Energy Storage tesla-home-battery

Published on April 29th, 2015 | by Steve Hanley

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Tesla Battery Systems Already Power 11 Walmart Stores

April 29th, 2015 by  
 

tesla-home-battery

The worst kept secret in the world is that Tesla storage battery will be revealed officially on April 30. What isn’t widely known is that the company has been quietly testing its batteries in more than 300 homes and many business for several years, according to Fortune.

In fact, Tesla storage batteries already power eleven Walmart stores around the country, reports Bloomberg. Food processing company Cargill is also reportedly testing the Tesla storage battery. Schools and wineries are on Elon Musk’s list of places to use the new technology as well. The knowledge gained from all that testing will go into making production versions of the Tesla storage battery as efficient and trouble free as possible.

Storage batteries can be used anywhere electric power is needed. They can take over in the event of a power outage to keep homes and business running as usual. They can be recharged at night when electric rates are lowest and used to provide power during the day when rates are at their peak. They can be recharged from the electric grid, from onsite generators, from solar panels or wind turbines.

The secret to any battery storage system is the inverter. Electricity coming in from the pole is in the form of alternating current. But batteries, solar panels and wind turbines operate on direct current. An inverter converts AC to DC and vice versa so everything in the system works seamlessly together.

Jeffery Evanson, Tesla’s head of investor relations head  told Business Insider recently that the announcement expected on Thursday would be about a “Tesla home battery and a very large utility scale battery.” Utility scale batteries allow electric companies to even out the demand curve for power, which will save them money.

It costs electric companies a lot of money to ramp up their electricity output to meet the surge in demand that occurs every day when people get home from work, crank up the AC, turn on the computer and fire up the stove. Using batteries will allow utilities to meet that demand in a more cost effective way, saving them money and allowing them to avoid raising the rates they charge for electricity.

Just whispering the word “Tesla” can make a stock analyst swoon. Andrea James, an analyst with Dougherty & Co, told Bloomberg, “Tesla’s energy storage business could be worth as much as $70 to Tesla’s stock.” If you believe that, you should be on the phone to your broker as soon as you finish this story.


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About the Author

I have been a car nut since the days when Rob Walker and Henry N. Manney, III graced the pages of Road & Track. Today, I use my trusty Miata for TSD rallies and occasional track days at Lime Rock and Watkins Glen. If it moves on wheels, I'm interested in it. Please follow me on Google + and Twitter.



  • kevin mccune

    Go Tesla,these units make a lot of sense and would probaly alleviate the need for a lot of small backup generators.I really grow weary of all the Tesla badmouthing-what are people scared of?

    • Steve Hanley

      Musk is the king of “disruptive technology”. Disruptive means some people who are currently successful in business are in danger of being relegated to obscurity. That means they stand to make a lot less money than they are used to.

      People tend to get ornery when you start taking money out of their pockets or food off their tables.

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  • Rockne O’Bannon

    I remember this with Enron.
    It is really a gas company. No…. it’s an energy company. No… it is an information company… and arbitrageur… and a broker…. by the time the music stopped, all the assets were gone. It was a bunch of vapor and broken promises and wild accounting.

    A lot of companies do this to stay ahead of regulators, analysts, etc.

    Let’s break it down. Every single battery Tesla buys is from Panasonic. Which means that Panasonic can do everything Tesla is doing now, but cheaper. Why isn’t it? And Panasonic could have made a gigafactory in Japan and just sold the product to Tesla, but it didn’t. Why not?
    I think it is because Panasonic does not have a 300 PE and a bunch of investors going gaga over some South African guy’s pipe dreams. But if every battery in a Tesla car is from Panasonic, and if Tesla gave away all of its patents, then what is Tesla really? What justifies its 200-300 PE?

    Oh yeah. It’s a battery company. No wait, it’s a car company. No wait, it is a supercharger infrastructure company. No, it is a solar battery company… etc. etc. So it has to be worth at least as much as Enron, right?

  • Rockne O’Bannon

    Let’s do some math. Take the price of the battery and divide it by the number of charge/recharge cycles it can handle.
    Then figure out the difference between the peak and off peak power at a site. Alternatively, assuming that solar generated power is cheaper than line power, use that price differential.
    Now use the capacity of the battery to figure out how many “kilowatt hours” of cheap power you can store,and then use later in place of expensive power.

    How ya doin?

    I did the math once. I came up with something like 2 dollars per cycle just to charge and discharge, and the price differential for electricity for ME, not WalMart (which probably gets discounted power anyway) came out to a couple of pennies per kilowatt hour.

