Is this the right time to go off the grid?

off gridThe world is buzzing about the latest innovation by Elon Musk, founder of the Tesla battery-powered cars. Soon you’ll be able to hang a 220-pound battery on the wall of your garage, hook it up to solar panels, and cut the electrical wires to your house. The solar panels will give you electricity and hot water during the day while the sun is out, and the batteries will store excess electricity to power your home at night.

According to the company, in the first week after the announcement, 38,000 homeowners asked for more information about the home batteries. Musk says the technology will “fundamentally change the way the world uses energy.”

But will it really? Pulling thousands of homeowners off the grid would benefit Tesla, because the more batteries the company sells, the more scale the company will achieve at the factory level and, therefore, the less each future battery will cost—in Tesla cars as well as in the homes. But for you and me, there’s a catch: the full installation of solar panels plus batteries would cost roughly $98,000. And that assumes that you live in a sunny region such as Southern California.

Moreover, the battery-plus-solar-panel arrangement is actually less efficient than having solar panels hooked up to our electrical grid. An analysis by Bloomberg New Energy Finance, which made the $98,000 cost estimate, points out that our power grid is actually much more efficient, collectively and individually, than a battery could ever be. If you stay on the grid, the excess electricity your panels produce during the day is sold back to other consumers at retail prices, and then you simply buy back some of that electricity at night. Why store excess power when it can be sold directly back into the grid?

Bloomberg analysts think that the most viable market for Tesla’s Powerpack batteries will be businesses—which, in some states, have to pay extra charges for electricity during peak hours—and utilities, which can use the technology to make the grid still more efficient. That means that down the road, as the Powerpacks become less expensive, the power grid will also be becoming more efficient—for all of us. We’ll be changing the way the world uses energy, but perhaps not the way Musk envisions.



About Objectively Speaking

Tom Batterman, founder of Vigil Trust & Financial Advocacy and Financial Fiduciaries, LLC is in the business of representing the best financial interests of his clients. Having provided objective, fee-only financial management services for over two decades, he specializes in managing the investment and related financial affairs of individuals and mutual insurance companies who do not have the time, interest or expertise to manage such matters on their own. As an objective, unbiased professional who takes on a fiduciary responsibility to his clients, he guides clients to the financial decisions they would make themselves if they had years of training and experience and the time and expertise to fully research and understand all of their options. Founded in 2010 as an outgrowth of Vigil Trust & Financial Advocacy, Financial Fiduciaries, LLC is a financial management solution for individuals and mutual insurance companies who recognize they do not have the time, interest or expertise to properly attend to their financial matters on their own. While there are many financial “advisors”, most of them have investment products to sell and the “advice” they provide is geared toward getting their clients to engage in a purchase. As one of the rare subset of advisors known as “fiduciary advisors”, Financial Fiduciaries does not sell any investment product so its guidance is not compromised by conflicts of interest which plague ordinary advisors. Prior to his employment in the financial industry in financial advocacy and trust positions, he worked at a private law practice in the Wausau area in the areas of estate planning, tax, retirement planning, corporate organizations and real estate. He is a graduate of the University of Wisconsin-Madison and the UW-Madison Law School and has during his career held Series 7, 24 and 65 securities licenses. A longtime resident of the Wausau, Wisconsin Area, Tom is active in the community. He enjoys golf, curling, skiing, fishing, traveling and spending time with his family.
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