Tesla says strong demand for Powerwall battery storage unit in Australia

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Electric vehicle and battery storage developer Tesla Motors says it is receiving “very strong” demand for its new battery storage products in Australia, which are due to be rolled out in the next month or two.

In its latest quarterly update, the company said it will accelerate its battery cell production at its new “gigafactory” – a battery storage manufacturing plant in Nevada – and says it does not expect to be beaten on price.

Australia has been chosen as one of the first countries for the Tesla Energy “Powerwall” product, a 7kWh lithium-ion battery storage system, because of its excellent solar resources, high electricity prices, and the tariff structure for consumers.

“We are seeing very strong demand for Tesla Energy products globally, and particularly in Australia, Germany and South Africa,” founder and CEO Elon Musk said.

“To respond to these opportunities, we are growing our worldwide Tesla Energy sales team and are continuing to sign new business partnerships with utilities and energy companies.”

The strong response to the Tesla Powerwall in Australia is no surprise, given the big shifts in tariffs by Australian network operators, particularly the move to lift fixed network tariffs, introduce “demand tariffs” that they admit will make solar PV less attractive without storage, and by paying little for exports.

Solar installers report strong interest from customers at both the household and the commercial level, with installations starting to increase. Some predict they will be installing “at least ten a week” within a few months.

The interest in battery storage has prompted retailers such as AGL Energy to expand their storage offerings – it is now making larger systems from Sunverge available to customers, while Synergy and Alinta are also promising rollouts of battery storage in Western Australia, another prime market.

Musk, however, says that Tesla will not be beaten on price. Or at least he doesn’t think so.

“We’re constantly agonizing about cell cost and pack cost, and we don’t think anyone is on a path to be even close to us,” Musk told analysts on a conference call.  “If they are, I would be the first to congratulate them.”

Musk said Tesla had already “sold” all its planned production for battery storage in 2016. “If you were to take even a small fraction of the number of people that have placed orders … we would be sold out of all of 2016 production, I mean, well into 2017,” he said.

“So it’s really mostly about predicting our production rate, and we expect very dramatic increases in the stationary storage production.”

Musk said apart from its key target markets in Australia, Germany and South Africa, there were also emerging opportunities in India and in Hawaii.

The latter was due to tariff changes, including the removal of “net tariffs”, meaning that self consumption – and storing the output from rooftop solar systems in a box for use later – was now attractive, as it is in Australia.

tesla powerwall

One of Tesla’s initial partners in Australia will be Canberra-based Reposit Power, which is rolling out a series of trials enabling households with solar and storage to trade energy during the day. Reposit announced in May that its technology would be integrated with the Tesla battery storage unit.

The Tesla launch earlier this year created a buzz of excitement around the world, and has already brought other manufacturers into the Australian market, and triggered a fall in battery storage prices. Some analysts say battery storage will be a mass market product by 2020, others say it could be before then.

Environment minister Greg Hunt this week again cited battery storage as the key to “transforming the way we produce electricity through renewables” in Australia.

“Australia’s high rate of household solar in the world makes Australia an ideal place to develop storage and battery technology,” Hunt said. “Morgan Stanley estimates that up to a million Australian households could have solar storage systems by 2020.”

Matt Zema, the head of the Australian Energy Market Operator, which runs the grid in Australia, also hailed the arrival of battery storage in a speech last week, saying it would “fundamentally change” the electricity market.

“We are beginning to see the cost curve on storage coming down, as it has done with solar PV,” Zema said.

“But the real headline in this study is that for the first time in this market, new forms of energy storage technology will give us flexibility.

“This means that residential, that is you and I, as well as commercial and industrial energy users, will have the ability to actually store electricity.”

He said consumers were clearly changing their behaviour, and showing interest in energy efficiency, solar PV and battery storage.

“Couple solar PV with battery storage growth in a few years and you have fundamentally changed the electricity supply chain as we know it.”

and later ..

“(The) speed of technology – viable electricity storage, driven by customer involvement and consumer choice will dictate the next phase of where this industry is going.”

In Australia, the biggest markets for battery storage initially  will be those areas that pay little for the output from solar arrays to the grid. This includes all new installations, and in areas like NSW, where 160,000 households will lose their solar premium tariffs at the end of 2016.

Bloomberg New Energy Finance predicts 33GWh of storage in Australia within 20 years, accompanied by 37GW of rooftop solar.

Additional products supplied by Tesla Energy will include the 10kWh weekly cycle Powerwall which is compatible for residential back-up power and the Powerpack, a commercial and utility solution, grouping 100kWh battery blocks to scale from 500kWh to 10MWh+.  

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  • barrie harrop

    Too expensive now,payback needs to be 5-6 years before a viable proposition.

    • Jacob

      Maybe the media should take photos of remote communities that currently get their power by burning diesel.

    • Stan Hlegeris

      Barrie–You would probably say that about the Tesla Model S also. The 500+ Tesla drivers in Australia already know that there’s great value in saying NO to oil companies and powering their cars at a cost so low it might as well be free.

      It’s not just the money. It feels great, and feelings drive most financial decisions.

      Many power consumers will cheerfully pay a big premium to go off grid and say NO to electricity companies forever. Some will do the analysis you suggest, but enough will make the switch as soon as they can get their hands on the gear.

      I rationalise it as a sort of insurance: how much is it worth to know that you’ll never have to pay for electricity again? Lots. But it doesn’t matter, because it feels great, and that’s a feeling for which many people are happy to pay.

      As the early adopters leave the grid, the experience for stragglers will get more and more unpleasant as the retailers continue to squeeze you for revenue.

      • JeffJL

        Stan. People do not buy the Teslas to save money. Poor comparison.

        And yes people will just buy them with no checking of the payback period because; they want to have reduced power bills and don’t care about the capital sunk; They like to be the first to have the technology; They want to stick it to the power company.

        • MaxG

          One of the major reasons I’ve gone off-grid; to stick it to them. We basically said: the life of the system is 15 years; we will break even on our 2013 power bill in 13 years, if prices remain the same. Any year beyond that is free.
          Not only this, but we have increased consumption, due to running of pumps, heaters, and other consumers, we would not normally run (if we’d to pay for). I’ve also seen me moving from petrol-driven tools to battery-driven tools… and the next thing is an electric car; and I may even convert the tractor to electric. 🙂

          • Stan Hlegeris

            Yes, there’s that weird effect, too. Because the tariffs are ass-about, anyone who has enough solar PV often has excess power available.

            In the absence of any way to pass that energy on to a neighbour at a price fair to both producer and consumer, you might as well just switch on the air conditioning.

  • James Hilden-Minton

    Georgia Power in the US charges $20/kW in monthly demand charges. A 7kWh Powerwall at a price of $3000 can cut about 3 kW of demand charges. With a savings $60 per month, breakeven happens in 50 months, and the total savings over 10-year warrantee is $7200. The internal rate of return over 10 years is 23.8%. That’s plenty of return for both solar installer and customer to do quite well.