Tesla Powerwall 2 - Business brilliance or a concept in need of a reality check ?
Probably like many thousands of others interested in such pastimes, a couple of weeks ago I poured a glass of decent single malt, grabbed something to snack on and sat back to play catch-up with the media-event covering the first customer deliveries of Tesla's long anticipated Model 3 along with a couple of other related videos, totally prepared to be awe inspired.
Did I learn anything new?, well not really seeing that everything had already been said or seen in various forms elsewhere, so nothing was really new, but it did at least raise that warm feeling that this was likely a key event for renewable energy and the cleaning up of the transport sector, but it could just as easily have been the whiskey.
I know, you're reading this and thinking 'apart from Tesla being the manufacturer, what's this got to do with the Powerwall 2? ', well, that simply comes down to the thought process immediately after watching the model 3 videos, something along the lines of 'they've done it again, putting engineering vanity before customer requirements' . In the case of the model 3 this is so evident in the decision to roll the autopilot facility into all cars and have the option unlocked by software key. What looks like a great idea for relatively well off technophiles looking to be early adopters, in reality is likely to be adding 20% to the development & build cost of the vehicle, which to me represents more than the cost of a domestic storage solution such as Tesla's own Powerwall for technology which provides a level of autonomy I'm just not interested in. It's not as if it's not been tried before, parking assistance and lane following technologies have already been relegated from being standard to an option on a number of top-range vehicles due to lack of post launch customer interest impacting model sales. I understand the trade off between risk & return, but considering that we're already talking about risky disruptive technologies, there is a strong case for conducting consumer research outside the technical community and drawing the risk line somewhat nearer the fulcrum. If this is the main thought derived from being comfortable and watching what is effectively a well conceived marketing campaign, then considering that I snugly fit the target profile, someone's got something seriously wrong somewhere.
At this point I'll regress a couple of years to Tesla's launch of the Powerwall. Excellent, a long awaited domestic scale storage system with a 7kWh (6.4kWh useable) capacity to suit the needs of the majority of homes (UK median electricity consumption ~9kWh/day), balanced well to sit alongside an existing reasonable solar PV system environment (4kWp: approx 9.7kWh/day) and modular, so scaleable, very scaleable. Not only was the product excellent, so was the vision: reduce supply chain lengths, stir in a giga-factory and leverage economies of scale to drive costs and prices down quickly - I'm eager Mr Musk, I'm listening ... yawn, cough, who are all these battery upstarts starting to nibble at Tesla's toes? - have they lost focus & risk missing the boat ?
Well, moving on 18 months and the Powerwall certainly became cheaper as promised, in terms of $/kW that is, with the $5500 14kWh Powerwall 2 superseding the $3000 6.4kWh Powerwall (now referred to as Powerwall 1). Is this really the most efficient way to deliver cost savings, a reduction in price of 17%/kWh if you bought 83% more storage capacity, is this truly an economy of scale or a pointer to engineers & product marketing executives needing a reality check ?
So, why a reality check?: well as raised earlier, the original Powerwall seems to have been well matched to a typical domestic requirement within the UK which isn't too dissimilar from many other potential markets, but what about the effect of seasonality in an energy efficient UK home. For a low energy household with a 4kWp PV system and a non-electrical form of space and DHW heating, average daily imported electricity consumption could reasonably be estimated as ranging between ~3kWh in mid-summer & ~7kWh in mid-winter, therefore a 14kWh Powerwall 2 simply provides unnecessary capacity. In summer a 14kWh system would almost exclusively operate in the 80%-100% capacity band and in the winter in a band between 0% & 30%. This effectively describes a solution which is over specified for energy efficient domestic properties, the very properties in which early adopters are likely to form a significant customer base, another case of 'putting engineering vanity before customer requirements' .
The original concept of a modular solution based on a 7kWh entry point was well suited to address domestic energy requirements where efficiency had already been addressed, with the modularity offering a fully scaleable solution for larger or energy inefficient properties. However, through increasing the minimum capacity, it's my opinion that Tesla have done their UK business prospects considerable harm which is likely reflected in other markets too - the competition must be looking to move on from merely nibbling toes and establishing themselves as players in the major and most lucrative domestic market sector, the one that Tesla seem to have unwittingly vacated.
Having expended considerable effort trawling through literally hundreds of articles I find it incredulous that no-one has conducted research and published evidence related to the optimisation of energy storage in energy efficient environments, particularly to ensure that manufacturing production capacity, effort & resource isn't being unnecessarily wasted. If unneeded capacity is minimised the product unit price will be lower, which increases market potential, which drives volume sales which reduces cost, thereby accessing true economies of scale.
'Tesla Powerwall 2 - Business brilliance or a concept in need of a reality check ?' - well, even though the analysis is pretty basic, the logic & conclusion certainly points towards the latter. Let's hope that the issue is identified and addressed in a timely manner, whether it's a Powerwall 3 or Powerwall 2 Lite doesn't really matter, but losing the plot and customers certainly does.
Whatever lies within our power to do, also lies within our power not to do.
