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Tesla Powerwall Economics

June 16, 2017
tags: ,

By Paul Homewood

h/t Joe Public

While Elon Musk has been throwing his toys out of the pram following Trump’s decision to exit Paris, let’s take a look at what his famous batteries have to offer.

This is what their website offers:

image

https://www.tesla.com/en_GB/powerwall

 

If we assume an all-in cost of £8000, and a ten year life (which matches the warranty), we get an annual cost of £800.

Add on interest at 5%, and the cost rises to £1200.

On top of this, of course, is the cost of solar panels etc, to produce the power in the first place.

Even then, it is highly doubtful whether the set up could provide anywhere near the amount of power I would need.

My annual electricity bill comes to to about £700.

Am I missing something?

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40 Comments leave one →
  1. Lynn Clark permalink
    June 16, 2017 10:13 am

    You’re making me wonder if I’m missing something. 5% interest takes £800 to £1200? Wouldn’t that be a 50% interest rate? I’d think that 5% would take £800 to £840. Right?

    • JJB MKI permalink
      June 16, 2017 11:50 am

      5% per year on £8000 = £4000 over ten years if I’ve interpreted it correctly..

    • dave permalink
      June 16, 2017 12:11 pm

      “Right?”

      No; wrong.

      5% per annum, opportunity cost, on the £8000 invested at the beginning, is the £400 a year extra. Paul is assuming, roughly, that he could buy an annuity for £8,000 now, which would return to him a total cash flow of about £12,000 after tax.

      • dave permalink
        June 16, 2017 12:16 pm

        Alternatively, Paul is saying.” I have not got £8,000 but I will borrow it at 5%.
        I will set aside enough each year for a sinking fund to repay the loan – um, that is £1,200 a year in outgoings.” The exact approach to this sort of capital budgeting is called discounted-cashflow calculation. It gets complicated once you factor in inflation.

      • dave permalink
        June 16, 2017 12:29 pm

        The Economics of Capital Budgeting by M Bromwich, 1978, is a good introduction.

        I always liked the cover. It shows, in three cartoon panels, a fat little business man at his desk. In the first he has put a small bag on money in his out-tray; in the second he is twiddling his thumbs and gazing at the ceiling; in the third he is looking with demonic greed at a big bag of money in his in-tray.

  2. Jack Broughton permalink
    June 16, 2017 10:18 am

    “Am I missing something?” ……. Yes, you are missing the passport to the green heaven where Eton will grant your every wish.

    I average about 10 kWh / day and pay about £ 700 / year for electricity, so I am very keen to spend an extra £400 / year (+ panels cost of course) to join this green club.

  3. quaesoveritas permalink
    June 16, 2017 10:20 am

    “Add on interest at 5%, and the cost rises to £1200.”
    Surely £840, as Lynn Clark says.
    At 5%, an additional £400 would be over 10 years, not a single year.

    • richard verney permalink
      June 17, 2017 8:54 am

      It has been explained above (although whilst I agree with the principle, I think that the figures suggested are wrong).

      The crux is that one is borrowing £8,000 which is notionally spread over 10 years. It is being spread over 10 years since this is the claimed life expectancy of the Tesla Wall.

      Now then if one borrows £8,000 at an APR of 5%, to be paid back over 10 years with interest accruing monthly, the capital cost of the Tesla Wall is, according to on-line APR calculators, some £10,182.29. That means that the annual cost is £1,018.23 (when spread over 10 years).

      This article illustrates one of the problems with solar. It is true that the price of solar panels is coming down, however, the cost of the panels is only a very small part of the total outlay, and the cost of other items, inverters, storage, installation costs etc, are not coming down.

  4. Soren Nielsen permalink
    June 16, 2017 10:32 am

    I am sure you will have a field day with Philip Williamson’s nonsense in the spectator…

    https://www.spectator.co.uk/2017/06/the-great-myth-of-the-global-warming-pause/?utm_source=Adestra&utm_medium=email&utm_campaign=20170617_Weekly_Highlights_24_SUBS

    [https://spectator.imgix.net/content/uploads/2017/06/Contents-iceberg.jpg?auto=compress,enhance,format&crop=faces,entropy,edges&fit=crop&w=250&h=140]

    The great myth of the global warming ‘pause’ | The Spectator http://www.spectator.co.uk Readers of The Spectator will be familiar with the argument that climate change, like Britpop, ended in 1998. Raised on a diet of Matt Ridley and James Delingpole, you may have convinced yourself that…

    ________________________________

    • CheshireRed permalink
      June 16, 2017 11:52 am

      Always amazes me how what is ostensibly good (or should that be GREAT) news of a 20 year long global warming Pause is greeted with absolute fury by the Green Blob. The reason is obvious: a Pause means humiliation for alarmists and that there’s no climate crisis, and no climate crisis means there’s no climate gravy train to ride on.

