Calculating the return on investment of my Tesla Powerwall battery storage

Unleash the Powerwall
In Part One of the Powerwall ROI, I covered off some commentary about batteries in general, a sample payback case by Choice Australia, and some general comments on improving your electricity usage.
Now, on with the show…

My Powerwall ROI Calculation

When I was doing my analysis on the Powerwall ROI, I first looked at what that money meant to our family, in pure financial terms.
The easiest thing to do with it was nothing. Just leave it in our offset account against the mortgage, and help pay it down quicker. At the interest rate we were paying, the value was less than $750 per year.
If the solar system could beat that figure – and I had few doubts it would at current prices – then on a cash basis it was a better investment than my loan offset. The Powerwall would simply ice that cake by increasing self- consumption levels due to power shifting.
Yes, we could have also used the money for an overseas holiday, but once you get four flights and accommodation, as well as visits to tourist trap gift shops (those meddlin’ kids!) you’re not going to get too far with that money. The experience of holidaying somewhere new is great of course, but so is freeing up capital in future years. Particularly in an electricity market with inbuilt price rises.
Let’s get to the detail of my situation, to fill in some blanks:

  • 5kW in 20 panels facing NNW at pitch of approx 25 degrees
  • Expected solar generation 19.5kWh average per day
  • Household usage for 2015 = 21.9kWh / day
  • Single level, brick veneer house, corrugated steel roof.
  • Insulated sarking under all roof panels.
  • Ceiling insulation using glasswool batts to appropriate rating.
  • Wall insulation on external walls to appropriate rating.
  • 4 beds + study, rumpus, double garage
  • Also running a 31,000 Litre pool (unheated) with thermal blanket
  • Gas cooktop, gas continuous hot water
  • Electric oven, fridge, cold feed dishwasher, washing machine, dryer
  • Nothing excessive like a movie room.
  • Ducted air conditioning aka The Bane to my Powerwall’s Batman

Any more details is just inviting the burglars!
Household usage is particularly important to know for your situation, and to try out the efficiency measures I detailed in Part One as the first step.
After looking at the figures, I thought the simplest solution was to get the biggest system I could, with the budget and roof space I had. This would ensure those cloudy days could still give me a chance at filling the Powerwall and/or run the house.
When it came to the payback factor, I took what you might call a macro view of what the system could do for me. Rather than work out the small fry of feed in tariff and saved import costs, I added up all of our 2015 electricity usage.
After all discounts from my energy provider, this figure was $1920. This is strictly what I paid for electricity after adding all GST and removing discounts. The connection fee is a set cost I didn’t include (worth another $311 per annum).
The system cost was $15,990, and so, if it wiped out 100% of those usage charges, then ROI is 8.3 years (System Cost / $1920).
That may be optimistic for various reasons, so let’s say the system reduces usage by 80%, then payback time is 10.4 years(System Cost / $1536).
Both calculations assume my power usage remains generally steady, and that electricity rates don’t go up, and that my system performance doesn’t degrade.
“But it WILL degrade!” shout the Lithium critics. And they’re right.
Nothing is forever, and the battery will not support as much input and output over time, due to known shortcomings with lithium storage. The battery has a 10 year warranty, but it does have expected degradation built into that. That is one factor.
It is entirely possible that the generation capacity of my system on average might not stand up to the lab-tested 19.5kW per day for the ROI period. That is the second factor.
Conversely, those quoted lab figures (which work out to 3.9kWh per day per kW installed for Sydney) may not be accurate in the face of panel technology advancement e.g. power optimisers. I’ve asked the source for more details on those figures, like when it was last updated. I’ll keep you posted if anything happens there.
In addition, how would I ensure I consumed that 19.5kW amount on average every day? For most people, that is seriously difficult without some kind of shmick automation suite, perhaps reaching as far as IoT monitored appliances.
There is a third, and very important factor: over time, as my system performance degrades, electricity prices will increase. If our government brings in an ETS (Emissions Trading Scheme i.e. Carbon Tax) over the next few years, that will have a big effect.
So for the purposes of simple mathematics, I’m assuming firstly that the degradation will be largely offset by the increase in unit cost per kWh. And secondly that, some days I’ll need the grid, and some days it will need me.
Or at least accept me for who I am. She’s a hard mistress.
The other large assumption is that nothing will change about my power usage between 2015 and 2016 and that… Wait, can you hear that? It sounds like… yes! Its the approach of:

The PlanTM

Fire up the triumphant music, Jarvis …

You Have The Power To Change

(Pun intended)
In Part One I referred to Origin Energy’s pricing, and how people don’t tend to move utilities readily, or financial providers, or insurers. Its called “Lazy Tax” where they just keep jacking up the price, assuming you won’t go because of the effort supposedly required.
In electricity circles, it seems hardly worth moving, when one company might only be a couple of cents cheaper per unit than another.
When you factor in that 2 cents = 10% per kWh in a lot of cases, and multiple that by thousands of them per year, its a different story.
You can also capitalise on that with a decent discount deal, but be aware that the “XX% pay on time discount!” will generally not cover your connection fee, only usage.
My old power company was giving me “twelve” percent pay on time for usage. Three percent was calculated before GST was applied, and the remaining 9% after GST was applied. So it was more like 11.73% discount. The cads!
My Powerwall will shortly be moving into the Reposit Power pilot here in Sydney, and as part of that I’ve moved to Diamond Energy for my electricity provision.

