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How the Tesla Powerwall Works


The Real Market for Powerwall
Tesla's batteries for businesses and utility companies (pictured here) provided energy for the big Powerwall unveiling on April 30, 2015. Tesla could find success with commercial customers before residential customers.
Tesla's batteries for businesses and utility companies (pictured here) provided energy for the big Powerwall unveiling on April 30, 2015. Tesla could find success with commercial customers before residential customers.
© Patrick T. Fallon/Reuters/Corbis

Home battery buyers face a problem familiar to alternative power users, namely, that the savings don't offset the costs, at least not yet. Many critics argue that all but the most frugal appliances will quickly gobble up the 2 kilowatts the batteries trickle out, especially when running heaters or air conditioners during brownouts, but not that everyone agrees on that score (see previous sidebar) [sources: Galbraith; Geuss; Randall; Tesla Motors].

Nevertheless, using car batteries to power homes makes sense, and engineers have kicked around the idea since at least 2010. Electric car batteries, which churn out far more juice than the home variety, retain around 75 percent of their capacity when replaced — more than enough to run a good-sized house [sources: Sherman; Wald].

But the use case with the most promise right now is less residential and more commercial: Tesla's scalable 400 kwh business/utility batteries, made up of the same basic cells Tesla Motors uses in its Model S [sources: CNN; Vance]. For utilities, the reason has to do with peak energy demand.

It turns out that utilities find the hours and days of peak energy demand almost as costly and irritating as we do. That's because, in order to keep up with the extra drawdown, energy companies must maintain special peaking power plants, aka peaker plants or peakers, that sit idle much of the time. To make matters worse, these plants, which must turn on and off quickly, burn expensive natural gas (although some run on fuel oil or hydroelectric power). Cheap, reliable batteries could allow utilities to spread the load, storing cheap off-peak energy and dispensing it during peak times [sources: Illinois EPA; Oglethorpe Power; Randall].

A few utilities, including Southern California Electric and Texas-based OnCor, are already test-driving this approach [source: Randall]. If it catches on, your house could soon run on battery power whether you buy a Powerwall or not.

Meanwhile, businesses such as Walmart, Amazon and Google are testing Tesla's batteries as a way to lower energy costs, get the most out of onsite clean energy and provide power backups for operations and data centers [sources: Randall; Vance].

In short, the prognoses for the utility and business side looks good, and that could make the consumer side look increasingly better. But must household users wait for market forces to work their magic, or can the gurus of green make a case for Tesla Powerwalls today?