Tesla Drops the 10-kW Powerwall

Tesla Drops the 10-kW Powerwall

On March 22, Tesla Motors, Inc. (NASDAQ: TSLA) maker of electric vehicles, EV powertrain components, and battery products, announced it was discontinuing sales of its 10 kilowatt (10-kW) Powerwall home energy storage battery. 

In spite of that, the stock price actually rebounded from its February low, regaining more than 57 percent, and the raters at the crowdsourced Vetr community upgraded their rating from 1.5 to 2.0 Stars. According to Yahoo finance, the company went from $237.34 on March 20 to $230.40 on March 23. 

The company, majority-owned by founder and CEO Elon Musk, will instead focus on the 7-kW model, which the company calls “the Daily Powerwall”. 

Powerwall batteries were first introduced on April 30 of 2015, presumably as an adjunct of Tesla’s EV and battery production focus. Since then, they have also been the impetus for the June 2014 groundbreaking for a 1.9-million-square-foot production facility on four levels called the Gigafactory

This facility, built at the Tahoe Reno Industrial Center in Storey, Nevada, is expected to reduce production costs for EV batteries, Powerwall, and Powerpack – Tesla’s utility-scale – and fully scalable – electrical storage battery – by almost one-third. 

The announcement comes on the heels of a Feb. 2 revelation that Tesla already has a new Powerwall 10kW in the works – a development that Musk described as “a further step-change in capabilities”.

 

10 kW vs. 7-kW 

The 10-kW configuration Powerwall, priced at $3,500 without an inverter or professional installation, is designed for use in the event of a blackout. It provides only 500 cycles (discharge/recharge) and was never meant to be used off-grid. It effectively stores about 9.6 kilowatt-hours (kWh) of electricity and delivers the full load for an hour, or the equivalent of one 15-amp household circuit (1.6 kW) for about six hours. This translates to 3.3 kW of peak power (or 2 kW of continuous power). 

Since the average American home uses 30 kWh per day, homeowners would need to install and connect a minimum of three Powerwall units. This “microgrid” would meet a family’s most basic needs during a weeklong power outage, assuming the family size is 2.54. Even then, air conditioners, furnaces, electric hot water heaters and clothes’ dryers – the biggest energy users – would be off-limits most of the time unless one also had solar panels or a residential-type wind turbines to create more energy. 

For the same $13,200 or so, one could buy a very reliable liquid cooled, natural-gas powered standby generator delivering 2.5 times as much electricity, and have enough left over for an Energy Star-rated double-door refrigerator. Alternatively, for the cost of a single 10-kW Powerwall, homeowners could purchase a portable, reliable, CNG/NG (compressed natural gas; natural gas) power station. This is basically a generator inside a sound-suppressing shell pre-wired to hook into a circuit breaker. 

Homeowners could also create their own microgrids. Thirteen thousand and change will buy 80 deep-cycle lead acid (marine-type) batteries. Wired in tandem, these could provide almost twice as much cycling capacity as the Powerwall 10-kW, and almost three times as much power (29 kW).

  

The 7-kW Powerwall 

Internet chatter suggests that consumers shaped the Powerwall’s future, favoring the 7-kW model over the 10-kW by a wide margin. The bias, say experts, is not only because the 7-kW model is somewhat more affordable - $3,000 vs. $3,500 for the 10-kW model – but because it has a 10-year guarantee, works on a day-to-day basis (long-lived nickel manganese cobalt oxide; 5,000 cycles before death), and has a 92-percent efficiency rating. It also allows the homeowner to participate in net metering, or go off-grid.

The efficiency rating is remarkable, in that the faster batteries are discharged, the more they heat, and the less usable power is available. In spite of that, both Powerwalls have the same efficiency rating. When it comes to usable power delivery, the 10-kW wins, providing 8.7 kWh of alternating current, or AC, against the 7-kW unit’s 6.4 kWh.

Other than cost, the 7-kW also makes good household-budget sense, depending on where in the U.S. the homeowner lives and at what time of day he/she buys electricity. For those living in premium electricity-price regions of the nation like the New England states, Alaska, or Hawaii – where a kilowatt-hour costs .19 cents or more – savings can be huge. 

