Tesla has retooled its strategy for selling people with solar panels on batteries to store excess energy before the company even sold its first units.
The electric automaker unveiled a new suite of batteries last May, called Powerwalls, for homes and businesses. However, it quietly dropped its 10 kilowatt-hour device, the larger of its two residential batteries. Originally marketed as a backup power supply in case of grid-wide blackout, the $3,500 unit wasn't as affordable as other alternatives, especially given that solar panels are sold separately.
Instead, the company said it plans to focus on its 7 kilowatt-hour Powerwall, meant for storing excess solar energy generated throughout the day for use at night or when the sun isn't shining.
"We have seen enormous interest in the Daily Powerwall worldwide," Tesla wrote in a statement emailed to The Huffington Post on Thursday. "The Daily Powerwall supports daily use applications like solar self-consumption plus backup power applications, and can offer backup simply by modifying the way it is installed in a home. Due to the interest, we have decided to focus entirely on building and deploying the 7 kWh Daily Powerwall at this time."
The 7 kilowatt-hour Powerwall has yet to be released in the United States, though Tesla told HuffPost some have been installed in countries such as Australia.
The company never produced 10 kWh batteries. It didn't seem like they would ever become economical.
GreenTech Media's Julia Pyper, who first broke the news of the 10 kilowatt-hour Powerwall's being discontinued, wrote:
Even at Tesla’s low wholesale price, a 500-cycle battery just doesn’t pencil out against the alternatives, especially once the inverter and other system costs are included. State-of-the-art backup generators from companies like Generac and Cummins sell for $5,000 or less. These companies also offer financing, which removes any advantage Tesla might claim with that tactic, as GTM’s Jeff St. John pointed out last spring.
“Even some of the deep cycling lead acid batteries offer 1,000 cycles and cost less than half of the $3,500 price tag for Tesla Powerwall,” said Ravi Manghani, senior energy storage analyst at GTM Research. “For pure backup applications only providing 500 cycles, lead acid batteries or gensets are way more economical.”
The bigger challenge, however, will be changing the current electricity rate structure in the United States. Here, electricity is more expensive during the day, when solar panels generate energy, and cheaper at night. Utility companies will buy consumers’ excess solar generated during peak hours and recirculate it into the power grid. Electricity purchased at night, when solar panels aren’t producing energy, sells at a cheaper rate.
Therefore, there’s little incentive for people to use solar-storage batteries that hang onto energy during the day if they could be selling it at peak prices to the utility companies and buying it back later on the cheap.
“It only makes sense for storage if it’s more expensive to buy electricity at night and sell it back during the day,” Brian Warshay, an analyst for Bloomberg New Energy Finance, told HuffPost last May. “But most people aren’t on those types of rates.”
Even so, this year is expected to be a big year for energy storage as the electrical capacity of renewable energy sources in the U.S. hits new heights.
"Emerging technologies, cost reductions and supportive policies will make 2016 a breakout year for energy storage," Philippe Bourchard, vice president of business development at the New York-based startup Eos Energy Storage, wrote in a recent blog post. "The industry will see major announcements from utilities and developers regarding major contracts and execution of large-scale projects, transforming the electricity grid as we know it."