The True Tesla Powerwall ROI Revealed


The True Tesla Powerwall ROI Revealed

As more people begin shifting toward renewable energy sources, one of the major questions asked is what sort of return on investment will buyers receive. I hear about climate change in the news almost every day, and with that, I also hear about new products emerging in the marketplace that will help prevent climate change.

The Tesla Powerwall may provide you with a positive return on investment depending on various factors. Some of the more important factors that affect your ROI are:

  • Monthly electric bill
  • Installation Cost
  • Utility company
  • Federal/state incentives
  • Duration of stay in state

Let’s check out a more nuanced look at the Tesla Powerwall and the many factors that will affect your ROI.

Tesla Powerwall ROI Revealed

Regardless of whether you want to live off the grid, help stop climate change or a combination of all those things, you are going to want to make sure you get a return on your investment if you purchase a Tesla Powerwall. Whether it’s stocks, real estate, or solar, all investors will tell you that time is the most valuable asset when investing.

In some circumstances, switching from natural gas products to renewable energy sources and storage methods can be expensive; however, it is also possible to recoup your costs and save thousands of dollars of a longer stretch of time.

Some of these products can be pricey, and that’s not including installation or maintenance fees. If you are wondering if a Tesla Powerwall will give you a positive return on investment, there are going to be many factors you need to take into consideration.

Tesla, the Powerwall, and Other Products

Additionally, you’re going to want to take a look at the company itself. We hear about Tesla on a frequent basis, whether it’s because they’re sending another rocket into space or because they’re developing new electric vehicles. Whatever the case may be, it is no secret the company is one of the most interesting in the world.

Tesla is expanding at a rapid pace, and the Tesla Powerwall is just a part of their enthusiastic renewable energy campaign that is set to potentially be one of their largest campaigns to date.

Elon Musk has said repeatedly that one of the main directions of his company is to make renewable energy resources more affordable for the common American. That mentality is crucial if you’re thinking about your ROI.

Tesla focuses on other projects aside from the Powerwall, such as electric vehicles, solar panels, and even space exploration. This is a company to watch.

Hypothetical Scenarios and ROI

We are going to look at a few basic scenarios that a buyer may encounter. I researched the basic factors that will affect how long it may take you to get a positive ROI. In order to get a good idea of the basic ROI, we will have to establish a few averages.

With these averages, you should be able to factor in the additional variables that may affect your choice in order to decide if a Tesla Powerwall is right for you.

The average electricity bill can be anywhere between $90 and $150 a month. The US Energy Information Administration states that the average electricity bill in 2018 was $117.65. According to the US census bureau, the average size of the American household was 2,322 square feet in 2019.

Solar panel systems can provide a different level of kW depending on the number of panels installed as well as the needs of the user. For example, a California home would need an approximately 7.0 kW system, whereas a Massachusetts home would need an 8.8 kW system.

When potential buyers go onto Tesla’s Powerwall ordering process, Tesla assumes the average system will be an 8.0 kW system. Although there are many variables, for the sake of simplicity, we will stick with assuming you have an 8.0 kW solar energy system.

Scenario #1: Small House with Solar Panels

For this scenario, let’s assume you’ve decided to live in a smaller sized home of around 1,200 square feet. It’s a nice little cottage in the countryside with great potential to go off the grid. As a result, your electricity bill is lower and on average is $90 a month.

Smaller homes are also generally easier to heat and more well-insulated (as a New Englander, I can personally attest to this fact). We are also going to assume in this scenario that an 8 kW solar system is already installed on the house, and the installation of the Tesla Powerwall will allow the homeowner to be totally independent of the grid.

According to Tesla, this sized system would require two Tesla Powerwalls. The cost breakdown is as follows:

  • 2 Powerwalls: $14,000
  • Gateway: $1,000
  • Powerwall Installation: $3,000

Tax Credits and Incentives

A federal tax credit is applicable if the Tesla Powerwall is incorporated into an existing solar panel system or retrofitted. The applicable tax credit would be $3,960, according to Tesla. Different states and electrical companies also have their own benefits and incentives to encourage green energy usage.

