Thoughts on Tesla’s Powerwall
May 6th, 2015Update: 11 May 2015: Tesla Q1 2015 Earnings Call
More info was released on the recent Tesla earnings call. The Powerwall will be charged directly from the DC from the solar panels and the battery will output into an existing string inverter. At one point they say that the Powerwall looks like the solar array to the inverter. Still loads of unanswered questions, but these were two huge points. Also, the demand is completely off the rails. I’ve been one of the very skeptical voices on this and it turns out that tens of thousands of residential and industrial customers and installers don’t care about the details, they just want it. Tesla has already sold out until the middle of 2016.
Definitely worth a listen.
I’ve excerpted a lot of the material about the Powerwall and Powerpack from the transcript of the call. I’ve bolded the parts that I found particularly interesting:
Elon Reeve Musk – Chairman & Chief Executive Officer
Yeah, I mean, let me just talk more broadly about the response to the Powerwall and Powerpack because I don’t think that’s really the question you should be asking. The response has been overwhelming, okay, like crazy. In the course of like less than a week, we’ve had 38,000 reservations for the Powerwall, 2,500 reservations for Powerpack. The Powerpack, it should be noted, typically this is bought by utilities or large industrial companies for heavy industrial work. So, typically Powerpack, it’s like at least 10 Powerpacks per installation. So if there’s 2,500 reservations, actually 25,000 Powerpacks.
Powerwall also we suspect is probably an average of number of Powerpacks, it’s probably 1.5 to 2 per installation. So, 38,000 reservations is more, like 50,000 or 60,000 actual Powerwalls.
So, I mean, there’s, like, no way that we could possibly satisfy this demand this year and we’re basically like sold out through the middle of next year in the first week. It was just crazy. We had 2,500 requests from companies that want to distribute and install the Powerwall and Powerpack. We can’t even respond to them. We have to, like, triage our response to those who want to be a distributor.
So, it’s like crazy off the hook. Yeah. And it seems to have gone super viral. For the specific case of SolarCity, what they are referring to is that there’s two versions of the Powerwall. There is the daily cycling version and there is the Power backup version. One is energy optimized and one is daily-cycling-optimized.
For the daily-cycling-optimized one, the economics, it is true in the U.S. with rare exception are more expensive than utility. So if somebody wants to do a daily cycling, basically go off grid. It’s going to be more expensive than being on grid. This doesn’t mean that people won’t buy it because there are people who want to go off grid on principle, or they just want to be independent. And that’s what the SolarCity comment is about.
Jeffrey B. Straubel – Chief Technology Officer
Yeah. It might also be worth noting that SolarCity doesn’t yet operate in Europe and the main target application for the daily cycling battery pack was actually were several markets not in the Continental U.S. and particularly Germany and Australia are very strong markets where it does make economic sense today based on the feed in tariff and the electricity rate structures in those countries. So, SolarCity’s comments I think need to be sort of put in the regional context.
Elon Reeve Musk – Chairman & Chief Executive Officer
Yeah. SolarCity is only operating in the U.S. And I mean, the Powerwall, it will be available from SolarCity and from other installers in both configurations. But if someone is doing a daily cycling application, they’re doing it out of – because they specifically want grid independence and there are some number of people who will want to do that and that’s good.
And it’s also important to appreciate even for say the power backup systems that you always have power in the event of power outage, if like let’s say that appeal to like 2% of households in the U.S. or 1%, that’s 1 million households, like it is 1 person in a 100 care about having battery backup in the event of a utility outage, probably. We couldn’t even support a small fraction of that right now. So, it’s kind of a moot point.
…
And the daily cycler one, I mean, we expect it to be able to daily cycle for something on the order of 15 years. Actually the warranty period would be a little bit less than that. But we expect it to be something that’s in the kind of 5,000 cycle range capability, whereas the high-energy pack is more like around the maybe depending upon on how it’s used anywhere from 1,000 cycles to 1,500 cycles.
…
And I should say like the most of our stationary storage sales to be at the utility or heavy industrial scale, it’s probably – and just a guess because early days – 5 to 10 times more megawatt hours will be deployed at the utility in heavy industrial scale than at the consumer scale.
…
Elon Reeve Musk – Chairman & Chief Executive Officer
So the Powerpack would be the one that’s like the heavy duty, like the big production sales one, not so much the Powerwall. Powerwall is great, but like I said, it’s probably only 10% to 20% that the size of the Powerpack demand.
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Elon Reeve Musk – Chairman & Chief Executive Officer
Yeah. I mean, clearly, given the very high demand that we’re seeing for Tesla Energy products, we’re actually trying to figure out if we can go from like our current production target of like 35-gigawatt hours at the cell level and 50 at the pack level in our Nevada plant to maybe 50% more than that or even higher because just the sheer volume of demand here is just staggering. We could easily have the entire Gigafactory just do stationary storage.
