by

[Update: on Oct 28 2016 Tesla announced the Powerwall 2 ]

[Update: In June 2016 Tesla updated the Powerwall warranty – details here]

11 months ago Elon Musk jumped on stage and announced the Powerwall. The Tesla data sheets released after Musk’s presentation proclaimed we would soon be able to buy a 7kWh daily cycling Powerwall for US$3,000. It would be guaranteed for 10 years with an optional 10 year warranty extension available. Treehouse, one of the companies who Tesla announced would be first to sell it in the US declared that $3,000 was the retail price – not the wholesale price and we all went “Wow! Cheap batteries have finally arrived.”.

Those of us in Australia started scribbling on the back of our fag packets and guessed that USD$3000 would conservatively translate to a retail price in Australia of AUD$6,000 after shipping, GST and some margin for an Aussie distributor.

We worked out the cost to store a kWh in the Powerwall using the price of the battery divided by the total number of cycles claimed by Tesla.

The simple sum is:

AUD$6000 / (365 days x 7kWh x 10 years) = $6000/25,550 = 23c per kWh stored.

We acknowledged that this did not include a battery inverter, but for a battery to give this low cost per kWh was unprecedented. If you had a really high peak tariff you could just about make the economics work for storing solar. And as the price came down, it would surely soon be a no-brainer for every solar home to buy a Powerwall.

How reality compares to the hype

Eleven months on and the first Powerwalls are getting installed. And those customers have warranty documents along with their shiny, shield-shaped batteries.

You can read the Australian Powerwall Warranty here. It paints a very different picture to the one we got 11 months ago.

The most important figures for a battery are what the manufacturer will actually warrant. That’s where they have to really lay out what they believe the battery is capable of over the warranty period, and pay out cold hard cash if it doesn’t make those numbers.

In Tesla’s case the minimum warranted total energy output for a daily cycle appears to be substantially less than we assumed when they announced the 7kWh battery.

For a start – at some point in the last 11 months the nameplate capacity of the battery was quietly changed from 7 down to 6.4kWh.

Call me naïve (lots of people do) – but the new spec would suggest to a layman that the Powerwall would be warranted to produce 3650 x 6.4 = 23,360kWh = 23.36 MWh of energy if you cycled it once per day for its 10 years of warranted life.

But the warranty document says differently.

It doesn’t warrant 6.4kWh per cycle of usable energy at all.

It warrants 85% of 6.4kWh (5.4kWh) for the first 2 years (or 740 cycles – whichever comes first).

Then it warrants 4.6kWh per cycle for the next 3 years (or 1087 cycles – whichever comes first).

Then it warrants a mere 3.8kWh per cycle for the final 5 years of the warranty (or 2368 cycles – whichever comes first).

After that it’s out of warranty. So any extra kWh are a bonus.

Here’s what it looks like on a graph I knocked together -with kWh per cycle on the vertical axis and years along the bottom.

As you can see you are getting a lot less warranted energy from the Powerwall than if you were pulling 6.4 kWh every night for 10 years. Instead of the 23,300 kWh (6.4kWh x 3650 days) a layman may have expected, you are only warranted 18,000kWh of energy.

But it gets worse. If you look at the red rectangle: for the 5 years that the Powerwall has degraded to a warranted 3.8 kWh capacity, you’ll only get 1,825 daily cycles running it every day for those 5 years even though it’s warranted for 2,368. So you may get even less energy than the area of that box implies. In fact I reckon you are looking at a total warranted throughput of 16,000 kWh cycling the battery fully once per day.

The actual price of the battery in Australia after GST, shipping and a reasonable installer margin has turned out to be about $8,000. So the real cost of warranted storage for the Powerwall in Australia, cycled once per day, is around $8000 / 16,000kWh = 50c per kWh. Double the original expectation.

Sidenote #1: Of course that is the worst case scenario. It may be the case that Tesla have been really conservative in the warranty, and most Powerwall owners may get many more kWh from their unit over its lifetime. But only time will tell if that transpires. Right here, right now, the only numbers that we can hold Tesla to are the ones in their warranty. Sidenote #2: As the usable kWh get lower it gets more likely that you’ll cycle the battery multiple times per day, chopping peaks in usage and filling gaps in solar generation . So maybe I’m being a bit mean with the 16,000kWh. If we use 18,000kWh – the cost per kWh is slightly better at 44c per kWh

The 50c per kWh is for the battery only. If you add installation and one of the compatible Fronius or Solar Edge inverters, you are actually looking at closer to $12,000 to add the Powerwall to a solar system, giving a cost of storage with daily cycling of 75c per kWh. Ouch.

I’m picking on Tesla in this post because they are the poster child of home batteries and made huge claims 11 months ago. But of course they are not the only battery manufacturer who are warranting a much lower throughput than the headline specs would suggest.

For this reason we’ll be adding a new row to our Battery Comparison Table: “Cost per warranted kWh”, so you can compare all the batteries on the Australian market – that we can get data for – side by side.

But the takeaway is this: before you buy batteries – do your research into the warranted cost per kWh over the life of the battery instead of simply looking at upfront dollars per kWh as per the battery’s data sheet. Depending on battery chemistry, the headline kWh is often very misleading. The only number I’d trust is the one that the manufacturer writes on the warranty document.