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Homeowner Blog

Powervault 3 vs Tesla Powerwall 2: Back of Envelope Economics

Erica Charles 11 May 2018

Last week our blog compared the chemistry of Powervault 3 (LFP) with the chemistry of Powerwall 2 (NMC).

The basic conclusion was that LFP means "double the life cycles, double the cost." As a rough guide, for someone installing Powervault 3 as part of a solar system (thus with a VAT rate of 5%), the rough costs are as follows:

 

Powervault 3

Tesla Powerwall 2

Storage Capacity:

2.5kWh

5.0kWh

7.5kWh

13.5kWh

Rough Installed Cost incl VAT @ 5%

£4,510

£6,060

£7,670

£6,300

Cost incl VAT @ 5% per kWh battery capacity

£1,804

£1,212

£1,023

£467

 

In fact in this case, the cost per kWh of LFP (Powervault 3) is more than double the cost per kWh of NMC (Powerwall 2).

But as we also said, with the 7.5kWh Powervault 3, you buy a minimum guaranteed level of 51,800 storage ‘slots’ upfront. With Powerwall 2, you only buy ’37,000’ slots upfront.

Powerwall 2 will pay for itself much more quickly than Powervault 3, but what does this mean for the overall lifetime economics...?

Back of Envelope Economics

Successful exploitation of home battery storage technology is achieved by having a cheap source of electricity to charge the battery, thus enabling inexpensive charging of the battery ready for discharge during peak electricity times.

For example for domestic properties in the UK, the energy cost to charge the battery will be 0p per kWh in the case of ‘free excess solar’ and 6.41p per kWh in the case of off-peak electricity under the TIDE tariff

The overall economic benefit of installing a battery with current functionality (storage of excess solar, off-peak charge / peak discharge) depends on

  • the availability of excess solar to charge the battery and the ratio of ‘free electricity’ to ‘cheap electricity;
  • sizing the battery to closely match the peak or, in the case of the TIDE tariff, the ‘High Tide’ load (4pm – 8pm weekdays) - for the Tide tariff this rate is 29.99p per kWh;
  • the potential to take advantage of a TIDE-type tariff beyond the battery: one of the big advantages of battery storage is that it enables you to mitigate the ‘High Tide’ 29.99p 4pm – 8pm tariff, whilst soaking up as much as you like of the cheap ‘Low Tide’ tariff, for example to charge an electric vehicle cheaply at night.

A reasonable expectation might be that the battery will be charged with 50% ‘free solar’ plus 50% of ‘off-peak’ energy. Allowing for round-trip losses, the ‘average’ cost of electricity charged to the battery will be 3.5p per kWh. 

On this basis, if the battery is set to discharge in the High Tide period, the homeowner will save 26.5p per kWh discharged by the battery, whilst being able to access the Low Tide  tariff for electric vehicle charging and other high loads that could be run overnight.

In simple terms the economics look like this:

 

 

Powervault 3

Tesla Powerwall 2

Storage Capacity:

2.5kWh

5.0kWh

7.5kWh

13.5kWh

Cost incl VAT @ 5%

£4,510

£6,060

£7,670

£6,300

Expected lifetime storage capacity:

19,050kWh

38,100kWh

57,050kWh

47,800kWh

Expected lifetime savings if discharged in ‘High Tide’ window at 26.5p saving per kWh:

£5,048

£10,097

£15,118

£12,667

Expected Lifetime Profit

£538

£4037

£7,448

£4997

Simple investment return %

12%

67%

97%

65%

Approximate annual saving if using 260 (weekday) ‘life cycles’ per year

£175

£350

£525

£930

Payback time

> 20 years

17 years

15 years

7 years

Expected life if using 260 ‘life cycles’ a year

20-25 years

20-25 years

20-25 years

~12 years

 

From the table:

  • we feel the business case for a 2.5kWh Powervault 3 system is pretty weak – the economies of scale simply don’t kick in sufficiently at this size;
  • the simple investment return % is highest for the largest Powervault 3, which yields a lifetime profit of £7,500 on an investment of just under £7,700.
  • as expected, the Tesla Powerwall 2 offers the shortest payback time of 7 years under this scenario, against an expected life of around 12 years, generating a lifetime profit of £5,000 on an investment of £6,300.

Note that with Powervault 3, smart appliance control will make it easy to run any smart appliance such as a smart washing machine, dishwasher etc off the cheap tariff, whilst still ensuring the clothes get washed and the dishes are clean in time for breakfast.

Negating the Need for More Power Stations: The Biggest Win?

On top of the economic benefits, there are of course the environmental benefits which are by no means trivial: by installing micro-generation and battery storage, homeowners are collectively negating the need for investment in new centralised power stations, thus facilitating the roll out of electric vehicles, reducing air pollution, and generally contributing towards a cleaner living environment and a more sustainable planet.

 

The Full Report: Powervault 3 vs Powerwall 2

Click on the link below to download our full Head-to-Head analysis of Powervault 3 vs Powerwall 2: 

 

Free Download

Head-to-Head Analysis:

Powervault 3 vs Powerwall 2

eBook_pink_pattern_L

 

Download now

  

Request a quote

If you would like a quote for Powervault 3, Powerwall 2, or indeed any other system, please get in touch.

Call 0118 951 4490, email info@spiritenergy.co.uk or request a quote:

Request free advice / quote 

 

 

 

Topics: Solar PV battery storage, Tesla Solar Battery, Powervault 3

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