      • dave permalink
        June 16, 2017 6:09 pm

        “…a pause means humiliation for alarmists…no…gravy train…”

        The second point does not really apply to ordinary believers.

        The first point – their ‘amour propre’ and their chance to crow – is everything to them. Cognitive dissonance and all that.

    • richard verney permalink
      June 17, 2017 9:20 am

      Apart from multidecadal variation, it would appear that the pause has been going on since about 1940.

      There is no worthwhile data regarding temperatures in the Southern Hemisphere, or the equatorial area of the planet since even today, these areas are sparsely sampled, and in the past the position was even worse. This is noted by both Phil Jones in his 1981 paper, and Hansen in his 1981 paper notes the comments made by Phil Jones on the inadequacy of data sets covering the Southern Hemisphere, and endorses those comments. The Climategate emails also comment on the problems with Southern Hemisphere data sets.

      That being so, we only have worthwhile data on the Northern Hemisphere. When one reviews the Northern Hemisphere data, it appears that the warmest period was the late 1930s/1940. The National Academy of Science in 1975 published a paper suggesting that the Northern Hemsiphere had cooled by about 0.5 degC between 1940 and 1975.

      Both Phil Jones, and James Hansen in separate papers published in 1981 concluded that temperatures in the Northern Hemisphere were as at 1980 some 0.3 degC lower than they were in 1940. See for Example James Hansen’s 28th August 1981 paper in Science Volume 213 (http://www.atmos.washington.edu/~davidc/ATMS211/articles_optional/Hansen81_CO2_Impact.pdf).

      Since 1980 it has probably warmed about 0.3 degC thereby meaning that temperatures in the Northern Hemisphere are today about as warm as they were in 1940. Indeed, the US data shows the 1930s as the warmest period in the US, and the US has the largest data set of any country. Both Greenland and Iceland show 1940 as the warmest period. Russia has complained that the global data no longer contains their high latitude data, and this high latitude data does not show any warming since the 1940s.

      If CO2 is a well mixed gas, then such warming as CO2 produces should be seen across these land masses, but it is not.

      Indeed, Michael Mann had to drop and disregard the tree ring data going through to the late 1990s since if this tree ring data was included, it would show that the late 1990s were no warmer than the peak warmth of the late 1930s/1940s.

      So we have the position that in the Northern hemisphere (the only zone where there is reasonable historic sampling and spatial coverage) shows that the temperature today is no warmer than it was back in 1940, notwithstanding that during this time about 95% of all mandmade C)2 has been emitted which puts Climate Sensitivity to C)2 (if there be any at all) to zero, or close thereto..

      During the period 1940 to 2017 there have been ups and downs, but this would appear to be the result of natural multidecadal variation and nothing more. No doubt you will recall the Climategate emails on the need to get rid of the 1940s blip, and the comment upon simply seeing multidecadal natural variation, and nothing more.

  5. June 16, 2017 10:46 am

    “Am I missing something?” A massive subsidy paid by other consumers, but especially paid by those in fuel poverty.

  6. AlecM permalink
    June 16, 2017 11:06 am

    Elon Musk is a top of the range bludger.

  7. Roy Hartwell permalink
    June 16, 2017 11:06 am

    Clearly you are not one for virtue signalling 🙂

    • Gamecock permalink
      June 19, 2017 9:53 pm

      Hmmm . . . put some solar panels on your roof. Don’t hook them up to anything. No one will know any better than you are a saint in the crusade to save the planet.

      Might be a great market for the BOXES The Wall comes in. Who needs a wall when you can set a box outside your house for a few days. Invite a friend with a van/pickup over for drinks. Tell your neighbors he was the installer.

  8. Sheri permalink
    June 16, 2017 11:54 am

    The interest rate calculation is off, unless it’s one of those weird loans with all the interest up front (called Rule of 78s in the USA) and even then perhaps a bit high.

    It’s also evident that Musk is praying English have the same math skills the USA has, as in virtually none.

    • John F. Hultquist permalink
      June 16, 2017 5:40 pm

      That’s not nice.
      A USA kid.