    Conclusions.
    The price of the batteries is too high to justify using them to save power, especially in a cheap electricity country like the US.
    OR
    The time for the batteries to pay back their investment is greater than the expected life of the battery.

    So let’s spend some money to save the environment! Except that… maybe we could find some better things to do with these batteries than just burn them out on something that is a money loser in the first place.
    How about backup power supplies for hospitals? I would bet some people in Nepal could put them to better use than a WalMart.

    • Chicken McNasty

      Hospitals already have UPS systems, they have for years. Batteries have been used for all kinds of critical power situations while the generator gets started and synchronizes the power. The value isn’t in the batteries themselves to save power, it’s solar grid parity with utilities being reached this year – the costs per kwh will continue to plummet.

      • Rockne O’Bannon

        Addressing your points in turn, I know. I know. I know. And you are wrong.

        The value proposition for the small devices is being presented not in terms of grid parity at all, but as the differential between the fully installed cost of solar vs grid power. That differential if it exists now is slight, and if it gets much larger by the time the batteries become useless, it is still unlikely to pay for the battery, inverter and installation.

        Let me give you a case for Japan, where that differential is HUGE. In fact, Panasonic, Tesla’s supplier, has been marketing better devices than this for years. It can’t fine takers. Here is why: Grid power is about 30 yen per kWh, let’s say 30 cents, ok? And let’s say I have a fully depreciated solar system on my house for which the FIT contract has expired, so my cost for power from solar is zero yen per kWh. Just freaking zero to illustrate my point.

        Is it worth it for me to buy one of these units, for 3500 dollars plus inverter plus installation… let’s say 5000 dollars? (Never seen a system this cheap, but let’s just go for it.)

        Well if i fully charge it every day, and then use every bit of power from it, and do that for every day of the year for 10 years, that would be 30 cents times 10 kWh times 365 days times 10 years, that would give me 11000 dollars. Wow! I doubled my money!

        But let’s back up. Solar power ain’t free. And grid electricity might actually fall in cost in the next few years. And I won’t use all that power every day. And I might not generate that much extra power every day. And nobody in the US, except Hawaiians, pays 30 cents a kilowatt hour. Add in the risks, the inefficiencies, the taxes, the utility hassles, and the foregone revenues / opportunity cost from a FIT or just plain old charging your car, and this “investment” ain’t gonna make it no way no how.

        And let’s not forget that the example above is 3,650 full cycles. Tesla’s guarantee might be for 10 years, but I am hearing here and there that the batteries are reliable for about 1000 cycles? Certainly YMMV, but throw that risk in there too.

        Huge solar fan here. Won’t be buying one of these expensive toys.

        • Chicken McNasty

          I should be clear. I don’t think the game changer is this particular unit, right now. But costs will continue to plummet. The conglomeration of it all is definitely pointing in the direction of everyone being islanded off from the utility, especially at the residential level. It’s going to happen eventually. The variable I’m curious about is exactly what you mentioned, what will this do to power costs in general?

          • Rockne O’Bannon

            Yes. You should be clear. I will be too. The circumstances I presented above point to this:
            If this fully installed device and inverter with this capacity were priced at about 1500 dollars, it MIGHT be a successful product. Maybe subsidies can do that. I don’t know. I would not count on it.

            Reasons:
            Solar is just not that cheap yet, and even if panel prices drop to zero, installation and inverters will still be expensive, and you can bet utilities will tack on some fees.
            If fossil fuels stay cheap, then the differential between the grid price and the solar price will never become high. The US will never use a carbon tax as other countries do.
            Gas tanks and solar panels last “forever.” Batteries don’t.
            etc.
            Let me just summarize and say: Americans would revolt in the streets if energy became expensive enough to justify purchasing this Tesla storage device.

            If you are curious about power costs in general, I would point you to a Lawrence Livermore study showing that half of the energy produced in the US, and probably most nations, is wasted. If all utilities instituted Peak/Off peak rates tomorrow, then people could find their own ways to reduce costs and consumption. They would find that using batteries to do that is not cost effective.

            The grid is not the enemy. The overall effect of solar is to provide power during periods of peak usage. What Musk is trying to do is replace the cheapest electricity that is available to anyone, off peak power, and it can’t be done profitably. Moreover, people think that using solar PV power to charge the batteries is a great idea, when in fact, it is expensive, not even grid parity, in most places. He wants people to pay good money to replace cheaply available power with expensively generated power.

            If Musk knows this and does not care, he is a charlatan. If he does not know this, he is an idiot.

