Tesla Powerwall: 2016 Pricing Number Crunch and Payback Times

Back in May, 2015, we crunched the payback figures for the Powerwall, based on an assumed Australian cost and example electricity prices. Now there are local installed costs available, we have broken out the calculator and gone over the figures. The question is, can the Powerwall give a decent payback time?

Check out our previous numbers, or catch up with the announcement of Powerwall in Australia. Of course, there are other companies offering competing technologies, for various prices.

But for now, this is what the Powerwall will cost. Hot tip, the juicy bits are in bold.


Assumptions

The prices used for this calculation are from the Natural Solar quote system. Due to various factors, such as install issues, prices will vary on a case by case basis.

The calculations are quite simplified and don't account for a lot of financial factors, which can vary from person to person. But it's a starting point.

Electricity prices are based on my own AGL bill and the calculations simplified. Swap your own power usage and costs in and re-run the numbers for a more personalised figure.

Prices used are $0.2377 per kWh, and $0.7596 a day surcharge for peak. Off Peak numbers are $0.0674 a kWh and $0.0517 a day supply charge. Solar feed in tariff is $0.051 per kWh.

We have used an average daily production of 3.9 kWh per 1kW of solar, for a Sydney location, based on figures from Solar Choice.


Powerwall + Solar

Natural Solar quote $16,390 for a 4kW solar system and 7kW Powerwall, installed. A 6kW system bumps the price up $18290. The prices includes any Government rebates.

If ordered before the end of January, 2016, there is a $1000 discount on the prices, which we have not included.

The prices are for single phase installations - three phase saves a little of the price. For our numbers, we used the single phase prices.

As of January 15, the prices are as below (with $1000 discount) for a Powerwall + solar and inverter, installed.

The 4kWp Three Phase $13,990 The 4kWp Single Phase $15,390

The 6kWp Three Phase $15,990 The 6kWp Single Phase $17,290.

The 4kW system will produce 15.6 kWh a day, about which 7.5 kWh is used to charge powerwall. The remainder is fed back to the grid, earning $0.4131 per day.

The Powerwall can offset around 6.5 kWh of power usage, saving $1.54505 a day.

The total saved and earned is $1.95815 a day, or $714.73 a year. Payback is 22.9 years.

The 6kW system saves the same power each day, but earns $0.8109 a day from the feed in tariff. The 6kW system saves $2.35595 a day, or $859.92 a year. Payback is 21.3 years.

4kW Payback: ~ 23 years. 6kW Payback: ~ 21 Years


Powerwall and Existing Solar

For owners with solar already installed, there is also an option to just have the Powerwall installed. Costs vary a bit depending on if a compatible inverter is owned, but given as $9500.

We assume that the current solar system has fully paid for itself (not just been paid for), otherwise it’s remaining cost needs to be factored in.

The Powerwall can offset around 6.5 kWh of power usage, saving $1.54505 a day.

Any potential feed in tariff is not included in the price, as it’s production is not included in the Powerwall cost. It could be giving additional savings however.

By charging the Powerwall (7.5 kWh), instead of getting the feed in tariff, $0.3825 is lost. Total saved is $1.16255 a day, or $424.33 a year.

Payback time is 22.4 years.


Powerwall + Offpeak charging

With no solar, offpeak power could be used to charge the Powerwall.

Assuming the full supply costs, charging the Powerwall costs $0.5572 a day. It can offset $1.54505 a day, giving a total saving of $0.98785 a day, or $360.57 a year.

We assume the same install cost as existing solar - $9500.

Payback is 26.35 years.


Going Off Grid

By ditching the connection completely, we can avoid the $0.7596 a day supply charge, but can’t sell back any excess power.

Each Powerwall needs around a 2kW of solar to be fully charged on an average day. Adding more powerwalls into the system gives greater capacity, but does not increase or decrease payback time.

No specific cost is given, but we have assumed $25,000 - the cost of a two Powerwalls, plus a 4kW to 5kW array, based on a combination of the above numbers.

Likely a real off grid system would need more Powerwalls, but the payback time is the same.

The system can save $3.0901 of electricity costs a day, plus the $0.7596 supply charge, for a saving of $3.8497 a day, or $1405.14 a year.

Payback time is 17.8 years.


Summing Up

For now, most people won’t get a very economically viable result from a Powerwall. Considering the warranty is for 10 years, a payback time higher than this is not ideal.

To get a 10 year payback, electricity prices would need to be $0.40 a kWh - not an overly high figure. Some providers do variable pricing, but the Australian average is closer to 30 cents a kWh, which gives a 14 year or so payback time.

For many people (such as myself), better payback can be had from simply keeping the money in an offset account. In the future, financing plans may improve the proposition.

There are a lot of factors that could affect the payback times, most importantly the cost of electricity. It’s hard to predict what electricity prices will be in the future, but with an increase in solar and battery storage, it is possible they could drop, further increasing the pay back time.