For example, while the state of Vermont does not offer incentives for energy storage, Green Mountain Power, which powers the majority of the state, offers up to $850 as a rebate for installing a Tesla Powerwall. You’ll want to check with your electrical provider or your state to see what sort of incentives are available.

The price for this installation, not including the Green Mountain Power incentive I used as an example, would be around $14,040.

So, now let’s do some math to find out if this is worth it.

Is it Worth it?

$14,040 divided by your monthly electrical bill average of $90 is 156. If we divide 156 by 12 months of the year, we end up with the number 13. This means it will take you 13 years to break even if your average electrical bill stays the same over that period of time.

Coincidentally, according to a one year survey performed by the American Community Survey in 2018, the average length of time Americans own their home is for 13 years. If you were to sell your home after developing almost 50% equity if you got a 30-year loan, the addition of a Tesla Powerwall that allows you to go off the grid may even boost your home value. We’ll cover this variable later on.

In my opinion, if you are going to be living in a smaller home for over a decade and then perhaps decide to move into a bigger house as your family grows, you will be able to break-even.

If you live in this house for 25 years, you will save $12,960; this would be after the break-even point. If you decide to live in this smaller home for 15+ years, you will see a positive return on investment.

Scenario #2: Large House with Solar Panels

For this scenario, you’ve decided to buy a big house with a pre-existing solar energy system. It’s in a beautiful, sunny spot. It’s 2,300 square feet of house that you intend to fill with your stuff and memories. However, with those larger walls and bigger roof will come an increased average electricity bill of $150 a month.

We’re going to use the same formulas and assumptions for this scenario that we used in the previous scenario. Let’s check out the math and see how this will work out for you:

According to Tesla, this sized system would require two Tesla Powerwalls. The cost breakdown is as follows:

  • 2 Powerwalls: $14,000
  • Gateway: $1,000
  • Powerwall Installation: $3,000
  • Federal tax credit: -$3,960
  • The price of this installation would be $14,040.

Is it Worth it?

 $14,040 divided by your monthly electrical bill of $150 is 93.6. If we divide 93.6 by 12 months of the year, the number we get is 7.8. Therefore, you’ll recoup the price you paid on the Tesla Powerwall after 7.8 years of ownership.

In the world of homeownership, 7.8 years is a relatively short timeframe! The main factor in this was obviously the average monthly cost of electricity that, if removed, will allow for a greater return of investment and to recoup the money spent on purchasing and installation.

If you live in this house for 25 years, you will see savings of $30,960; this would be after the break-even point. What we have learned from comparing these first two scenarios is that if your electricity bill is higher and will be off-set by going off the grid, you will more quickly recoup your expenses and get a substantially greater return on investment.

Scenario #3: Medium House with No Solar Panels

While our focus is on the Tesla Powerwall, let’s also look at a potential question that people may be considering if switching to green energy is one of their priorities:  Should I add solar panels (and with it, a Tesla Powerwall) to my home?

Purchasing and installing solar panels is a major investment and undertaking for your property. Moving forward with this process through Tesla allows you to purchase 8.16 kW solar panels for your home, as well as the correct number of Tesla Powerwalls, and professional installation.

Let’s see how much this will cost if you own a medium-sized home and have an average electric bill of $150.

According to Tesla, the prices will be as follows:

  • 2 Powerwalls: $14,000
  • Gateway: $1,000
  • Powerwall Installation: $3,000
  • 8.16 kW Solar Panels: $16,400
  • Federal tax credit: -$7,348
  • Tesla deal from adding both panels and Powerwall simultaneously: -$1,000
  • The price to install solar panels and a Tesla Powerwall for this home after the federal tax credit would be: $26,052

Is it Worth it?

If we take the total price of $26,052 and divide it by your average electric bill of $120, we get the number 217.1. If we divide 217.1 by the 12 months of the year, we get 18.09. Therefore, you will have recouped the cost of this project after 18 years if your average electrical bill remains the same.

Over 25 years, you will save an additional $16,228. This type of project and expense will be for someone who is a long-term investor in a property or has found their “forever” home. If you’re planning to undertake this project, you will need to be confident that you will make use of the property for at least 18 years to breakeven.