  9. June 16, 2017 12:31 pm

    For about double the money you can have a bigger battery than Tesla’s Powerwall and get an electric car thrown in 😉

    http://www.autocar.co.uk/car-review/smart/forfour/first-drives/smart-forfour-electric-drive-2017-review

  10. June 16, 2017 12:42 pm

    How much of your annual electricity bill is connection charges? They don’t go away. For example, I pay $0.07/kwh for electricity and another $0.04/kwh for line/connect fees (~$40/month).

    Will the battery support all your requirements when the panel isn’t producing? At about 150-200 w/sqm effective output, how much of your array going into battery charging?

  11. Gerry, England permalink
    June 16, 2017 12:55 pm

    Paul, you have overlooked the need for a burning desire to save the planet from a non-existent problem.

    Mentioning burning – a current hot topic – do you have to inform your insurance company that along with a power generation source on your roof that can’t be turned off, you now have a lithium bomb in your house? I mean if you have compressed gases stored such as for welding you should have a sign to inform the fire service, so should you have a sign up about solar panels and a big lithium battery?

    While on the subject of Muskrat, I noted on Jo Nova that last year 219 EVs were sold in Australia. Going down well there then.

    • andrewa permalink
      June 17, 2017 9:48 pm

      You do understand that the largest quantity of high explosives you are allowed to keep at home in South Africa is 2 KGs don’t you? I personally manufacture my own explosives for fun. What is the largest amount of H E one is allowed to keep at home for own use in the UK?

  12. skedaddle permalink
    June 16, 2017 1:07 pm

    The battery is chump change next to the roof panels. I had a neighbor just quoted $60,000 for panels on his 2500 sq. ft. house. And that’s only for the roof panels.

  13. Richard permalink
    June 16, 2017 3:02 pm

    Denmark Is Killing Tesla (and Other Electric Cars) – Bloomberg
    https://www.bloomberg.com/news/…/denmark-is-killing-tesla-and-other-electric-cars

  14. June 16, 2017 3:13 pm

    Going green is spun as an economic plan by incorporating so-called health and enviironmental externalites. Other than that, the renewables are said to becoming economically competitive soon, or by conflating subsidies with tax deductions in fossil fuel industries.

    Obama said energy costs would skyrocket. Your new green minister infered Joe Public would pay extra because it would be only right to accept more costs to receive better ends.

    Dom Perignon costs more than Italian proseco because Dom IS better – we are fully aware of that. The argument hides the point that proseco is pound for pound a better option if your disposable income is limited – and many would be satisfied with draft beer. Same with the Green Way – if you agree landscape blight and dead birds don’t have equivalent offset costs to fossil fuels.

    All this starts and ends with anthropomorphic CO2 as the initiator of CAGW. Without the disease of alarmism, we’d all be looking for the cheapest way forward. Utopia has always been about getting lots of stuff for little effort or personal cost.

    • Graeme No.3 permalink
      June 16, 2017 3:33 pm

      Yes, economically competitive SOON! I keep a copy of the Scientific American which claims that the price of solar is dropping so rapidly that within 6 years no-one will build a conventional power station.
      Dated October 1987.

      The problem with these claims is that Moore’s Law has been invoked wrongly for large scale items. The power available for collection is set by the solar level per sq. metre, and to get it more cheaply requires either cheaper panels and/or greater efficiency. Both have been achieved but the law of diminishing returns applies esp. with a quantum limit ~ 32%.

      • Gerry, England permalink
        June 17, 2017 11:44 am

        They also never work out what would happen if their green wet dream came true and we did all use EVs and solar panels and windmills with regard to the cost of the elements needed to make them all. Lithium is not like coal, oil or gas. And then there are the rare earth elements – wonder how they got their name.

  15. gallopingcamel permalink
    June 16, 2017 4:24 pm

    Trump has upset the apple cart that was supposed to deliver trillions of taxpayer dollars to GE, Tesla and dozens of predatory fat cats.
    Best president since Reagan? Best EVAH?

    • Gerry, England permalink
      June 17, 2017 11:53 am

      H/T GWPF The great Donald has closed the Office of International Climate and Technology. They lectured others on the delights of EVs and other solutions to the non-existent problem.

  16. mwhite permalink
    June 16, 2017 4:26 pm

    If you have the space you might as well use good old lead acid batteries. I’m sure a bank of lead acids in the right configuration would work just as well and be alot cheaper.