          • Chicken McNasty

            Boy do you sound emotionally invested in this point of view you’re trying to advance. We’re moving into uncharted territory and there are a number of variables which will influence exactly what happens. The solar projects might end up being bundled with Tesla (or similar) vehicles, killing oil pricing by demand reduction. Natural gas might take over power generation. People might switch to smaller neighborhood based networks of power and fuel cell energy storage.

            I’m excited about the change. I’ve worked in the power industry for 15 years and have quite a bit of experience with large UPS systems, all of which you mention are players in the Japanese resi market. One thing is certain, technology is advancing and costs are plunging. Never mind the geopolitical considerations on fuel and where to get it. The safety of the grid network, etc.

            We’ll see what happens. Lighten up a little bit. Japanese women are gorgeous. The future is bright. At the least of all, solar power and cheaper storage are a foot pressing on the neck of fossil fuel pricing. And any reduction in oil specifically sends OPEC into reverse auction mode as they try to make up for falling prices by capturing market share. It’s amazing to consider that this opens up the ability of people to build communities in areas which don’t have feasible access to power, but do water. We’re living in an exciting time with all sorts of technological advances making changes to the dogma we live with. It’s a good thing 🙂

          • Rockne O’Bannon

            My emotional investment would shock you. I have been living a very green lifestyle for 20 years now, and I have seen a lot of progress. I have also seen enormous waste of capital, the seed corn of any society. Enron, Iraq, Madoff… value conserved carefully by good people over generations… destroyed by con men, trusted by people as “geniuses”.

            A lot of people see the Musk/Tesla nexus and assign hope to it. “If we can just get rid of nuclear and all buy battery cars, we will all be saved!” But to me, and to a lot of people, that nexus represents a money pit down which all of the seed corn of US environmentalist “hope” will get sucked. The cars and their proprietary infrastructure are hugely wasteful. But ok. Time is showing that. Every new ploy to distract people from how badly their car operations are going is just another broken promise. People are seeing that now. Few of the things Musk has promised have actually been done. Even fewer on schedule.

            You can probably name 10 companies doing work on utility level and personal level storage. None has a PE or a market cap anywhere near Tesla’s. But they are all doing more serious work than Tesla, which is simply repackaging Panasonic batteries and selling them. Every Tesla battery uses resources that could be used to make 20 good hybrid vehicles that don’t get refuelled with coal emissions. Tesla could buy Volt and Leaf operations outright using about half of their stock, and yet their sales are fewer than either Volt or Leaf. The “value” of what Tesla is actually doing is quite small. And yet Musk spends his time denigrating competitors who are paying attention to changing the world rather than goosing the stock.

            You probably get the idea that I could go on all day.

            Sure I can look on the bright side. But I have a somewhat longer view of history than most, and I know that when things hit the fan, all the babies get thrown out with the bath water. The scale of Tesla’s failure after raising so many hopes for so long is going to affect Leaf, Volt, and now… a whole lot of storage start ups. Subsidies and sales will dry up. Solar City leases will go into litigation. Utilities, regulators and politicians will sharpen their knives and go to work.

            Just look at what happened to the real Tesla and look at what his scandal did to the development of DC and his other brainstorms.

            As far as the rest, I am not seeing lower fossil fuel prices as a good thing for sustainability, although they might be good for many economies. Historically, supply creates its own demand. People are finding ways to use oil more these days, not less. Many countries, even in Southeast Asia, are using this opportunity to raise fossil fuel taxes and cut energy subsidies for fossil fuels. Not the US, though.

            And Tesla is not giving anybody anything new, it is just marketing these things as new and helpful. Selling the hope instead of the product.

            And that’s it.

          • Chicken McNasty

            I get it, and I realize the technology is not new – but the application and the way they’re going to market is new. I’m hopeful but then again I’m not exactly looking at the environmental impact so much as the impact of manipulating the upper limits of fossil fuel pricing, and quite honestly I believe every single military action of the US in the middle east post 1980’s is to actually manipulate oil futures upward. It’s not that I’m unconcerned with the environmental impact so much as it’s just not the primary driver with me.

          • Rockne O’Bannon

            Wars are almost always over control of resources. If you wanted to classify humans, capital and religious artifacts as resources, then you could extrapolate that to “always.”

            If resources are not “scarce,” then people will have a lot less need to fight over them. I happen to believe that most countries probably have sufficient resources within their borders that they can produce or trade for what they need, in the long run. Few people believe that, I think.

            So I think we agree, and considered geopolitically, I would be thrilled to see Japan become energy independent, and for the Saudis to switch entirely to solar while selling their crude for use in petrochemicals rather than as fuel. Natural gas should be used for fertilizers, not for electrical generation. And wind for everybody. The world is improved on many dimensions by every single technological improvement. It is a fact.

