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Powervault 3 vs Tesla Powerwall 2: Back of Envelope Economics

Erica Charles 11 May 2018

When considering battery storage, the costs are vital. So let’s see how they stack up for two of the biggest brands, Powervault 3 and Tesla’s Powerwall 2. As a rough guide, for someone installing a battery 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:

4.1kWh

8.2kWh

12.3kWh

16.4kWh

13.5kWh

Rough Installed Cost incl VAT @ 5%

£5,090

£6,940

£8,760

£10,595

£8,350

Cost incl VAT @ 5% per kWh battery capacity

£1,242

£846

£712

£646

£619

In fact in this case, the cost per kWh of Powervault 3 is slightly more than the cost per kWh of Powerwall 2, though the difference becomes more exaggerated when you go for a smaller size of Powervault.

If you simply divide the system cost by the expected number of ‘kWh storage slots’ (or in Powervault 3’s case the “kWh under warranty”), then you are better off buying a 12.3kWh Powervault 3 system than you are buying a Powerwall 2 system.  Powervault 3 gives a ‘cost per kWh storage slot’ of 8p, as compared to 12p for Powerwall 2 (note of course this is based on our theoretical cost per storage slot, not Tesla’s – Tesla doesn’t talk in terms of lifecycles, only in terms of 10 year warranty).

However it should be noted that to realise the 8p / kWh storage cost, we think the Powervault 3 system will need to last well beyond the 10 year warranty period – it’s going to take more like 20 years to use up all the Powervault 3 storage slots (lifecycles) if you charge and discharge the battery once a day. Powervault 3 therefore needs to be viewed as a longer term investment.

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 7.91p per kWh in the case of off-peak electricity under the Bulb smart 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 load (4pm – 7pm weekdays) - for the Bulb smart tariff this rate is 41.94p per kWh;
  • the potential to take advantage of a Bulb-type tariff beyond the battery: one of the big advantages of battery storage is that it enables you to mitigate the peak 41.94p 4pm – 7pm tariff, whilst soaking up as much as you like of the cheap off-peak 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 4p per kWh. 

On this basis, if the battery is set to discharge in the peak period, the homeowner will save 37.94p per kWh discharged by the battery, whilst being able to access the low 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:

4.1kWh

8.2kWh

12.3kWh

16.4kWh

13.5kWh

Cost incl VAT @ 5%

£5,090

£6,940

£8,760

£10,595

£8,350

Expected lifetime storage capacity:

31,500kWh

62,900kWh

94,400kWh

128,500kWh

60,075kWh

Expected lifetime savings if discharged in peak window at 37.94p saving per kWh:

£11,951

£23,864

£35,815

£48,753

£22,792

Expected Lifetime Profit

£6,861

£16,924

£27,055

£38,158

£15,442

Simple investment return %

135%

244%

301%

360%

210%

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

£404

£809

£1,213

£1,618

£1,332

Payback time

13 years

9 years

7 years

7 years

7 years

Expected life if using 260 ‘life cycles’ a year

25-30 years

25-30 years

25-30 years

25-30 years

~12 years

 

From the table:

  •  Powervault 3 claims to provide a high number of lifecycles and a high “kWh under warranty”.  The lithium polymer technology used is expected to extend the life of the batteries when compared to a normal NMC battery.
  • Tesla Powerwall 2 talks in terms of ‘unlimited cycles’ for 10 years and therefore we have had to attribute an expected lifetime storage capacity to it. It should be stressed that this is our estimate, not Tesla’s. We have been conservative and it is lower than the claimed lifetime storage capacity of Powervault 3. Whilst both are based on lithium nickel manganese cobalt, Powervault 3 uses a polymer electrolyte which increases cost but also extends life.
  • On the basis of the analysis as presented, Powervault 3 should provide a slightly higher return on investment and more lifetime profit than Powerwall 2.
  • That said, because the upfront cost per kWh of rated capacity is higher for Powervault 3, it will take longer for Powervault 3 to pay for itself – and for the smaller systems, the payback period is well outside the warranty period.

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

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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:

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Topics: Battery storage, Tesla Powerwall, Powervault

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