How Much Money Does Tesla's Powerwall Really Save On Your Power Bill?

Thanks to Natural Solar and the Pfitzner family, we now have real-world usage figures from a solar panel setup and Powerwall combination system. While promising, the announcement was a little light on in details, so we got a hold of the full figures and did a number crunching analysis of the results. So is the setup worth it?

The original claim from Natural Solar's recent was of a payback of 6-7 years, but those calculations leave out a lot of important information. Read our initial report here for some more background.

We fully crunch the numbers below, but here's the brief version -- spoiler alert!

Based on the numbers given to us from Natural Solar, our calculation of the Powerwall and solar system's (simple) payback is around double what was reported at approximately 13 years before break-even, and the direct use of solar -- not the Powerwall -- accounts for a very large chunk of the savings.

If the system's purchase price could have instead earned or saved interest -- like in a mortgage, for example -- the simple payback could be up to 20 years or more.

These numbers are not directly comparable to what we have calculated before, due to the specific system setup and prices used by this particular installation, but overall are in line with what was expected and reported.

Of course this is not a one size fits all case study -- other usage patterns and electricity costs could mean the payback time is much lower.

Keep in mind though that pure ROI is not the only metric, and a solar and battery storage setup has other advantages and environmental benefits. Early adopters such as the Pfitzner family drive forward the progression of the technology and help bring us one step closer to a smart, distributed, fault tolerant mesh of power generation and storage for everyone.

Having the Powerwall (and associated management and monitoring tech) also means that the household can track and optimise their power usage to save money, and gain access to programs such as GridCredits. The system also provides a buffer against rising electricity costs and can have further gains from time of day billings.

While for now the pure economic ROI figures are not as good as we might hope, it's a fairly good bet that thanks to the rapidly improving technology involved, even first generation battery storage setups will save more than they cost over their lifetimes.

For those who want to keep up with the Pfitzner family and their Powerwall journey, check out the their blog.


Numbers And Assumptions

All our facts and figures come directly from Natural Solar. The team over there has been fantastic in answering all our questions. That said, there was quite a lot of back and forth to iron out all the bugs in the numbers, so we will update these calculations if new information comes to light.

Image: Tesla

These calculations are meant as a guide only, and are fairly simplified and averaged. Consider it a starting point for the finer intricacies of calculating the returns for specific circumstances. Only the Powerwall efficiency losses are included. We are covering the figures from the billing period only - ideally an entire year's worth of data is needed for more accurate calculations, especially when it comes to solar generation.

Powerwall figures are based on the data from Tesla. While we have tried to be as accurate as possible, we welcome and encourage any checking and challenging of our figures.

There are also some very important clarifications that need be made about the originally released figures and the resulting ROI figures. The power bill cost of $40.46 does not include GST. The comparison $660 power bill is from a different provider, and is not for the same electricity cost or energy use. Worse, it is from summer, whereas the current bill is from Autumn. While it does represent savings made by the household (which is important), it does not represent savings from just the new Powerwall and solar system.


The Facts And Figures

The household has a $50.39 bill, over a 86 day billing period. They used $47.21 worth of electricity, received $58.88 worth of credit for solar feed in, and paid $52.13 for metering and other charges. There is also $9.93 charged for GST.

The family is connected with Diamond Energy, which charges $0.215 per kWh and gives an $0.08 per kWh solar feed in credit.

The system consists of a 5 kW solar array, Powerwall, and associated inverter and monitoring gear. It costs $14990 from Natural Solar, which includes an up front government rebate.

The household averaged 21 kWh per day of solar generation during the billing period. This is notably above the average yearly figures from Solar Choice, of around 19.5 kWh. A full years worth of data is needed to get a more accurate figure.


Day By Day In kWh

During an average day (over the billing period), the solar array outputs around 21 kWh from the inverter. Around 6.64 kWh is then used to charge the Powerwall. Another 5.8 kWh is then used to run appliances such as pool pumps, dishwashers etc directly from solar during the day. Around 8.56 kWh is then sold back to the grid for a credit.

Once the sun goes down, around 6.16 kWh is used from the Powerwall to run the house (based on Telsa Powerwall efficiency numbers). The house also then draws an average of 2.55 kWh from the grid each day once the Powerwall is out of juice.

The house uses an average of 14.5 kWh a day. 5.8 kWh from solar, 6.16 kWh from the Powerwall, and 2.55 kWh from the grid. Around 0.5 kWh is lost in the round trip in and out of the Powerwall.

This is a fantastic result, and great direct use of the solar array.


Savings Comparison

The old $660 bill is not a valid comparison, so we mocked up a ‘virtual’ bill based on the household's power usage from the same provider, if they did not have the solar system.

Based on the information on the Diamond Energy website, the electricity and supply costs are higher than what was provided to us as the current figures for the household.

Based on the same total kWh usage, the household would pay around $350 for the same bill, with no solar or Powerwall. As you can see, this is a very big difference to the $660 bill used in the Natural Solar comparison.

