I might be in danger of becoming an Elon Musk fanboy, so feel free to call me out on it if I become too sycophantic. There are definitely reasons to be skeptical of people like Musk, if for no other reason that we shouldn’t pin all our hopes for climate justice on a handful of billionaires. But Musk legitimacy has a knack for implementing good ideas, while his public profile helps these ideas attract public attention and investment that they might not otherwise have access to. Plus, he seems to be one of the only members of the technological elite who really understands the urgency of the climate problem.
So even though I’m a bit late to the party (I’ve been on vacation and then very busy for the last few months), I have to write a bit about Musk’s latest Big Thing, namely the Tesla Powerwall. The Powerwall is basically a big Tesla car battery for your home. It comes in three sizes: 7 kWh, 10 kWh, and a scalable 100 kWh Powerpack which is intended for commercial and industrial uses. There are two main ways that consumers and businesses might use the Powerwall. The less radical one is to hook it up to a house that is connected to the electrical grid, in order to provide insurance against blackouts or brownouts, and allow the user to take advantage of times in the day when electricity from the grid is cheapest. The more radical proposal, is to hook the Powerwall up to some roof-mounted solar panels so that you can still get power from them even when the sun isn’t shining. This, in theory, could allow you to live completely off the grid.
A few analysts have thrown a bit of cold water on the powerwall. The PowerWall will sell for between $3000 and $3500 in the United States, but end-users consumers will likely pay more due to installation costs and retailer markups. If you buy one, you’ll also need an AC-DC inverter, to say nothing of a full set of solar panels. For that, you get a finite amount of power discharged over the lifetime of the PowerWall, because the batteries will eventually degrade. That means that the effective cost per kilowatt-hour of the powerwall is 15 cents per kWh, plus whatever you’re paying for your solar panels or electricity from the grid. The average American retail price of electricity is 12.5 cents per kWh, so it seems like the financial case for the Powerwall isn’t quite there yet.
As with any such assessment of a new technology, however, the word “yet” is a pretty big one. The Powerwall, like any new technology, has the potential to improve its performance and reduce its price. And a 50 percent decrease in its costs per kWh might start to make it attractive. The question, then, is whether Tesla (or its competitors) will be able to realize that kind of an improvement in home battery technology. That depends on two things: The basic limits of what the the batteries and the processes used to manufacture them are capable of, and the economic, social, and political context in which the batteries will be developed. I’m no expert on the first of those two things, so I’m going to consider the latter.
I have said in a previous post that a crucial question you have to ask about a new technology is not whether it is effective or affordable in the present day, but whether it has a viable niche. Is there a group of users, however small, who can financially support the Powerwall enough to support its further development? If so, then we can expect the Powerwall’s performance to go up and its price to come down.
In answering this question, my tardiness is actually a bit of an advantage, because the first two months of the Powerwall’s history can give us some idea of the kind of uptake the idea has had. The results of even a brief bit of googling are…encouraging. Here are a few potential early adopters I’ve found for the Powerwall:
- Rich People. The evidence for this is that the Powerwall has already sold out through the middle of 2016. Given that the financial case for the technology as it currently exists is so flimsy, how can we account for this? It could be a case of overzealous retailers who will get burned when trying to sell the Powerwall on to end-users, but another explanation, in my mind, is that people with disposable income are interested in the Powerwall regardless of the financial case, or lack thereof, for it. And why not? It looks cool; it’s a conversation piece; and it lets you feel like you’re sticking it to the man a little bit and helping to tackle climate change. This makes the Powerwall roughly comparable to buying a flashy car, or to shopping at an expensive organic foods store. Nobody ever said that consumers make their choices based on financial calculations alone, after all. Rich early adopters were a big part of how the early automobile, then an unreliable and exorbitantly expensive technology-got a big boost. This illustrates why you need to consider cultural, aesthetic, political, and social elements of new technologies, rather than just relying on financial and technical analysis.
- Movie Theatres. And other businesses for which it is extremely costly to lose power even for a short time. For these guys, the extra cost of the a bank of powerpacks might be easily justified as a way of providing security in the event of a power outage. Cinemas and other similar businesses are therefore likely to be some of the first commercial customers for the new technology.
- Remote Areas. Admittedly, the cost of the technology might be a barrier here, particularly because many remote areas are not very wealthy. But many parts of Africa already use solar power rather than relying on the electrical grid, meaning that there could be some potential for this kind of battery technology there if some way can be found to make this technology work in the local context.
If even one of these markets proves to be fertile soil for the Powerwall, then the result could be a rapid reduction in the battery’s price per kWh, which will open up further markets, thereby making it even cheaper. There is probably a limit to how cheap it can get, but until we reach that, we can at least hope that the Powerwall might eventually emerge as something that can allow distributed solar a fighting chance against the traditional, carbon-intensive grid.
Perhaps, however, it’s a mistake to see this entirely in terms of market dynamics. Energy systems can be subsidized. Indeed, they already are. So why not subsidise the Powerwall? If framed correctly, it could become a very popular policy, allowing households to reduce their dependence on the power grid, cut their bills, contribute to a more sustainable economy, and buy some really cool technology to boot. A 50% tax break on any home energy storage might be a plausible option, particularly in sunny areas that stand to get the most from the Powerwall, or areas with state-owned energy firms which will be less likely to lobby against this kind of policy. This is an opportunity for the kind of proactive transition management that we should be encouraging our governments to do. We should do what we can to push for it.