Some estimates have suggested the 7-kW Powerwall is a lesser value than advertised. The Koch-funded Institute for Energy Research, for example, suggests a 40-year payback. Tesla says a more accurate estimate could be achieved by using the 7-kW unit in areas that have renewable energy policies like feed-in tariffs. The payback would then be closer to 10 years.   

As of March 2016, the factory was assembling Powerwall and Powerpack battery packs using cells shipped from Tesla’s EV assembly plant in Fremont.

 

The Rebirth of the 10-kW Powerwall 

The much-anticipated Powerwall 2.0 due out this summer is expected to improve on both price and performance. Musk has promised a “step change”, but disappointed consumers by failing to reveal how much of a change that might be. The phrase suggests significant changes, though Musk himself has noted that advances in battery technology are incremental rather than dramatic.

For example, Tesla used (and may still use) nickel cobalt aluminum (NCA) battery cells made by Panasonic Corporation (OTC: PCRFY) for its vehicles and its back-up power battery packs like the 10-kWh Powerwall. The Gigafactory is expected to deliver better batteries

So why, if the 10-kW Powerwall was such a dud, is Musk announcing the Powerwall 2.0? 

Forbes, in a less than sanguine mood, called the Powerwall “just another toy for rich green people”. It’s true that the 10-kW solution is expensive, but that is due to the acknowledged high cost of electric-battery technology

Other opinions are more favorable. As energy expert Tom Lombardo said last year: 

“Much like he did with electric vehicles, Elon Musk is creating a product in order to advance the technology. He sees a future where renewable energy and storage work together to provide all of the world’s electrical needs, with or without the grid.” 

That resonates, as does another writer’s calling the Powerwall concept “capturing the Zeitgeist”. The national “spirit” is largely defined by a desire for cleaner energy, and the ideal is one that appeals across party lines and social divides. 

In short, Elon Musk is a 21st century visionary, and shareholders should trust that vision while heeding advice from The Harvard Law School Forum. 

In 2013, this forum cautioned shareholders not to ignore major events in the personal lives of CEOs. Musk and his wife of four years are, for a third time, contemplating divorce, and the upheaval in Musk’s business and personal life could lead to a Tesla/SpaceX divestiture, merger, or downsizing, or cause Musk to lose focus and/or become risk averse. 

The last is particularly dangerous for the kinds of business ventures Musk engages in, and could allow competitors, and technology, to surge ahead.

 

Companies to Watch:

* China BAK Battery (NASDAQ: CBAK) on March 16 signed a purchase contract with Sysgration (Zhenjiang) Co., Ltd. ("Sysgration"), a leading manufacturer of automotive electronics products and smart home devices to sell no fewer than six million units of its 26650 high-power lithium batteries. 

* Oakridge Global Energy Solutions (OTCBB: OGES), an emerging player in the lithium-ion battery market, on March 22 announced the opening of its $40 million, 70,000-square-foot manufacturing facility in Palm Bay, Florida – a debut that marks the completion of OGES’ transition from an R&D enterprise to a manufacturing entity. 

* EnSync, Inc. (NYSE MKT: ESNC: formerly ZBB Energy) is a developer of energy management systems for large customers like utilities and manufacturing plants. ESNC currently has $2.5 million in work on the books, and Power Purchase Agreement contracts worth another $11.2 m. 

* Galenfeha (OTCBB: GLFH) supplies engineering services and alternative power products to natural gas producers and industry in Texas and Louisiana. Stocks are down on the price drop in fossil fuels.  

Jeanne Roberts is an award winning freelance writer covering the environment, sustainability, social justice, health, politics, and the natural world. She has roots in the corporate world as a California reporter and a communications specialist at a large public utility and has spent the past 10 years working as an editor for a small-cap stock site, and as an environmental/political/social justice blogger for The PanelistCelsias,Cooler PlanetDeSmogBlogEnergy BoomSolveClimate.com, the Clean Tech Blog,EarthTechling, and various other online publications. Ms. Roberts has written a book on alternative energy sources, sustainable home building, and environmental initiatives for homeowners available on Amazon.

 

Originally published on March 30, 2016