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Tesla's Home Battery—An
Electricity Storage Breakthro
ugh?
Richard J. Campbell, Specialist in Energy Policy
(rcampbell@crs.loc.gov, 77905)
Paul W. Parfomak, Specialist in Energy and Infrastructure Policy
(pparfomak@crs.loc.gov, 70030)
May 4, 2015 (IN10271)
Costeffective electricity storage has long been a kind of "Holy Grail" for the electric
power sector. Such storage technology could have multiple benefits for electricity
consumers. It can serve as a temporary source of backup power to maintain onsite
electric service in the event of a utility power blackout. It can be used to improve the
availability of ("firm up") electricity generated from intermittent renewable sources such
as solar and wind. It can also be used to shift enduser electricity loads from costly peak
hours to lower cost offpeak hours, which can level regional generation profiles and lower
customer electric bills. In pursuit of these benefits, many electricity storage solutions
have been developed, and some have become commercially available—primarily at utility
scale—but high costs and performance issues (along with key regulatory barriers) have
limited their deployment. (See CRS Report R42455, Energy Storage for Power Grids and
Electric Transportation: A Technology Assessment.) For example, banks of leadacid
batteries have been used to firm up generation from some renewable power installations.
However, the economics and environmental characteristics of these batteries are unlikely
to provide a longterm answer. Lithium ion batteries, another mature technology, have a
better
energy density and higher cycle life compared to leadacid batteries, but they are
much more expensive to manufacture. Other advanced battery technologies and kinetic
and chemicalbased energy storage systems are also being pursued.
On April 30, 2015, Tesla Motors announced plans for a suite of Tesla Energy lithiumion
batteries scalable for use by homeowners, commercial endusers, and electric utilities. A
key offering will be the
Powerwall battery pack, a modular system offered in a seven
kilowatthour (kWh) and 10 kWh configuration, priced at $3,000 and $3,500, respectively.
While the 10 kWh battery is "optimized for backup applications," it can also be used for
load shifting and, thus, appeal to customers seeking to take advantage of timeofuse
electricity rates. Both batteries also target residential customers with solar photovoltaic
(PV) installations to store power and extend usage beyond daylight hours.
To bring economies of scale to lithium ion battery production, Tesla Motors embarked on
building the
Tesla battery Gigafactory in Reno, NV. While the company's initial focus was
on electric vehicle batteries, the opportunity existed to address electricity storage more
generally. At the price points announced by Tesla, the economics of electricity storage
would markedly improve. Including installation and other equipment costs, the estimated
cost of a 10 kWh Powerwall system installed could rise to $5,000. Even so, this would be
less than half the cost of estimates for similar battery storage technology, which range in
price from $1,000 to $1,250 per kWh. An average U.S. residential customer with a 3kW
solar PV system could conceivably recover the cost of a Powerwall in
four years.
Nevertheless, it remains to be seen if the Tesla Powerwall and other products will be able
to overcome historical price barriers to adoption and meet customer expectations for
battery performance.
In addition to its potential consumer benefits, Tesla battery systems could help the United
States achieve certain public policy goals. For example, the U.S. Environmental Protection
Agency's
Clean Power Plan aims to further reduce
atmospheric emissions from coalfired
power plants, and suggests increasing levels of renewable generation. (See CRS Report
R43621, EPA's Proposed Greenhouse Gas Regulations: Implications for the Electric Power
Sector.) Utility scale deployment of Tesla batteries could facilitate renewables deployment
while reducing the need for fossil fuelfired backup supplies and new transmission
infrastructure. Widespread deployment of Tesla batteries among electricity consumers
could also increase the overall reliability and resiliency of the electric grid by serving as
sources of distributed electricity supply during power system emergencies. (See CRS
Report R42696,
WeatherRelated Power Outages and Electric System Resiliency.)
Although the Tesla battery systems may represent a significant change in electricity
storage economics, if not technology, they may face other industry and regulatory
barriers. Many electric utilities have expressed concerns that state laws requiring net
metering to encourage residential solar PV adoption may cause a loss of revenue and a
shift of costs to lower income customers. (See CRS Report R43742, Customer Choice and
the Power Industry of the Future.) Efforts are underway in several states to investigate
the fairness of these policies. Other states are looking at the perceived value of
distributed generation to utilities and society at large. Power quality, grid control, and
information security are concerns associated with distributed power in any form. Timeof
use rates are not available in many utility service territories, limiting the opportunity for
homeowners to capture loadshifting benefits through lower electric bills. Meanwhile,
some in the utility industry may accelerate their efforts to remove or reduce federal
incentives for renewable electricity which they see as unfair subsidies. (See CRS Report
R43340, Production Tax Credit Incentives for Renewable Electricity: Financial Comparison
of Selected Policy Options.) Congress is currently considering energy policy and
infrastructure issues, and may introduce several bills and initiatives to encourage
distributed generation as a way to diversify choices in power generation and improve
electricity system resiliency.
The pricing and availability of the Tesla Powerwall and similar competing battery products
may encourage further solar PV deployment, especially if current federal and state
incentives continue. However, most of these potential customers are unlikely to generate
all the electricity they consume, and will likely need to consider their overall electric
utility costs versus the potential benefits of further investment in distributed generation
and electricity storage systems.
Related
Issues Before Congress:
Electric Power Sector
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