As you can see from their website, they subscribe to green principles, including some initiatives relating to the financial side. In discussions with them I’ve found their customer service to be great as well.
The partnership with Reposit is a chance to launch some new tech initiatives (micro-grids) in the renewables area. So a lot of boxes are being ticked.
I was even more happy when I saw their rates – here’s a comparison to my old provider:

Item ex GST ex Discount Diamond Old Provider Difference
Price (cents) / kWh 19.35 23.61 -18.0%
Connection (cents) / day 74.95 77.63 -3.5%
Feed in tariff (cents) 8.0 5.1 157%

Not bad, eh? Of course, the rates will vary with usage, as each provider has set bands for pricing, sometimes calculated against a daily average amount. The old provider dropped their price per kWh slightly at each band, while Diamond go up slightly, and use a monthly band.
It reinforces that we need to use less power, and more thoughtfully. The bands for Diamond are: first 100 kWh per calendar month priced as above, next 240kWh per calendar month (19.95c), remaining (21.6c).
Based on known use since install, I should not use import much more than 70kWh per calendar month (about 2 per day), so should always price against the lowest band. Famous last words?
I also receive a discount for paying on time and by direct debit with Diamond, and even though that percentage is smaller than the ~12% I received with the old provider, the lower base cost is winning the race.

The Balancing Act

Import versus export is another key stat from the table above. The feed in tariff for Diamond is a lot higher, as a percentage, than I’d otherwise get from a lot of companies, and combined with the lower pricing, has a lot more impact.
If I get 8 cents for every kWh I export, and pay around 20 cents for every kWh I import (once GST and discounts are applied), then my ratio for being cost neutral on usage is almost exactly 2.5 export to 1 import. Under my old provider it would be almost 4.5 due to their higher purchase cost and lower FiT.
Of course, there is still the connection fee charged every day, with any provider. To cancel THAT out with Diamond, I’d need to export 10.3kWh per day in addition to keeping my 2.5 ratio above!
Unlikely, but every little bit helps to get that ROI under 10 years. If, by some miracle (or more likely, Reposit Power), the connection fees are also wiped out, then ROI drops to less than 7.5 years.

A Moving Target

Diamond’s cheaper energy prices change my ROI calculation. I accept that, but at the time I bought the system, I was calculating off the old provider, so that is still the basis for everything I look at, moving forward.
This all assumes I keep using power at the rate of 2015. Several things have changed in that area, which tip the balance in my favour.
Firstly, my pool equipment got replaced in January. It was older than the house I’m sitting in, purchased through eBay according to the neighbours. As a result, it wasn’t terribly efficient, and I’ve since discovered plenty of issues with the pump itself after pulling it apart out of curiosity.
The new equipment will lower power bills due to smarter controller options and newer pump components, allowing it to run less hours per day, at a more efficient rate.
Note that I wasn’t planning it as part of the Powerwall install, and wouldn’t mind that money back in the ol’ skyrocket. C’est la vie, which is French for “I’ll take the good with the bad” I think. Language is not my strong suit…
The house has been fully fitted with LED lighting, which was only completely part way through 2015. Timers are now on the AV and computer equipment to help reduce overnight use, and get the Powerwall through to morning, hale and hearty.
The crimes of the ducted air conditioner are now on display for all to see. As a result we’re dealing with our ventilation with a bit more thought, and using other resources (love our Dyson fans) to regulate air flow.
I’ve been clear on communicating with the kids about leaving things running (TV, lights, PlayStations) when they don’t need them. Every little bit counts, and “Less waste = more holidays” is the mantra. They are on board and excited about it… or the holidays, maybe.

In Summary

We still have lives to lead. We’re still going to want to do things that involve carbon fuels, directly or indirectly (at least until I get my Model 3). Nobody has a good plan for commercial electric flight, though they’re having a red-hot go at it.
As a family, we’re just going to do it a little smarter with the things we can control.  More consideration for the budget, the planet, and the grandchildren I hope to have some day, in a functioning and more enlightened society.
That sounds a little disingenuous, when I just spent the last 4000 words talking about money, but this is one of the major things critics miss about renewables:
It isn’t about growing your own kale in a mountain retreat, seeking purification away from the evils of the rat race, while aligning your shakras. I’m not knocking anyone who wants to do that, mind.
Its a balancing act, because we can’t all just jump off the grid and leave a few users with the burden. Some of us will seek independence, or be forced into it to live where we want. Some need to live in suburbia because of our commitments. Many won’t even be able to afford solar hybrid in any case, until the price drops after the early adopters get the ball rolling.
The point is, we have options, and we should use them.
We can all contribute – in fact we’d bloody better! If we don’t start moving in the same direction on this, from the policy makers right through to the average citizen, we’re not going to have an environment or society left to worry about.
Long-term, with energy companies acting the way they are, and regulators supporting them, it will be up to us to take back control, and make sure we can improve things for our generation, and the ones to come.
I’d encourage anyone who can raise the capital to get into solar at the least, and look at battery storage as well. There are plenty of options hitting the market – check out the new gear from LG Chem, Redflow, Panasonic, and Enphase, just to name a few.
Oh yeah, and Tesla Powerwall! Can’t forget those guys…
Hopefully this information has helped you look at your own situation, in terms of considering a system, or you just find it an interesting perspective.
Moreso, I hope the motivation for buying a system – which ever option you go for – is beyond purely financial.
As always, if you’ve got any questions, ping me on Twitter.


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