Whether or not this is a wise investment for you depends entirely on your personal situation; you must take into consideration your career, whether your family will grow, whether you may need to suddenly move for a new job, and so on.

After considering those previous factors, if you intend on living in this home for quite a while, this will yield a positive return on investment.

Additional Factors That Will Affect ROI

Even though the above scenarios can be generally helpful in getting an idea of whether the Tesla Powerwall is right for you, there are still many other factors that go into determining the effectiveness of the Tesla Powerwall and solar panels.

For example, it is not uncommon for some electrical companies to charge you a minimum bill even if you use full solar. Although it may seem unfair, it is a familiar practice that many homes that use full solar experience.

Some companies allow you to pay your excess electricity stored in your Tesla Powerwall back into the grid; so you can actually make money. But again, that depends on the electrical company in your area.

As previously mentioned, there are also big incentives to look out for that could dramatically decrease your initial cost, thus reducing your breakeven point and getting you a larger return on investment.

What States Have the Best Deals?

Rhode Island and Massachusetts take the trophy for having the best solar power incentives (go New England!) This is according to a survey performed by the solar energy advocacy group called Solar Power Rocks.

For example, in Rhode Island, there is the Renewable Energy Fund, which provides residents with $0.85 per watt through the installing company, or up to $7,000. So if you have a typical 5 kW system, you will receive $4,250 upon completion of a new installation.

 Additionally, the state does not require you to pay any taxes on your newly purchased and installed solar equipment. These incentives don’t even include what the electrical companies in Rhode Island are offering as possible incentives or rebates!

With the possibility of getting thousands more back in the form of rebates, credits, or incentives, you could significantly reduce the cost of installing a Tesla Powerwall and, as previously mentioned, get to that break-even point much quicker and get a larger return on investment.

Location is Key

Regardless of where you are, you will certainly want to investigate any rebates, incentives, or credits that may be available to you through your state, city, and electrical company.

On the topic of location, you’ll also want to consider heating/electrical costs and year-round solar exposure. To absolutely no one’s surprise, the sunshine state of California takes a strong lead in producing the highest amount of solar energy.

However, the north-eastern states have the highest electrical costs due to the amount of consumption. This is most likely a result of the significantly colder weather.

I wish I could say the variables end there, but it gets more complicated. You’ll also have to take into consideration the angle of your roof, the amount of shade on your property, your electrical company, the hours of sunlight exposure, and more.

The more research you perform, the more you’ll realize there are additional variables that will affect the ultimate return on investment for your Tesla Powerwall. If you enjoy doing that type of research, follow this link to a calculator developed by the National Renewable Energy Laboratory: https://pvwatts.nrel.gov/

Tesla Powerwall Compared to Other Solar Energy Storage Units

We all hear about Tesla and Elon Musk, but there are other companies out there that also offer storage units for solar energy. There are three main types of technology when it comes to heavy-duty batteries for use in solar energy systems.

  1. Lead batteries are time tested, cheap but have shorter lifespans and smaller depth-of-discharge.
  2. Lithium-ion batteries are more expensive, more efficient, have increased depth-of-discharge, and have a longer lifespan.
  3. Saltwater batteries, which are a newer innovation, are more efficient than lead batteries but less efficient than Lithium-ion, have moderate lifespans, and moderate depth-of-discharge

We haven’t discussed depth-of-discharge yet, or DoD. Most batteries have to retain a small portion of their charge because of their chemical composition. If you use 100% of a battery’s charge at any time, it will greatly reduce the lifespan of the battery.

If we’re thinking about ROI, having an increased lifespan is important, and so is the increased efficiency that comes with a greater DoD.

Let’s take a look at how the prices compare and look at other factors that could impact overall ROI.

Pricing

A single Tesla Powerwall costs $7,000. Remember that does not include the cost of the Gateway and installation charges, which altogether will cost $11,500. This also does not include federal incentives.

