How Tesla keeps making home batteries better and better

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If you were to put on a blindfold and throw a dart at a cork board containing a long list of industry sectors, you’d be unlikely to hit a sector that isn’t experiencing rapid technological change. But if you landed on the energy sector, you’ve just hit one of the sectors that is right on the cusp of experiencing significant disruption and change. The rate of change and the nature of the disruption is likely to be driven by a range of factors, such as policy direction and customer preferences, but a key factor will also be technology development and cost. This article looks at the changes in battery technology for just one of many battery makers over a very short period of time, providing an insight into the direction of technology and the impact of cost reductions in the pathway to a revolution in energy markets.

Consumers will be at the centre of the transformation of the energy market in the decisions they make to purchase technologies like batteries. The findings below show that the economics are increasingly stacking up for the technology and consumers should now be thinking about how the economics of batteries stack up for their individual circumstances.


In April 2015, the original Tesla Powerwall home battery was unveiled. It looked like something out of this world and had the functionality to back it up. Tesla used its experience making electric cars to build the battery, which was designed to reduce electricity costs for homes. The battery could achieve this by storing solar or off peak electricity and using it in the evening when electricity is more expensive. The Powerwall 1 was one of the first home batteries to use a liquid cooling system, enabling it to operate at a lower temperature and extend it’s life. In fact, Tesla was so confident with its product that it gave a 10 year warranty with every Powerwall sold. To put this in perspective, most new cars sold in Australia come with a 3 year warranty!

The battery was 6.4kWh in size and could produce 3.3kW of power, which means it could power a kettle, a microwave and a television for about 2 hours. As a first-generation product, the Powerwall was about the size and shape of a body board and would take at least 4 strong people to lift it! In most cases, to install the Powerwall, an inverter would also need to be installed so the electricity produced is suitable for use in the home. This meant a fully installed system took approximately 1 day to install and cost about $10,000 in total.


Unveiled only 18 months later, the Powerwall 2 is a breakthrough unit, setting a new standard in the home battery industry. The Powerwall 2 is a liquid cooled battery using lithium ion technology much like the first unit, but this is where the similarities end. Unlike the Powerwall 1, the Powerwall 2 is available in two versions; an AC version which includes an inbuilt inverter and a DC version which does not. Since a vast majority of solar systems don’t include an inverter that is compatible with the DC Powerwall 2, we will only discuss the AC Powerwall 2 in this article.

With 13.2kWh of storage, the 2nd Powerwall holds more than twice the energy held by the original and outputs a maximum of 5kW of continuous power. This means the Powerwall 2 could power the same microwave, kettle and television, plus a hair straightener and toaster, for 2 hours and 38 minutes! Put another way, the Powerwall 2 packs almost enough energy to power the average Australian home for a whole day (which would require 16kWh of storage). Despite these improvements in the total energy storage and power of the battery, it is smaller in every dimension than the original Powerwall, taking up about two thirds of the space.

As mentioned before, the new Powerwall also includes an inbuilt inverter. This means that the electricity it produces is already in the form required for use in the home. Cost and complexity is reduced because no additional units need to be installed. Essentially, the battery becomes an all-in-one plug and play unit. According to Telsa, the inbuilt inverter also supports backup applications, which means the battery has the ability to power homes when there is a blackout. In the case of a Powerwall 1, this function would have required the purchase of a special backup capable inverter. The Powerwall 2 also simplifies the installation process as it can be either wall or floor mounted and, like the Powerwall 1, it may be stored indoors or outdoors.

Despite all the improvements that have made their way into the Powerwall 2, the unit is similarly priced to the first unit, from $10,150 fully installed. Therefore, per unit of energy the Powerwall 2 has halved in cost and represents the best value yet for a home battery system.


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