By Institute for Energy Research ——Bio and Archives--January 10, 2016
Global Warming-Energy-Environment | CFP Comments | Reader Friendly | Subscribe | Email Us
Tesla says that regions with renewable-energy policies like feed-in tariffs — such as Hawaii, the UK and Australia — provide a more accurate basis for the Powerwall’s use in the wild. In these areas, “the consumer can utilize a Powerwall to consume more of their solar generation and the payback is less than 10 years, while providing the non-economic benefits as well,” Tesla says.It is important to note that Tesla is admitting here that the Powerwall has an incredibly limited potential if the state that provides “a more accurate basis for the Powerwall’s use in the wild” is Hawaii. This is because Hawaii has the most expensive electricity rates in the United States. In fact, Hawaii’s residential electricity rates are 120 percent higher than the average residential electricity rates in the United States. Furthermore, an analysis of Australia’s off-peak and on-peak rates by Lifehacker Australia shows that the payback period would be 25 years.[viii] And that analysis assumed that the on-peak rate would be about 4 times higher than the off-peak rate, making the economics much better for Powerwall. So, even in the case of Australia, the payback period is 2.5 times the warranty period. If you include solar in the mix in Australia, Lifehacker gets a 31 year payback period because it assumed that the cost of the solar system had to be repaid, as it must be. Lastly, Tesla admits that the Powerwall’s economics do not make sense from a dollars and sense perspective. Tesla told the Engadget reporter that it admits that the rates structure we used, as well as the rate structure used by Lifehacker Australia, Green Mountain Power, and Pepco’s peak pricing rate structure all do not make sense to use with a Powerwall. Specifically, Tesla stated:
Transparently, if a consumer were to have a rate structure defined in the [IER] article, then the payback calculation is indeed correct. However, very few people with this sort of rate structure are interested in Powerwall for financial reasons. They are interested for energy independence, backup security, environmental reasons and tech early adoption, none of which are taken into account.Tesla admits that the Powerwall does not make economic sense unless people consider “energy independence, backup security, environmental reasons and tech early adoption.” True enough, they are not applied in the IER analysis, and neither are aesthetics or personal happiness. IER’s analysis was economic, and it is difficult to determine what economic value one puts on these items when the economics are extremely far off. Neither Engadget nor Tesla provides Tesla’s calculation for Hawaii, Australia, or the UK, which may take these, or other, non-economic issues into account. It is also not clear how these issues would be valued. The energy independence Tesla is apparently talking about has to be personal energy independence not national energy independence. Tesla must be referring to energy independence in this sense because broadly speaking, solar panels reduce America’s energy independence as a whole, not increase it. America is very energy independent when it comes to electricity generation. The only fuel we import much of is oil and it generates less than 1 percent of America’s electricity. The majority of solar panels, however, are produced in China.[ix] Whether solar panels and a Powerwall are better for the environmental is also debatable. One reason is that rare earth minerals are used in the production of solar panels and the production of rare earth minerals is frequently very toxic. The BBC called one of the leading places for the production of rare earths “the worst place on earth.” So it’s difficult to say unambiguously that solar panels and other products that use rare earth minerals are environmentally superior. Furthermore, since the United States has a reliable electrical grid, why would these non-economic issues need to be entered into the analysis? It seems more likely that it should be applied to a country like Germany, where its “energy transformation”[x] policies of encouraging wind and solar power have increased residential electricity rates to over 3 times those in the United States and have forced industrial consumers to buy back-up systems because of problems that these intermittent technologies have created, making Germany’s electrical grid less reliable. It is important to note that in Germany there are additional charges being incurred due to public policies, which have resulted in grid instability from intermittent sources being force-fed into a once dependable grid via devices such as feed-in tariffs and other subsidies, combined with mandates. When politics takes over an electric delivery system, costs are incurred in many different fashions. Tesla’s Powerwall looks to be just another potential cost owing its livelihood to politics and the media.
View Comments
The Institute for Energy Research (IER) is a not-for-profit organization that conducts intensive research and analysis on the functions, operations, and government regulation of global energy markets. IER maintains that freely-functioning energy markets provide the most efficient and effective solutions to today’s global energy and environmental challenges and, as such, are critical to the well-being of individuals and society.