            I understand your emphasis on “big business” as the cause and perpetuator of these problems, but it is more complicated than that, certainly. Some auto companies pay their CEO huge amounts of compensation, and other companies give it to workers instead. Some fight mileage and emissions regulation, and some embrace it. And, well, sometimes fighting for oil is fighting so that the free market controls it instead of some religious sect. The good guys often look like bad guys just because they would rather see things continue than have them all fall apart. It is controversial.

            In light of my circumspection, or odd perspective, take your pick, my BS detector starts pinging when a guy makes grand announcements just before a quarterly report comes out, and then quietly forgets them while cooking up other sound-bites for the next round of financing. It is perfectly fine to say any old thing you want, unless you run a 50 billion dollar company and have one bank providing you financing and pushing your stock at the same time. Both of those things were illegal 20 years ago. Those laws kept widows and orphans from losing their life-savings to pump and dump con men. Nowadays, I feel a duty to those widows and orphans so that they don’t wind up like Enron investors.

            And you know, if WalMart did the math and wants to buy battery backup for profitability, which I highly doubt, then more power to them (pun?). But for ordinary people who just think that they can make money with this because Elon Musk says so, they need to think a little harder.

            For what it is worth, I have done a lot of spread sheets and simulations for various personal projects, and I have only gotten the battery scenarios to work under pretty special conditions on a community level. Usually it requires “overcapacity” from the intermittent resources, and some kind of “bank of last resort” such as a grid to fall back on when plans do not go right, say 2% of the time. And the batteries have to be … well.. big unless you have pretty predictable weather. On a personal level, the results are much more straightforward. Without the grid, you just cannot make forecasting mistakes, or you buy a generator. This is not a “grid freedom” device for an average household.

            And this might surprise you. I actually want some battery storage and I have shopped for it. How rare is that? Can anyone else posting here say that? Part of my frustration with Tesla is that this “super, wonderful” product still falls short, even though my situation is almost ideal for a product like this. If I thought I could break even, I would get one. It is just Tesla getting my hopes up. What else is new?

          • Chicken McNasty

            What’s your biggest issue with Tesla’s product? Longevity? I can’t speak to consumer grade, the typical sales I’ve made are for multiple 500w 480v boxes stacked.

          • Rockne O’Bannon

            Wow. Commercially, it will be price. Cost of installation. You can’t make money cycling the things, so having them as back up for refrigeration or servers, etc. is your benefit you are selling. I suspect Tesla’s Walmart systems are car batteries that did not meet spec. So they repackaged them. Cycling them Peak/Offpeak is likely to be as (un)profitable as using them for generated solar storage. So you will want to tell your customers and insurance companies that if they lose refrigeration for a day, they have to throw everything out. What is that worth? All your server data. What is that worth? You can’t sell a reward, but you can sell risk-reduction.

            It is a fair question for home level too. It is several things, but I just have to say that price is the biggest problem.

            You can give warranties for the number of cycles, and you can demonstrate to Tesla that the batteries are degrading, and maybe they will give you a new one. Is the inverter covered? who knows?

            One also assumes that the rated capacity is going to be what they say it is initially. And for the personal scale box, 10 kWh capacity does not seem bad. It should be some value between what people have “left over” after generating during a sunny day. Overcapacity is just paying for battery you don’t need, right? So 10-20 kWh seems ok. Pardon the units btw, but kWh just works…

            So those are ok. It is price. It sounds bad to say, “I won’t buy it if I can’t break even.” But really, if the calculations work for LEDs, heat pump water heaters, solar arrays, and just about everything else, then you can always hit someone over the head with the bottom line and call them stubborn for standing in the way of progress. Here, the total installed cost is just way too much, and it just is not clear that anyone is really being helped by my sacrifice of benjamins. A good salesmen might push reliability in the face of power outages, but … that just makes them a glorified UPS, right? Sticking it to the man has no value for me when “the man” just wants to provide me and everyone else with stable power. I dunno. Some utilities in the US are being pretty disagreeable. Maybe this off-grid freedom has a lot of value for someone.

            Am I a jerk for being a cheapskate? Nah. Tesla is a jerk for coming out with a product that can’t be switched on without losing people a wad of money. But frankly, that is what Tesla always does.

            And I might as well say it: it makes more sense to buy a Leaf and charge it up using “free” solar power than buying a Tesla battery and charging it up to watch TV at night. When one considers a 10k dollar price for the 10 kWh system to power the house, you are getting up in Leaf territory in terms of pricing. Maybe I keep a Leaf charging and use another one to drive around. Switching them off day by day is still cheaper than buying a Tesla vehicle. Ouch.