So the Solar + Powerwall system saved around $300 on the bill, or about $1375 a year.

The simple payback time period for the entire system is 12 years.

Not unreasonable, but outside of the Powerwall's 10 year warranty.


Powerwall Degradation

The capacity of the Powerwall degrades over time, and the Tesla warranty does not cover ‘normal degradation’. There is no definition of this in the current warranty.

Image: Tesla

If we jump back to earlier in the year, the warranty used to state that the battery would have at least 60% of the original capacity remaining after daily cycles for 10 years. It was rated for a total of 18,000 kWh over the 10 years.

While now removed from the warranty, this gives a decent starting point to consider degradation. Likely the battery will perform better than this rating, and will continue to work just fine after the warranty is over, but it’s worth considering.

In the current setup, lost capacity in the battery means it offsets less power, which in turn means more must be drawn from the grid, and more solar will be sold back to the grid.

This extra loss bumps the simple payback time out to around 15 years.

Of course, it is likely the battery will perform better than this, but a slightly lower simple payback time of around 13 years is still a good benchmark.


Rising Power Costs

If electricity costs more per kWh in the future, then a solar + Powerwall system will save more money, lowering the simple payback time.

Of course, there is great debate over the expected long term electricity prices, despite short term gains.

The Climate Institute crunched some numbers and suggests that in Australia, electricity prices are currently around the same as they were 25 years ago, once accounting for inflation. Despite this, more rises are expected in the short term.

If we see a 30% rise over the next 10 years, the Pfitzner household will save more money. There are a lot of factors (such as exactly when the rises occur), but a rough calculation shows it could bring the simple payback period down to around 11 years.

Switching to time of day charging could also save money, and that’s the future plan for the current solar and Powerwall setup.

This could further drop the simple payback to around 10 years.


The Solar Conundrum

Those as obsessed with facts and figures as we are probably noticed that the household uses a huge amount of solar power directly, aside from charging the Powerwall. Around 5.8 kWh per day, during peak daylight hours.

This is a great result and is achieved by items such as a pool pump and running other appliances on timers. This sort of usage is ideal as well, because it does not need to be stored. There are loads of smart home options to further take advantage of these savings too.

Image: Tesla

That said, it is also a number that needs a little perspective. The direct solar usage is more than my entire (2 person) houses daily use, so is not a practical solution for everyone.

Solar Choice suggests that the average price for a 5kW solar array by itself (installed in NSW) is $6846. If this array was purchased instead, with no Powerwall, and the same daytime usage was kept, with the extra fed to the grid, around $2.89 would be saved per day, compared to our comparison bill.

Thanks to the lower purchase price, removing the Powerwall from the equation can actually improve the simple payback to under 10 years. A smaller cheaper solar array better match to the households usage could further reduce the simple payback time.

The issue here is that while the Powerwall is a fantastic bit of tech, it can only offset a limited amount of power each day. Even if it was charged for free, it can’t offset more than about $1.1 a day at the prices used for these calculations. Over the course of 10 years, that is about $4000 offset - way less than the price of the Powerwall itself.

Worse, if you factor in that the solar energy used to charge the Powerwall is not actually free (the solar panels cost money, and the power could be otherwise sold to the grid), the maximum possible savings are even lower.


The Opportunity Cost Elephant In The Room

A huge factor that is rarely considered in these payback calculations is the opportunity cost of the $14990 spent on the system.

Very few people have $15k hidden under the bed that could not be put to better use and save money over time.

Effectively, buying the system rather than paying off some of your highest interest debt (or combinations of debts, if each is under the $14990 total) is like taking out a loan for the system at that same rate. While it saves you money each electricity bill, those savings need to pay back the effective interest as well as the original purchase price.

A very common example would be a mortgage. Buyers of a solar and Powerwall system are unlikely to put it on a rented house (heh), so chances are they own it. Likely they also have a mortgage that could do with an extra $14990.

As a quick and dirty example, dropping $14990 into a mortgage instead of buying the solar and Powerwall system will save around $600 the first year at 4% interest. The reverse is that pulling $14990 out of an offset account will cost about $600 the first year in extra interest.

In other words, while you might save ~$1250 a year on your power bill, your mortgage costs you an extra $600 in the first year. So in terms of household cash flow, the Powerwall and solar system only saves around $650 a year, but that still needs to pay back the original purchase cost too.

The specific numbers are tricky to calculate because everyone will have a different situation, and interest rates will likely rise in the future. For other households, the opportunity cost could be different -- say if you have a higher interest rate car or credit card debt.

Still, this is a super important number to address, as directly affects the household's cash flow.

Using the above figures and reduced overall savings, the simple payback time is around 20 years.

Considering that is double the Powerwall's warranty period, it puts a big damper on the potential savings of the system at this point in time.

If we consider a simple backback of 10 years (with opportunity cost) the lowest acceptable (and that is pushing it), then the entire system cost needs to be about half what it is now. Of course, changing electricity prices will play an impact too, so it's worth doing your own calculations.