Here is a handy table for analyzing different battery storage devices of similar size to the Tesla Powerwall and their costs:

Battery BrandCostEnergy Capacity/usable capacityPower RatingDepth-of-Discharge
Tesla Powerwall$7,00014kWh/13.5kWh5 kW continuous90%
Electriq Powerpod$9,90014 kWh/11.4 kWh4 kW continuous81%
KiloVault HAB$5,0957.5 kWh/6 kWhUnknown80%
Generac PWRcell$9,99918kWh/15.12kWh9 kW continuous84%

This chart is meant to deliver a general idea of the costs of different batteries along with their effectiveness. It bears repeating that many other factors may determine whether a Tesla Powerwall is the right decision, or if you want to consider some of the other available options.

The prices in the table do not indicate the cost of installation or other pieces of hardware that may need to be purchased, nor does it list other important data points such as ideal operating temperature, whether the batteries are modular, and size specifications.

Resale Value

When you purchase or prepare to sell a home, you often take a close look at what sort of price you’ll list your home. Will those granite countertops recoup their cost? What about the bathroom renovation?

When it comes to the Tesla Powerwall, it will greatly depend on whether solar panels are installed too. Potential buyers generally look favorably upon more efficient and modernized electrical systems for a home.

Considering that solar panel systems are usually low maintenance, this should provide a boost for your home’s value. The change in your home value will again depend on your location and the mentality of the buyer. In energy-efficient cities, the value will most likely be much higher than in areas that are not.

What Else Do I Need to Know?

When you get a moment, take some time to look closely at your most recent electric bill. Does the company charge you the same rate per-kWh regardless of the time of day? Do they offer net metering, which means that solar energy you generate gets sent back into the grid for “credits?”

If those apply to you, then a Tesla Powerwall will likely not provide you with a substantial return on investment aside from serving as a backup generator.

A Tesla Powerwall as a backup generator will provide you with peace of mind if you want to make sure your family or business will stay powered during an outage or emergency.

However, there is a more substantial ROI analysis that can be performed regarding electricity usage and reliance on the grid. There are many factors that affect whether there will be a positive return on investment if you purchase a Tesla Powerwall.

Some of those factors include your geographical location, how long you intend to live or work in that location, the size of your home or business, your average electricity bill, incentives and subsidies, and whether you are connecting to your solar energy system, the grid, or both.

Addressing Climate Change

When we talk about returns on investment, we often focus on the almighty dollar. However, people who are often investigating whether they should switch to solar keep in the back of their minds the importance of addressing climate change. The science has proven that our planet is on a path to significant changes in our environment.

While potential buyers think about their wallets, they may also want to keep in mind their carbon footprint its effect on future generations. When we think about the condition of the planet we may leave for the next generations, investing a few extra dollars may provide a greater return on investment in the form of preserving our environment.

Tesla has voiced their concerns about the affordability of sustainable energy products. During Tesla’s “Battery Day,” which happened on September 22, 2020, Elon voiced support in moving the entire industry toward using solely renewable energy. There was also a focus on reinventing battery production to get a 56% decrease in the cost per kWh.

Thinking about your return on investment on the Tesla Powerwall, compared to other batteries, as it relates to climate change, requires thinking more on a philosophical level regarding the future of our planet. We all want what’s best for the next generation, but we have different ideas on how to get there.

Conclusion

If you have a medium-sized home, a moderately priced electrical bill, and pre-existing solar panels, the Tesla Powerwall could be a great investment for you that would provide a positive ROI after a relatively short time.

However, there are additional factors that you must research for your personal situation that could affect the usefulness and ROI of your Tesla Powerwall. It is also important to look at competitors; specifically, the Generac PWRCell seems like a significant competitor.

Take the time to research your location, the amount of sunlight you receive, federal/state incentives, and your pre-existing solar panels, or if you intend to install solar panels. Additionally, do some soul-searching and find out how long you may be in a certain location.

Will you or your spouse’s job take you elsewhere? Do you have other important maintenance to perform on your home first? How long will you want to live in your home? Unfortunately, I can’t do that research for you, but it plays a critical role in analyzing your potential investment in the Tesla Powerwall.

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Greg

Hi, I'm Greg. My daily driver is a Tesla Model 3 Performance. I've learned a ton about Teslas from hands-on experience and this is the site where I share everything I've learned.

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