What is the ROI (return on investment) of a Tesla Powerwall battery?

Q: Please comment on the utility/ROI of Tesla power walls. 

A: In general batteries have two uses. 

The first is to take advantage of TOD (time of day) tariffs. A TOD tariff is where your electricity company charges different rates for electricity at different times of the day. You can use this TOD tariff to buy electricity at a cheaper rate and sell it back at a higher rate. We do not have a TOD tariff where we live so I have no direct experience of using batteries for this application. 

The second use is as an alternative to a diesel or propane emergency back-up generator for when the power lines go down in a storm. I have not bought a battery for this application but I am planning to do so. 

The Tesla Powerwall is considerably cheaper (at about $500 per kWh of storage) per kilowatt-hour of storage than other batteries from companies like Sonnen and Simpliphi. I had a quote from Simpliphi that was $1,333 per kWh). However, at about $7,000 it is considerably more expensive than a diesel generator which costs $2-3,000. However, I have a propane back-up generator and it costs me $500 a year to get it serviced so that it actually works when we need it. I have learned this lesson the hard way – our previous back-up generator was not serviced and it stopped working right when we needed it. Over 10 years this maintenance cost is $5,000. So the full cost of a back-up generator is about the same as a Powerwall. 

Also, in Massachusetts, the new SMART subsidy program for solar panels includes an extra subsidy (an “adder” they call it) for a battery. This is currently about 4c per kWh generated by the solar panels. If you have a 10kW array generating about 10,000 kWh a year then this is worth $400 a year for 10 years which brings the cost of the Powerwall down to about $3,000 which makes it similar to the upfront cost of a diesel back-up generator. Only now you have no maintenance cost. This is why I intend to install a Powerwall to replace my defunct back-up generator in the near future. The regulations on qualifying for this adder are very complicated!

2 Replies to “What is the ROI (return on investment) of a Tesla Powerwall battery?”

  1. You state that after 10 years the cost of a battery saves money compared to a backup generator. However, batteries don’t have warranties that exceed 10 years. In the event of a battery failure, you now have a non working battery that has no user serviceable parts meaning you would have to buy a new replacement battery.

    1. Hi Mike, you are correct. But unlike a generator, batteries do not stop working as they got old, it is just that the storage capacity (in kWh) gets less. Hence you battery does not die all at once but has less capacity to run your house. It will still do it, probably for many more than 10 years, but it will not last as long during an outage as when it was new.

      And BTW, I have never found a generator with user serviceable parts, perhaps you have the skills to do it, but most people, including me, call a service technician and they are expensive.

      I hope that helps.

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