…
Elon Reeve Musk – Chairman & Chief Executive Officer
Yeah, because, like, we’re fairly confident at this point like so that the entire Gigafactory output could just do stationary storage. I mean it’s like, wow, okay. Well, we need to make cars too, so we’re just trying to make the factory bigger. That’s like the total logic. It’s lot more complicated than that.
…
I think there are a few points of clarification that should be made regarding the Powerwall, because a lot of people are confused about the whole inverter issue. So, the Powerwall does include a DC to DC inverter, and that can interface directly with a solar panel installation.
And if somebody has a solar panel installation, they already will have a DC to AC inverter for the solar panel system, and so no incremental DC to AC inverter is needed.
…
But like if you already have a solar installation or you’re going to get one, the DC/AC inverter is already there. That’s an important point in considering the cost of the system. And then, the operating temperature – it’s actually capable of operating at a much wider band of temperature. So we got to fix that specification that’s stated on the website.
…
Jeffrey B. Straubel – Chief Technology Officer
Yeah. And we’ve looked at pretty much every chemistry couple. They could possibly be relevant for this and are confident what we’re using is going to be the best. But if there’s something better we can also adjust and change over time. So there’s a lot of flexibility.
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Elon Reeve Musk – Chairman & Chief Executive Officer
Yeah. It’s not like we’re like wedded to a particular chemistry or anything like that, we just want to use the best chemistry. Like whatever little can that contains that cathode and anode and separator and electrolyte, whatever the best constituents of that can, that’s what we will want to use. So we’d love it if somebody could come up with a better internal chemistry for the cell. But it’s worth noting that nobody has sent us anything, a sample cell that’s better than the cell we’re producing, or that something that we will produce in the Gigafactory. So, we’d love it if somebody would do that, they just haven’t.
So, there’s like always things, which are big on promise and short on delivery when it comes to battery chemistry, and it’s just a real hard problem. And then hardly a week goes by that there’s not some alleged breakthrough in batteries, but what they’ll do is they’ll cite the power, but not the energy or they’ll forget to mention that it only lasts for 50 cycles or uses incredibly exotic raw materials.
Jeffrey B. Straubel – Chief Technology Officer
Or one component under the battery pulled separately.
Elon Reeve Musk – Chairman & Chief Executive Officer
Yeah, exactly. It’s just not – it’s not like a – it’s not the full picture. So it’s not like we don’t want a better chemistry to exist than what we’re using. We’d love it if there was such a thing and I’m sure there will be improvements over time and we’ll implement them as soon as they are remotely production-ready.
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Rod A. Lache – Deutsche Bank Securities, Inc.
Okay. And just a clarification on the comment about the fact that the DC/AC inverter is already there for solar, does the fact that it needs to be bidirectional change the nature of the cost or not really?
Jeffrey B. Straubel – Chief Technology Officer
No. Not in most cases. Because if you already have solar, typically the energy to charge the battery can come from the solar panel. So I think maybe one way to think of it is that the battery pack, the Powerwall, with its internal DC to DC converter can act much like a solar panel. It can match voltage with a solar panel array…
Jeffrey B. Straubel – Chief Technology Officer
…and it can feed power back into that. So the existing inverter doesn’t particularly see a big change.
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Jeffrey B. Straubel – Chief Technology Officer
Well, some of the different revenue streams you’re talking about are kind of mixed between Powerpack and Powerwall. The BMS system lives inside the battery pack in both cases, but with the Powerpack and the more utility-sized installations, there, we often will have sort of a site master computer or master controller that controls multiple Powerpacks and that site controller is what then interfaces to the utility or maybe a commercial customer to sort of run the scheduled charge and discharge that would be appropriate for a given application.
On the Powerwall, it’s a bit of a different situation. Still the BMS lives inside the battery pack, but in some cases, the inverter may be the system that’s deciding how to manage energy in the overall house. And that can depend on which type of inverter we’re using and how that works. And in terms of the size, we really – for Powerwall, again, we optimized the size around what was the most common photovoltaic size and also what we felt was kind of the smallest modular increment for backup. And it’s pretty key to note here that you can install multiple Powerwalls together.
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Elon Reeve Musk – Chairman & Chief Executive Officer
…man, there’s just no way we can meet the demand that we’re seeing right now. And so, we got to scale stationary storage as fast as possible.
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Trip S. Chowdhry – Global Equities Research LLC
Thank you. A quick question, two quick questions. First is regarding the residences which may not have the solar panels, and say that residence goes and buys two Powerwalls. Does that customer have to buy two inverters or one inverter is sufficient for as many Powerwalls the customer buys?
Elon Reeve Musk – Chairman & Chief Executive Officer
Yes. It’s basically whatever the capability of that inverter is. So, typically, a inverter would be capable of handling – one inverter is probably capable of handling, depending on the situation, up to maybe four or five Powerwalls.
