still the cost of a solar system to generate the power. At the moment it’s still cheaper to stay on the grid.

Power pricing is also a complex beast, however, and there are many factors with the potential to shift the attractiveness of home power storage, including a reduction in the cost of batteries once mass-production begins.

Another factor is that energy reform in Australia is likely to make variable tariffs for peak and off-peak periods more common, so storing power in the home at off-peak prices will be more attractive.

When can I get one?

United States residents can already reserve a Powerwall online – in fact, some 38,000 have already, according to Tesla. Shipments are due to begin around August.

Tesla says Australians will be able to get the Powerwall in the first quarter of 2016. The availability of the Powerpack is unconfirmed.