Still, the future of solar and battery storage is a bright one!


Comments

    good analysis

      Agree!

      As for the comment: For now, most people won’t get a very economically viable result from a Powerwall. Considering the warranty is for 10 years, a payback time higher than this is not ideal.

      you wouldn't want payback to be anywhere near 10 years... otherwise, all you've done is pay it back (ie zero benefit other than being able to boast you've got a powerwall). I'm sure it's also a limited warranty so in the likely scenario where you have a problem service call outs might not be included. For me, payback would need to be less than 7.

      On another note, I saw my first Model S today... whoa, that is one niiiiice looking piece of gear!!!!

      Last edited 15/01/16 5:21 pm

        That depends on a few factors, such as the opportunity loss of the money used to buy it, and the expected lifespan.

        Likely the units will be able to keep on working with reasonable capacity to 20 years or more.

        For my use (which won't be the same for everyone), the money would come from my offset account.

        The average interest rate for the past 25 years in Australia has been about 5%. So assuming the same for the next 25 years, lets say I will pay 5% interest on any money removed from my offset account.

        So roughly, for every $1000 the install costs, it needs to save me $50 a year to be better than leaving my money where it is.

        That means that if the payback is under 20 years, I am break even, to ahead, very slightly.

        A 10 year payback would mean that my power bill (if all offset) is halved over 20 years.

        A payback between 20 and 10 years is an effective lowering of my power bill.

        Of course there a countless assumptions in there about finances, Powerwall lifespan, ongoing power costs etc. Which is why I would feel comfortable with the 10 year pay back, in terms of risk.

        The other factor of course is the true opportunity loss of the money used to buy the setup. An offset account is a simple way to look at it (and I simplified further - many factors are ignored).

        In essence, Powerwall is an investment. Calculate the return (hard) and risk, then compare it to other investments. For now, it's not worth it, IMO.

          So at the moment it seems like a poor investment. I would look at batteries after a few years. Let the first few models work out any kinks and the prices drop.

          The average variable mortgage rate over the past 25 years is definitely not 5%. In 1990 a mortgage interest was 16-17%. Some quick checking suggests an average of more like 8% over the past 25 years.

          Remember that the payback period referenced in the article doesn't take into account the time-value of money. This is standard and one of the weaknesses of the standard payback calculation. For example, if we used a 5% discount rate the discounted payback period for the 6kW example above is basically infinite and a 25 year life gives an NPV of -$6,170.

          If we look at the best payback period from the examples (going off the grid), your actual NPV after 20 years is -$5,196 at a discount rate of 5%. So you're not breaking even by any real measure.

          Last edited 17/01/16 12:09 pm

            Yep, I said interest rate, not variable mortgage rate - they are different figures. The RBA has the historical data.

            I used the interest rate because it's the starting point for mortgage rates, which vary bank to bank etc. People can look at their own numbers to see how it works for themselves.

            I used 5% for the offset example to keep it simple (and not introduce another set of numbers) - it's very unlikely to be that. It's just a figure to give an example of the 'cost' of using money form elsewhere and ignores every factor beyond the plain interest.

            The individual reality is very different, and very hard to predict for the future anyway.

            But IMO it's a nice as a starting point because it reflects roughly what many people pay right now. So it's easy to say - How much will it cost me in the next year in interest to remove the money? And based on that, at what point would my cashflow go up or down if I install a Powerwall?

            I have tried to make it clear that none of these figures are accurate for any individual circumstances and they don't consider things like time-value. They are a massive simplification that ignores a lot of factors.

            But they are a starting point to think about the different factors.

              It's a bit confusing as you say interest rates and then talk exclusively about your home loan's offset account interest rate. The current 2% cash rate set by the RBA is about what you'd get for a standard savings account (give or take) while the best home loan with an offset is probably around 5%.

              At any rate, I'm currently in the same boat as you - there are few investments that can beat deferring costs on my home loan (without taking on extra risk at least).

                Yeah, I agree, not worded the best. I was just trying to keep it simply, but make the example.

          Not so fast. Any calculation on opportunity loss needs to take into account the likely cost of these devices over the lifespan of the asset! You can't assume that these devices will sell for anything close to what they will be initially sold for. If normal market forces are at play (and I assume they will be) then competition and market saturation will drive prices down significantly over time.

          As an example, I thought I'd missed the boat with solar panels given governments are slashing tariff's and solar rebates are a thing of the past. I was quoted over $15k for a system only 5 years ago and I would guess I'd get an equivalent system now for well under $10k. That difference buys a lot of electricity.

          As for leveraging money from my offset account, I'd rather leave my money where it is, helping me to pay off an appreciating asset rather than a depreciating "asset".

          Last edited 18/01/16 9:16 am

            Yeah, there are a huge range of factors. Many of which are very hard to predict with any accuracy.