    • Russ Wood permalink
      June 18, 2017 2:56 pm

      There’s a home outside Knysna, South Africa (not known if it escaped the raging fires there last week) that was built to be totally off the grid. He has a borehole well for water, a roof covered with solar panels, at least two small wind turbines – and a whole room full of truck batteries! Apparently the cost of all this off-the-grid stuff more than doubled the cost of the house. He even has a small generator for real emergencies, but a year of so ago, he wrote that the only fuel he has to buy is for his vehicles.
      So, you CAN go green (at least if you are prepred to specifically build your house around it) if you are also prepared to double (or maybe more) the house costs.

  17. Steve C permalink
    June 16, 2017 5:44 pm

    @mwhite – If you’re buying them new, say £100 per 100Ah deep discharge battery (& that’s retail). So for £5900 you could have 5900Ah, multiplied by 12V = 70.8kWh. Or, a dozen of those batteries = 14.4kWh, £1200 plus a few ’00 extra for the control electronics.

    Mind you, whichever battery you go for, you still have to buy all the energy you put into it at the normal price, and you know you won’t get it all back! All told, a reliable electricity supply is much to be preferred.

  18. John F. Hultquist permalink
    June 16, 2017 5:57 pm

    M & B Obama just bought an $8 Million (plus fees) house.
    Care to bet how many PowerWalls are in the basement?
    If just 1, how long will the freezer keep the ice cream hard and the A/C running?

  19. Athelstan permalink
    June 16, 2017 8:45 pm

    Man made CO2 causes erm………………A Fuckwit supposition triggers, gulls mankind’s inate guilt complex and upon which the left do dance a 24/7 mass bacchanalia on…

    YUP……………..Mankind is susceptible to, a puritanical self flagellating bent which in turn allows the politicians to pull, twiddle and press our knobs……And thus, facilitated are the lunatic palliatives ie the green idiocy.

    Cripes on a bike and that, begets green solutions . Now there are some = Elon musk = some more peopl; the corporate blob with their mates in the investment banks…………. are extracting the micturition [out of the taxpayers]………………. because Joe and Joanna public are as thick as 2×6 planks.

    A battery needs energy to tickle its cations, it’s a cul-de-sac, a nostrum moonbeam technology about as useful as chocolate teapots and that’s why Ambrose Evans Pritchard is such a champion thereof, he loves that sort of shit.

    I rather think tend to the opposite, batteries are dead.

  20. Bruce of Newcastle permalink
    June 17, 2017 1:03 am

    Sometime ago I did a guest post on a local economics blog with instructions how to do a quick and simple Net Present Value (NPV) analysis.

    I’ve dug out the spreadsheet and I’ve plugged in some numbers:

    Solar panels (4kW): £7000
    Powerwall (14kWh): £8000
    Battery life: 10 years
    Maintenance: £100/yr
    Insurance: £100/yr
    Interest rate: 5%

    Yield: 250 days/yr at 4kW for 6 hrs per day.

    Putting this all in and goalseeking an equivalent electricity price it comes to £0.357/kWh.
    So you would breakeven if you pay 35.7 p per kWh from the grid.

    It looks to me that you are paying about 12 p per kWh now, although that excludes VAT and the supply charge. Though you’d still need a grid connection with the above configuration since the Powerwall will at most cover only a day of electricity for a normal family. So two days of cloudy weather and you are on the grid and your Powerwall is flat.

    Doesn’t look an attractive investment to me.

    • June 17, 2017 3:33 am

      With Obama in charge for eight years my electricity cost remained at $0.10 per kVAh.

      With Trump, frakking gas and “Drill Baby, Drill” I suspect things will improve.

    • Gerry, England permalink
      June 17, 2017 11:42 am

      Muskrat’s site has a powerwall calculator related to bedrooms – not particularly accurate. The outcome is to give you how many powerwalls you might need but only to deliver ONE day of supply. So if you want more days just keep multiplying them up.

  21. tom0mason permalink
    June 17, 2017 3:28 am

    Tesla Powerwall Economics …

    and the resale value is…?

  22. June 17, 2017 4:24 am

    If the sun doesn’t shine again for more than 24 hours, you’re totally out of luck… it’s common in certain parts of the NH, that there will be extended periods of overcast days (like 5 out of seven days)… then you and your Tesla Wall are high and dry… and it’s back to the central grid again.

  23. June 18, 2017 12:48 am

    From a “Choice” evaluation “payback time of just over 24 years, or 2.4 times the warranty period. ” … battery only, without the solar panels.

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