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Sunday, August 21, 2022

Batteries Make Everything Great About Solar Even Better

Solar is great. Solar plus batteries is even better. 

When you generate your own electricity with solar, you have a level of energy independence. You have some insulation from electricity price fluctuations from your utility. When you add batteries to the mix, things get even better. 

Batteries allow you to time-shift your solar use and they allow your solar system to continue to operate when the grid is out. That's right, most solar PV systems shut down when the grid is down. But if you have batteries, you can continue to produce your own power and keep the lights on. 

In addition to these benefits. Batteries buffer grid demand and fill in the solar production gaps that passing clouds can cause... To illustrate this, I'll show you the energy use of our home on a hot August day. You can see the energy perspective from our home and how solar plus batteries radically changes how this appears to the grid.

Home Energy Use on a Hot August Day

The above image shows our home electricity use. You can see that our electric cars start charging at midnight and both were fully charged by 3AM. The spikes that happen throughout the day are for the air conditioner. As you can see, as the AC cycles on and off, our electricity demand cycles up and down accordingly. 

Now let's look at the solar production for this day. 

Solar production on a hot, cloudy summer day

This particular day was bright and cloudy. The passing clouds caused spikes and dips in solar production.

Looking at the two images above, you can see that we have spikey production caused by clouds and spikey demand caused by an AC unit turning off and on. How did these two interact and what was the resulting grid demand? See below: 

Day's Grid Usage

You can see that at 6AM we stopped using the grid. In the afternoon, we exported some solar production. We didn't start using the grid again until late in the evening at 10PM. This is a big deal. During the day, electricity prices are at their highest and we aren't using the grid at all during this time. 

How can the grid use be negative during the day? How were all of these spikes in both production and supply resolved? Batteries. 

Battery Usage (~charging AM, discharging PM)

Batteries supplied energy before the sun came up; they were the buffer that supplied energy when the clouds passed. Batteries filled in the gaps when the AC kicked on and we needed more than the solar was currently providing. After the sun went down at 8PM, batteries exclusively powered our home until 10PM. 

Looking at the image above, you can see at 6AM the batteries started discharging (above the line). By 7:30AM the sun was producing more than our home needed and the batteries started charging (below the line). By 1PM the batteries were full. From here the batteries alternated between charging and discharging always making sure that the grid didn't need to be touched with anything other than surplus solar production. 

By 5PM the solar production was not enough to power our home. The batteries started discharging, working cooperatively with solar, and taking on more and more of the home load as the sun was setting and solar production was fading for the day.

At 10PM the price to use the grid is back to its cheapest rate, so the battery shuts off and our home went back on the grid.

For us, our 12 kW solar array is not enough for us to be 100% self-powered, but (with batteries) it is enough to ensure that we're off-grid when electricity prices are the highest. We're on a time-of-use fee schedule. From 10PM till 6AM is off-peak time. This is when rates are the cheapest. This is when the grid has surplus capacity. This is when wind energy production is generally at its highest. This is when the dams have to keep some minimal amount of water flowing downstream for water quality, even if the power is not needed. 

Shifting our grid demand to 100% off-peak means that the existing infrastructure is better utilized. And it means that we don't have to pay the higher prices for electricity at mid-peak or peak times.

So if you have solar or you are considering solar, I suggest adding batteries to the plan. 


Disclosure: I am long Tesla

Sunday, August 7, 2022

Tesla's Biggest Advantage

In many ways, Tesla is unlike other car companies. It's not just that they aren't saddled with a legacy combustion business; there are EV start-ups like Lucid and Rivian that are similar in this respect. So what is it that makes Tesla different? 

We've previously written about some of these differences here (Tesla's moats) and here (Tesla is far more than a car company.) These moats certainly are important; however, this entry is not going to repeat those. Rather, this entry is about an additional advantage, one that isn't structural, and perhaps it's their biggest advantage.

A Matryoshka of Tesla Superchargers

Tesla was founded in 2003 (almost 20 years ago). Prototypes of their first car (Tesla Roadster) were officially revealed on July 19, 2006, during an invitation-only event at the Santa Monica Airport.

Just getting to this Roadster prototype phase in 2006, the company had already learned several lessons the hard way. The plan was: use a Lotus Elise body, an AC Propulsions motor, and commodity 18650 battery cells assembled into a battery pack that they'd design. The plan was simple, the execution not-so-much. 

Unknown Unknows

While creating Roadster, they ran into problems. Problems that they didn't even know existed until they tried to make something. The battery pack didn't fit into the existing Elise design. The motors controllers from ACP were hand-tuned analog devices; fine for a prototype, but not consistent nor scalable. Another unforeseen problem, there were no existing transmissions that could handle the torque that these powerful motors delivered. 

These problems were all eventually (mostly) solved and the Tesla Roadster came to the market in 2008. There was nothing like the Tesla Roadster out there. It was quick, sporty zero-emissions fun, but it was far from perfect. There were issues with hub flange bolts, 12V low-voltage auxiliary cables, and other things, but owners didn't care; they loved these cars. They were early adopters and they were willing to work through these issues. 