    There are also other advantages though, such as having constant power throughout a blackout that aren't really taken into consideration. Also, many people would just want one to go green/offset carbon emissions. Either way a decent analysis + good article.

      And disadvantages. If I were a fireman I wouldn't be trying to extinguish a house with this much energy and lithium inside, just contain it while it burned out. Go watch some burning hoverboard videos, multiply that by 1000.

      Usually a solar system, for safety reasons, will not produce power. It shuts down. Not sure about the stored power in the batteries.

        Spot on. It is unlikely to continue during a blackout as there is no power source for the inverter to sync to. Could lead to all sorts of problems with phaseing when the power is restored.

        Considering the NSW reliability measures are around 20-30 customer minutes per year on average it is an expensive option for this reason.

        Last edited 16/01/16 11:39 am

      Expensive and not necessarily environmentally friendly way to go considering. Anyone sensible would just pay the extra few cents for green power and sell any solar back to the grid as a green social contribution. That's not to day people won't buy the power wall for the warm and fuzzy feeling without doing the numbers behind it.

      Last edited 16/01/16 11:44 am

      the system won't necessarily operate during a blackout -- believe it or not

    In summary, don't get a Powerwall; don't get anything with a 'Tesla' label on it (expensive, gimmicky and unproductive).

      Started well then went straight into logical fallacy territory. Power wall numbers are bad therefore everything Tesla is bad just does not follow.

    Spoken like a true technophobe.

    What about that Aboriginal company. Are they just in Adelaide for their lead battery systems? How do they compare? Plus made in Australia.

    How does this compare with USA where electricity costs are halved? Or shall we assume Powerball to be a 'proof of concept' rather than a 'beneficial product'?

    This is interesting. Expensive, but interesting. As someone who rents, I would assume something like this is not for me due to it needing installation. Are there any alternative energy options for renters coming soon or are we just out of luck?

    From my understanding the power wall is being released to help accelerated the adoption of electric cars which you charge at home. By having a power wall you are essentially getting a free charge for your electric car which saves you money on that. The savings for house holds without an electric car will be small in comparison

      Charging an electric car does not change the payback time. It's just more power use, which needs more powerwalls. There are no free charges available.

      Also, the Powerwall battery is a lot lot smaller than the battery for a car. EG, 7kWh Powerwall vs up to 90Kwh battery for the Model S.

      Depending on supplier, electric cars can be charged via offpeak, which is much cheaper than solar stored by Powerwall. During the day, they can be directly charged via solar.

      A much better option is for your car to charge via offpeak and solar, then be used as a very large capacity Powerwall when plugged in, running your home on offset energy.

      Running most houses for a day will only reduce the range by 10% or so (depending on car) and you get the same blackout protection etc.

    "The 4kW system will produce 15.6 kWh a day, about which 7.5 kWh is used to charge powerwall. The remainder is fed back to the grid, earning $0.4131 per day."

    Your calculations are wrong. First the solar power goes to the house to be used (saving 23.77 cents). Then any excess solar power is used to charge the Powerwall to be used later (saving 23.77 cents minus 5.1 cents). Only once the Powerwall is charged, the excess will go to the grid (saving 5.1 cents)

    And the savings would be even higher if the customer switched to TOU tariffs and was able to discharge the battery during Peak times (saving 40+ cents)

    As with any solar system, the savings will depend on how much of the solar power is consumed by the house.

      You are completely correct, but as I mentioned, I purposefully simplified the situation, and chose not to include daytime use (and many other aspects) because I feel like it adds unnecessary and subjective complexity to the basic calculations.

      I just want a simple starting point for people to consider their own use from.

      Take my own use for example - during solar charging hours, it's a fridge and a modem, and sometimes a laptop. I don't have aircon, so even on the weekend it's not much higher. Sure, it does make a difference, but less than other factors.

      For those who want to get more in depth with their own calculations, there are many aspect to consider. It also becomes worth calculating the ROI of the Powerwall and solar systems separately.

      Solar energy can be potentially better used (and 'stored') than grid feeding in heaps of ways - hot water systems, pre-heating/cooling with aircon, running timed pool pumps, deep freezes, clothes dryers, chargign electric cars etc.

        Lindsay what is your home energy consumption?

        Batteries have an 8yr payback for about 55,000 houses in Australia. They are the high use houses in expensive tariff zones. Batteries may follow a power curve of .7 down in price if they do what PVs did. Your energy consumption may go up each year as will retail tariffs. So at some point on the graph buying the battery will get an 8yr payback.

    Another factor is whether you can get better than 5c/kWh exported to the grid.

    Companies like Reposit Power in the ACT are developing control systems to allow households to trade electricity on the market, which could result in a much better outcome than a 5c FIT.

    Personally, I'm in the 'wait and see' camp for at least another 3 years.

    Do not give politicians such ideas - they would INCREASE energy prices two-folds with a pretense that they assist households to became "energy independent"

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