            Last thing
            There will come a day when people will have paid off their solar arrays and utilities might not renew contracts anymore. So rooftop solar kilowatts become a “use it or lose it” resource. What do people do then? This will become a big issue in about… oh… ten years maybe. I have some interesting ideas that I am not really going to share here, but there are other things you can do with that “free solar power” besides putting it into a battery.

          • Rockne O’Bannon

            In my area of Japan, we have utility scale storage and personal product energy storage, each of which became available after the earthquake in 2011. In fact, home-scale fuel cells are also on the market.
            So all of the products are already marketed by major names such as Panasonic, and I think Toshiba, Mitsubishi, and I think Honda has joined in.
            Even with subsidies, these units are not selling. The peak/offpeak differential is about 20 cents per kWh. In the US, the peak/offpeak differential might be only 5 cents per kWh because US electricity is so cheap.

            I think that answers your question directly. Spending dollars to save pennies makes no sense. And I put the question to you. You say that will change eventually. When?

            If solar went to zero, it will not mean a thing if the price for grid electricity is about 10 cents per kWh. If solar is 8 cents per kWh and grid peak is 12 cents and off peak is 6 cents, then you STILL won’t use your batteries for solar. You will use them to store off-peak power and coal still wins.

  • kevin mccune

    Well let me share my feelings.I hate the smell of gas,I hate smelling it burn,I dislike getting it on my skin and the list goes on.I know these other technologies are relatively expensive,I dont look on it as saving the enviroment(everything has its costs and drawbacks)I just like a little power,with no stench or noise,I cannot help how the conservative enviromental ignoring cheapskates feel,I cant help how the lovers of the infernal machines feel,each to their own,perhaps someday there will be something better or maybe just our attitudes will improve,I dont have to win any argument,I like what,I like.

    • Rockne O’Bannon

      Good for you. You are fortunate that you live in a time and country where you can live as you choose and consume those products you prefer.

      I guess fans of Mirai and Tesla are duking it out over the fine points of products that just did not exist 10 years ago, each of which you would probably like. The revolution is over and it has improved our lives. And now the revolution is proceeding to eliminate rivals and eat its children.

      As a consumer of some “eco-products” and ideas, I happen to think that Tesla is headed down the wrong road and that it is doing it for greed’s sake. Run by a PT Barnum clone, it makes cars with big batteries it buys from someone else and marks the price way up for people who don’t really care about the cost anyway. Toyota innovates, produces, and follows through calmly with products that normal people can buy.

      I suppose both firms can “win” with you and with others in the long run. That would be nice. On the other hand, if PT Barnum loses 40 billion of investor funds based on irrational choices and decisions and becomes the next Bernie Madoff, people might think that the yearning for clean air and sustainability is just a snake-oil scam. Very innovative ideas of DeLorean, Tucker and others have been rejected by societies disgusted by financial escapades.

      At the very least, I am relieved that Toyota is no longer associated with Tesla. No matter what happens to overpriced battery cars, our future will have Mirai, and you will have at least one product that can satisfy you.

  • kevin mccune

    I’ve worked on ICE powered vehicles for 40+ plus years and I can tell you I wouldnt care if something that didnt stink and create nasty emissions were replaced by something else.When black ,messy ,cancer causing used oil runs down over my hands and person,lets just say I’m not impressed,its time for something else,these ICE powered vehicles are indeed infernal machines seen my first Tesla auto on on I 64 Saturday(it was going down the road just fine) and of course the hybrids(they were doing better then average-a Volt blasted by Me on an on ramp) .
    I dont worry about the cost,our petro industry is subsidized too,there are better things to do with oil then burn it through those hellish ,noisy (whomobile) motorcycles and 3 ton SUVs,this country eats oil and my guess is,when oil gets really expensive,more people will go hungry.
    During Tesla’s Day conspiracys were rampant(eg; the world wars,the demise of intracity transit systems,etc) people werent quite as independent then and tended to be a bit more civil,most of our societal problems have resulted from greed and the trend continues.

  • vacmancan

    Nice set-up!!!!! Hopefully everyone will enjoy our show on “Stored Sunshine.” https://www.youtube.com/watch?v=0NNRAZu848g

  • Jason Burroughs

    it’s a bit of hyperbole to transform “walmart has installed powerwall at 11 locations” to “11 walmarts powered by powerwall”. Obviously, powering an entire wal mart is a big deal – one store manager reported a monthly average electric bill of $28,000.

    We need credible news sources more than we need click bait.

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