Update #3 (May 10): As some readers and interviewed company executives have noted, the best way to compare Tesla’s battery storage products to others on the market is not simply via a $/kWh of capacity figure, but via a $/kWh of electricity generated (over the lifetime of the product) figure or a levelized cost of electricity (LCOE) comparison. So, a few CleanTechnica readers and I have put together the following, more useful article: Tesla Powerwall & Powerblocks Per-kWh Lifetime Prices vs Aquion Energy, Eos Energy, & Imergy
Aside from the bit at the end about battery recycling, I’d recommend simply skipping this article and reading the one linked above.
Update #2 (May 8): I’ve removed the table comparing the Powerwall to lithium-ion batteries on the German market, and discussion about it, because there seemed to be too many differences in the products, making comparison illogical or even incorrect with regard to some of the specifics, including cost. I also added the paragraph before “Tesla Powerwall vs US Home Storage Competitors (Price/kWh and warranty).” A similar problem existed with comparison to the Balqon product, so it has been removed from the remaining table.
Update: I should have also noted that SolarCity has reportedly quoted $7,140 for an outright purchase of the Powerwall and $5,000 for a 9-year lease (some say that is for the 7 kWh, some say the 10 kWh, but I’m mostly seeing it in connection to the 7 kWh one). This is presumably for installation and all, but SolarCity is not offering this until 2016.
[Full Disclosure: I’m long TSLA. However, I’m quite confident that doesn’t influence what information I present and what I write. As I have been for the past several years, I’m digging into these matters to better understand them, as I assume any unbiased researcher would do. I’m an investor in Tesla because I believe in its growth plan and how it compares to its current share price. I don’t think it’s long-term success (and my ROI) depend on what I write here.]
Right after the Tesla Powerwall news came out, I tried to get a good understanding from a few off-gridders of how the Powerwall compares to the batteries they’d otherwise buy (which are primarily low-cost lead-acid batteries that, admittedly, come with a host of issues). Basically, what I found is that the Tesla Powerwall competes on price, while offering numerous benefits (it’s much smaller per kWh, requires much less maintenance, is much prettier, can be hung on the wall, and a much greater amount of the battery can be utilized without quickly degrading the battery, for example).
However, that article focused on lead-acid batteries (as I noted, since those are most commonly used by off-gridders), while other types of technology more closely compete with lithium-ion batteries on the residential and utility-scale markets. So, below are some comparisons with those technologies.
Tesla Powerwall vs US Home Storage Competitors (Price/kWh and warranty)
What I was primarily led to when it comes to residential storage were lithium-iron-phosphate batteries from Balqon and Iron Edison (thanks, Vensonata!). Making assumptions about usable kWh based on the cycle life data these companies show for different max discharge rates, and then price/kWh and weight/kWh calculations based on that number, here’s how they seem to compare (update: the CEO of Iron Edison, Brandon Williams, notes that “Your price per kWh does not take into account the fact that Iron Edison is offering a complete battery with BMS and DC disconnect, whereas your Balqon price is only for a cell.” From what I understand, the Powerwall also includes a BMW and DC-to-DC converter. So, I have decided to simply remove the incomparable Balqon product):
|Tesla Powerwall (7kwh daily cycle)||Iron Edison LiYFePO4|
|price of the pack (excluding inverter)||$3,000||$2,761|
|kWh (usable, based on an assumed 80% DoD and efficiency)||5.6||2.6|
|price per kWh||$582||$1,106|
|Weight||220 lbs||140 lbs|
|Weight in lbs per kWh||39.3||53.8|
|Guarantee||10 years full guarantee||7 years prorated|
|Shelf Storage Life at 60% State of Charge||NA||5 years|
As you can also see, Tesla offers a 10-year full warranty whereas Iron Edison offers a 7-year prorated warranty. That obviously puts the Tesla Powerwall in much better light, in addition to having a much better price.
There’s one other residential battery storage provider with some numbers to compare to Tesla’s offering, but it didn’t really fit well into the table above and it did fit well in the second-to-last section below, so it is included at the bottom there.
Tesla Powerwall vs US Utility-Scale Storage Competitors
Aside from the residential and even commercial products, there’s also the utility-scale product, and this is where I think Tesla Energy will make the most money. As Elon notes:
For more info on Tesla Energy, check out press kit. $250/kWh for utility scale is the real kicker http://t.co/xE57uIUCse
— Elon Musk (@elonmusk) May 1, 2015
Yep, $250/kWh is competitive. Very competitive, it seems.
The most competitive flow batteries on the market come in at about $500/kWh, with estimations that they will get down to $250/kWh or $300/kWh “in the future.” No other lithium-ion batteries on the market come close to $250/kWh. This is all based on a recent Deutsche Bank report leaked to RenewEconomy, by the way.
There are two companies that are reportedly offering utility-scale batteries at a lower price: Alevo ($100/kWh) and Eos Energy Storage ($160/kWh). Furthermore, Eos Energy Storage is claiming a 30-year lifespan (well above Tesla’s presumable 10-year lifespan). However, deliveries of these products aren’t supposed to begin until 2016, and we don’t know yet if they can genuinely deliver what they are claiming and will hit the market in 2016 as promised.
If either of these companies deliver as promised, they could certainly out-bid Tesla Energy’s batteries in many cases. However, that’s presuming that the buyers feel comfortable with new technology not as thoroughly tested in the real world (as far as we know).
Also worth noting is that we don’t know the product prices of some companies that are already selling utility-scale storage solutions. Prices are still pretty well guarded by companies actually winning contracts. But we do know that Tesla is winning a good percentage of the SGIP pie in California.