Tip of the Spear :: The Earliest Early Adopters 

This tolerance for quirks and imperfections is a part of being an early adopter. In fact, I'd argue that it's more than just tolerance. For early adopters, understanding these quirks and how to sidestep them to make a product do amazing things despite the quirks is part of the appeal. The earliest of the early adopters (sometimes called innovators) have a sense of wabi-sabi (侘寂), loving something because of its imperfections; not in spite of them. They are in a club that not just anyone can join, paving the way into a new future. 

Because there was nothing else like the Tesla Roadster, this little niche flocked to Tesla. Tesla's initial customers loved the products and the company and their imperfections.

The Benefit of Time and Iteration 

By building a product, the unknown problems became known. Known problems can be fixed. This is what Tesla did. The innovation-flywheel turned a little faster with each revolution. These were the first steps to scalable, affordable, vehicle production.  

When you are trying to solve a big problem (such as how to make a fast, affordable, long-range EV) you run into a lot of smaller problems along the way. The problems often have layers and you must keep "peeling the onion" to solve them. It's a recursive nest of problems until you finally solve a fundamental issue, solving this allows you to pop-the-stack; reversing back up the layers, unwinding the problems of each layer with solutions from the layer below.

Innovation Flywheel

The faster that you can move around this loop, the faster your products improve. Tesla does not restrain themselves to 'model years' because this slows down their innovation time. Instead, the vehicles have detailed computer models that let employees test things out in virtual space first. If the computer models show that this would be a better product (better range, performance, cost, build time...) then it is prototyped and tested. A small change could go from idea to rolling out the door in new cars later the same day

As changes are made, the software in the car is updated to recognize this change and self-test this new functionality as each car rolls off the line. Each car is its own unit test system. This helps ensure quality and it allows the cars to self-diagnose issues when service is scheduled. This built-in self-test provides a safety net for innovation. If a change introduces an unexpected second-order effect, one of the thousands of self-tests can catch it before the vehicle goes out the door. 

Now Versus Then

Tesla has had the advantage of time. They've had more than a decade of runaway to make mistakes. The 2012 Model S won Car of the Year when it came out. If a startup were to release a car like that today, it would be panned as slow, short-ranged, inadequately thermally managed..., compared to the Model S of today. 

Tesla's biggest advantage is that they didn't have to compete with anyone else that was a pure-play EV manufacturer for the first decade and a half of their existence. Or said another way: Tesla's biggest advantage is that during their stumbling, skinned knees, learning, ramp-up mode, they didn't have to compete with, well, Tesla. 

Tesla's biggest advantage is that they didn't have to compete with Tesla. 

New Start-Ups Have A Bigger Challenge

Today's start-ups don't have a decade-plus of runway to try things, make mistakes, and learn lessons the hard way with sympathetic, enthusiastic early adopter customers. New EV companies have to launch a product that already has a decade of learnings in its initial release. It has to compete with EVs from the legacy automakers as well as Tesla. It is not impossible, it's just much harder. For example, Rivian's truck (RT1) is coming out and going head-to-head with the Ford F150 Lightning in many ways. Looking at the electric truck market, some buyers will be more comfortable buying one from Ford since they know where they can get it serviced and they know* Ford will still be in business five years from now. The road to profit and scale is not impossible for Rivian, but it will be a bumpy ride.

Tesla's Model S was introduced to a very different world than Rivian's truck. When the Tesla Model S came out, it was in a category of one. Model S didn't have to compete head-to-head with the likes of an electric Audi A7.

When the Tesla Model S came out, it was in a category of one. 

2012 Model S compared to 2022 Model S

What is the result of this innovation-flywheel running for a decade? As stated above, if a vehicle similar to the 2012 Model S were released today, it would not receive a warm welcome. To illustrate this point, let's compare the 2012 Model S to the 2022 Model S. 

2012 Tesla Model S

2022 Tesla Model S

Model S 2012
85 RWD
2022 Long Range
Dual Motor
Price (Long Range) $115,050 $99,990*
Price (inflation adj.) $144,069 $99,990
Range (miles) 265 375
0-60 4.3 sec 3.1 sec
Autopilot/FSD None - no cameras
(AP was intro-ed
in 2014)
AP standard,
FSD Upgrade
Rate (kW)
(5 miles/minute max)
(11 miles/minute max)
Gaming Chess, Backgammon,
a few 80s arcade
Equivalent to modern
game console, Steam
client support planned

* price as of 5/1/2022

As you can see in the table above, the Model S has improved significantly over the 10 years of its life. The current cost (esp. inflation-adjusted) is significantly less, yet you get a quicker car, faster charging, more range, better ADAS, and better infotainment technology. 

If Tesla (or anyone else) released a car today with the 2012 S price and specs, they would not win Car of the Year or enjoy the warm reception that Tesla had in 2012. This is the first-mover advantage and Tesla was given nearly 20 years to figure it out. 

Tesla's biggest advantage is that they didn't have to compete with Tesla.


Disclosure: I am long Tesla