Other Factors

While we love to crunch the numbers, the underlying ROI is rarely going to be what drives early adopters of technology such as Powerwall.

While the current system can’t, in the future the Powerwall can give blackout protection. It’s also a step towards greener energy use, and helps bring down the prices for anyone else.

So while (I) would personally invest my money elsewhere, solar and a Powerwall is a great technology combination, and is absolutely the way of the future.

Should you buy one based on ROI alone? Probably not. But buying one because it is awesome -- and understanding and accepting the ROI -- could be worth it to lots of people.


This story originally appeared on Gizmodo.

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Comments

    This is a very good analysis. Well done Lindsay.

    I view current offerings as generation 1. Think of it like iPhone 1. Wow it looks cool and changes the game. But do you really want to be hanging on to it in 15 years time? If you waited another 2 years the next generation model would have blown it out of the water - improving storage and giving you a better ROI.

    I would give it another 3-5 years until the opportunity cost and ROI better align.

      This article is complete rubbish, sorry.

      It introduces the most bizarre and bias manipulations of numbers.

      Opportunity cost, seriously WTF. I understand the evaluation in appreciating where to invest money but to use this to increase the ROI is blatant bias.

      But the worse thing about this article is it bases everything off a completely made up premise.

      "The old $660 bill is not a valid comparison…"

      That's nonsense. It is the only comparison that exists. The writer can't just go make up their own imaginary bill and then base the rest of the article on that.

      Part of these EV systems are modern monitoring systems. These systems will influence that way you use electricity through the day. The changes they introduce are part of the ROI and can not be simulated away.

    Good analysis. I love this technology but the truth is that a lot of people act weird around energy and electricity supply and are really investing in these systems for non-economic reasons. People like the feeling of being 'off the grid' and don't care if its cheaper or even if the payback period is greater than 20 years. If they were purely rational then solar hot water is a much better investment with a payback period of well under 10 years. Problem is its much less sexy and doesn't have the same doomsday/crazy eyes following like electricity supply...

    Origin energy are saying 4 year warranty on the powerwall.
    There is mention of up to 10 year. But I'd love to hear what the ACCC says on open ended warranties.

      The Inverter is the biggest problem. They only last about 5 years, can be easily damaged, cost a bomb and need an electrician to remove/replace them. Batteries currently are not really viable, very expensive, short life and can be damaged by a faulty inverter.

      When the tech really gets rolling we may in fact go back to DC current instead of the costly and wasteful conversion from DC to AC and back to DC.

      Since most of household energy we use is thermal for hot water, heating and cooling, the best strategy is to go direct with Solar Hot Water which is storable, and to use double glazing, thermal mass, fans, pelmeted curtains, shading with deciduous vegetation and venting. None of which requires high tech or throwing away expensive "fixes" after a few years.

    What would be the marginal benefit/cost of adding an additional Powerwall? Assuming the system could utilize it, would it make sense to add just and additional unit with no additional inverter needed?

    If they save $200 per year in grid tie costs and the additional Powerwall was $3500 - 30% Tax Credit, that would result in a 12-13 year ROI.

    I hope a full year analysis comes out in the future. Great job on this BTW.

      I imagine a second inverter, or an upgrade would be needed.

      Even with no inverter, adding a second Powerwall at current prices would make the ROI worse. If it took the entire system off grid, that (roughly) returns the ROI to about the same as now.

      While it might be nice to avoid the supply charge, like you say it's only about $220 a year. The killer is the Powerwall cost. That $3500 is US, no tax, no shipping etc etc. Installed price in Australia is estimated around $10,000.

      The best way to improve the ROI in this case is to better use the solar energy directly during the day.

    This is a great analysis. Thank you!

    For the green feeling, does the powerwall actually add anything over a solar array alone? If I fed everything into the grid instead of storing it, doesn't that offset just as much carbon?

    I'd also love an assessment of how much estate agents reckon a powerwall adds to the value of a home. I suspect it's far in excess of $10k, making it a no-brainer now for anyone looking to sell in the next year or two. Is that suspicion right? Can that be quantified?

      In theory, exporting saves more carbon (in a direct kWh to carbon conversion anyway) due to efficiency losses in the powerwall. I imagine that the actual carbon saved would be very complex to calculate (including to produce the powerwall), and solar might still win.

      There isn't much data on how much solar, or other systems add to property value. My research seems to suggest it super subjective, and depends on housing demand etc.

      I would think a system would help sell a house faster, and might be worth more to the right buyer, but generally would not add much value.

      Based on my numbers, I would pay an extra $3000 or so for the house in the study (right now). That would give me a real world payback in about 5 years, so little risk with a 10 year powerwall warranty and ongoing solar production.

        Thank you. I guess that makes sense. By that reckoning, if your house is in the $1M range, it's costing you about $4k per month in interest every month you don't sell it. So, if it adds $3k to the value, you would need to believe the powerwall knocks 1-2 months off the sell time. That sounds a bit unlikely, but maybe not outside all possibility.

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