Lastly, there are of course many other startups, entrepreneurs, large corporations, and independent scientists working on potential battery breakthroughs… but there’s no sign any of them are close to commercial viability.
Wait a Sec, What about LCOE? And What about Extra Hardware & Software?
I reached out to several battery storage companies regarding Tesla Energy’s pricing compared to their own, and also asked about their competitive advantages over Tesla. Below are a few responses.
“While pricing details on their utility-scale products were not released, if they are similar to the pricing of their residential product ($3,500 for 10kWh, or $350 per kWh), their base pricing is quite competitive with both other lithium-ion vendors, as well as other battery chemistries. However, and this is important, price per kWh is really not proper way to look at battery pricing – rather, one should look at the levelized cost of energy over the lifetime of the system, which can vary depending on the characteristics of the particular battery chemistry, the application use case, and other factors. In fact, a system that is more expensive up front may end up being the most economical in terms of total cost of ownership because the right software management system can extract the most life from such a system compared to cheaper options.
“Tesla quoted prices for the battery portion of the system. Additional items that need to be considered are the inverter, other balance of system (other hardware components), and soft costs which include labor and paperwork. Finally, software is a critical component for system operation and maintenance. For operation, advanced energy management software can optimize energy storage system performance for specific applications, reduce battery degradation, and increase overall energy storage system return on investment. And for maintenance, software is particularly critical for fleet and asset management and service optimization.”
All good points. (But again remember that Tesla has stated a price of $250/kWh for its utility-scale product.)
“We were not surprised by Tesla’s storage product pricing as it is in line with where we see the numbers. However, the $350/kWh product pricing and offering is the installer price not the total price to consumers. Specifically, it does not include the inverter cost, installation costs, and cost of sales. Once you consider the true “installed” cost of these systems, the price point is great but not astounding and not all unexpected to those of us who understand the cost structure. Also, to reach a large volume of deployments, the Gigafactory will need to be operational. It’s great to have Elon Musk officially join the storage industry and promote the cost-effectiveness of energy storage, bringing mainstream attention to what we’ve all been working so hard for.
“CODA’s Energy offers a turn-key energy storage product to commercial and industrial customers with a 10-year warranty, all hardware and software, full installation, permitting, interconnection and project costs built into the cost of the system. We offer these systems at no upfront cost using a shared savings financing model and CODA provides all the installation and project management services for our customers.
“The Energy Storage market is at a high point right now due to the hard work and roads paved by some key players in the market. CODA is thrilled that analysts and industry followers are projecting unprecedented growth due to the innovation in both technology and business by existing energy storage companies. For Tesla to enter on the high note is timely as it puts the last piece of the puzzle together for true mainstream recognition – a big name to draw attention to what we’ve all been working so hard for. We now have the validation of the market and the attention of customers and press. CODA is excited to continue to be a leader in this space as it delivers on its technical and financial promise.”
Note that Paul said there’s no upfront cost for CODA’s systems — it is simply taking a cut of customers’ financial savings.
And JLM Energy (corporate site here) chimed in with a similar statement, adding that the batteries in its system are priced 5% lower than Tesla Energy’s, and also providing the total price for their systems.
“It looks like the Tesla Battery pack is just that, a battery pack. JLM’s offering is an entire solution. Consumers don’t buy solar panels, they buy solar systems. It is not clear what the Tesla system would look like and cost. JLM provides the entire system. Batteries, attractive packaging, battery management system, inverter, integration, loads and loads of firmware controlling the batteries in harmony with the electrical loads in a home, seamless integration with a new or pre-existing solar system. When it comes to batteries, it is the integration that matters. We even have a generator hook up.
“Key differences between JLM’s Energizr and Tesla Powerwall: JLM Energizr is a real delivered product, which includes embedded, programmable firmware and an inverter. Energizr also works with JLM Energy’s proprietary software for full reporting, activity and energy management. Energizr is a battery management system. Powerwall is being presented without these components, providing an attractive set of batteries, which any number of manufacturers could have supplied 4 years ago for significantly less.
“When it comes to batteries alone, JLM is comparable to Tesla’s pricing. About 5% lower. But as a whole system? We don’t know. Tesla does not provide a complete system.”
Pamela Biery, a JLM Energy company spokesperson, added:
JLM’s Energizr is offered in as a complete energy system in two sizes, uninstalled:
$14,995 8.8 kWh
$8,599 4.3 kWh
Energizr is sold as a complete system which includes:
1. Battery Management system in sleek, compact wall-mounted case
2. Off-grid and Grid-tied inverter system
3. Solar system integration
4. Generator integration
5. Complete system integration
6. Internet software for remote monitoring and setup
7. Compact, easy installation
8. System expandability; not just battery expandability
9. 10-year warranty
All of the statements above were confirmed by JLM CEO Farid Dibachi.
Anyhow, if you didn’t need me to tell you, this is quite a complicated topic. There are factors that go far beyond the per-kWh price of a battery pack — lifecycle, size, the battery management system, other hardware and software costs, etc.
My overall thought is that Tesla has quite a competitive product, and its costs will continue to come down and get increasingly hard to beat, but there’s still a lot of risk inherent in this nascent market — and it’s actually several markets (home storage, commercial & industrial storage, utility-scale storage, and battery management as well as battery hardware).
One last thing that I think is worth noting is that Tesla seems intent on recycling old batteries. (See the 2011 video below.) Presuming that most customers go with SolarCity’s 9-year $5,000 lease, my guess is that SolarCity would sell those batteries back to Tesla and Tesla would recycle them in order to produce new batteries at a much cheaper price. But that may be more speculation than you’re comfortable with, and it doesn’t really influence competition with other battery suppliers today.