— End Update —
A few people have asked for my thoughts on Tesla’s energy storage announcement from last week.
For most Americans with grid-tie solar, the 7kw Powerwall almost certainly doesn’t make economic sense. As a backup solution, the 10kw version might be considered, but my guess is that a more traditional generator is a better way to go at this time, assuming a generator can be used.
In places like Germany, Australia, Hawaii and maybe parts of California, the 7kw Powerwall would be much closer to being viable.
BUT:
For some inexplicable reason, Tesla has not released meaningful specifications on the Powerwall systems. We don’t, for example, know anything about how the Powerwall integrates with existing solar power systems.
How does it actually charge?
Unknown.
What is the DC voltage range on the charging side? Does it include MPPT?
Unknown. Unknown.
Can one use an existing string inverter to output AC from the Powerwall?
Unknown. SMA told me that they have no comment because they have not been included in any testing of the Powerwall. In other words, they’re in the dark with the rest of us. This is incredible (not in a good way), since SMA is the #1 inverter manufacturer in the world.
How does the Powerwall play with the most popular inverter solution in the Americas (Enphase)?
Unknown, but probably very incompatible.
X capacity loss after Y full discharge cycles?
Unknown. Unknown.
The unknowns go on and on.
Tesla’s announcement was designed for consumption by people who know next to nothing about solar power or battery storage and this includes most of the media. The specs Tesla released are unbelievably—almost hilariously—incomplete. My suspicion is that the installed cost per kWh for the residential Powerwall models is going to be much higher (2x, 3x?) than the wholesale prices Tesla has published. Maybe keeping these facts quiet served to make tastier soundbites. I don’t know.
Now, I say all of the above as probably the most rabid advocate of solar power you’re likely to encounter, as a solar user with 5kw of panels on my own roof, as a solar power sales consultant, and as a potential customer and sales consultant for the Powerwall.
“It has all of the integrated safety systems, the thermal controls, the DC to DC converter. It’s designed to work very well with solar systems right out of the box.”
—Elon Musk
I want to believe.
Tesla, please just release the real Powerwall specifications and wiring diagrams for different installation scenarios. Simple.
Regardless of what the reality is, I think Tesla is going to sell a shitload of Powerwalls, probably far more than they will be able to produce in the near future. There is enough hype and excitement that people will pull the trigger by the tens of thousands without really knowing what they’re doing.
I’m doubling down on what I told all of you before the announcement:
Whatever Tesla announces today, my personal and professional advice (all of my grid-tie PV customers are now asking about batteries) for the average residential solar user is to wait at least until Tesla’s Gigafactory has ramped production.
What?
Wait two or three more years?
Yep. Definitely. Wait.
I’m less familiar with the industrial and utility side of things, but the Tesla Powerpack looks to be profoundly disruptive in those spheres. If you’re a company or utility that’s already using some mix of wind or solar and/or have backup requirements running into the thousands of kWh or more, Tesla is easily at the top of the heap.
Thanks for the additional commentary, Kevin. All extremely suspicious to me — all those unknowns, which conjures up the famous Donald Rumsfeld gobbledygook.
Just a couple of points to make. One is that that Elon Musk dude kinda gives me the creeps with his nervous laughter, and overall demeanor. Maybe he has every reason to be arrogant, since his invention could change the world.
Which brings me to my second point, which has nothing to do with his invention directly. And that is the economy, which I know has been forecast to crash for many years now, and still hasn’t. But the 7-year cycle of economic downturns or crises could be at play for this year or maybe next. Now, given the fact that even now, many Americans have little to no savings (the ones with their heads above water, living paycheck to paycheck), the only way I see this energy revolution working, especially with a dollar devaluation or other manufactured shock-doctrine event in the near term, is for some other source of funding to get this really off the ground. Sorry if I’m a bit pessimistic about the prospects of that, but I just don’t see it, given our falling/failing world economy.
And, I gotta ask, why would TPTB allow such an invention to even get off the ground, unless they benefit from it? Isn’t affordable solar and efficient battery technology The Enemy?
I’d like to believe as well. For now, I’ll keep my AGM batteries with a few more years’ lifespan, and try to be a bit hopeful about Tesla’s new toy. Hey, if I win the Powerball, I’ll be happy to buy a bunch of Powerwalls for my neighborhood.
The lack of details, people like you and me being skeptical, and Musk being creepy or not… It turns out to not matter because the demand for fixed storage at prices anything remotely like what Tesla is offering is way, way beyond what they were anticipating. Residential and industrial users are booking sales very far in excess of what Tesla is capable of producing in the immediate term. Also interesting is that 2500 installers want to sign up on the retail end.
I’d say that if 5% of what they said on the earnings call is true, and I suspect that much more of it is true than 5%:
“It’s different this time.”