Today we announced the close of $37.5 million in financing, a follow-on to our earlier announcement from September. This isn’t the point of what we do, but it enables us to fulfill the promise we’ve made to ourselves and to the world to change boating for the better.
This round includes some notable investors:
L37 Ventures, where partners include Randall Ussery, who will now join our board of directors, and Monica Lee, my first hire and director of business development at CityAuction (the internet auction site I founded in 1997)
Duffy Duffield, the founder of Duffy Boats, who has sold more electric boats than anyone else in the world
Jeff Wilke, former CEO of Amazon’s Consumer business unit
Tom Alberg, angel investor and former board member at Amazon
Megan Smith, former CTO of the US, leader of Shift7, dedicated to increasing diversity in tech
Several Pure Watercraft employees
You see a pattern – investment by people who know us and what we’re doing very well. Together, we’re making boating better – better for the boater, better for the boat owner, and better for everyone else who enjoys our precious outdoors.
Thanks to those who helped us get here (including current and former employees), and those who will take us to the next level.
Today, we announced funding of $23.4 million (including some conversion of convertible debt raised earlier). When completed, this funding round will enable us to build out our team and production capacity to meet the needs of our customers.
We’ve spent the last 9 years developing the Pure Outboard – the highest performance electric marine propulsion system on the market (in terms of propulsion for its weight). While there are many different kinds of boats, the way to bring all of them into a new era that’s more enjoyable and accessible to more people than ever before is to develop groundbreaking technology from the ground up, and to find ways to power the boats people want.
To that end, we’ve recently announced complete boat packages – a pontoon boat, a bass fishing boat, and a rigid inflatable boat. These offerings make it easy for someone to choose a complete system, with the confidence of knowing that everything fits together well, and serves the purpose they intend. Pontoon boats and fishing boats are now the top categories of boat sold in the US, and rigid inflatables are the boats most often used as tenders on yachts.
To get to where we are, and where we’re going, we rely on our customers and others as part of our team. Your pre-orders, referrals, and ideas power us forward. The most powerful messages about our company, its mission, and our products come from you – at the boat ramp or dock, on Facebook or Twitter, or on Zoom calls with your friends.
What attracts most people to Pure Watercraft is the promise of a thrilling yet quiet ride in a high-performance electric boat. They want to catch more fish, have more peaceful conversations, and hear the sounds of nature. They want to tinker with boats less, and enjoy experiences more.
The environmental impact matters, too. It matters to our employees, who dedicate their professional lives to making boating more enjoyable, accessible, and environmentally friendly than ever before. And it matters to our customers, who care about taking good care of the water and the outdoors they enjoy so much.
One of those customers is Marin Rowing Association (MRA) in California. In 2014, they installed solar panels to make their boathouse carbon-neutral. They even sized their solar array to account for charging the outboard motors on their coaching launches, even though at the time, there were no electric motors capable of powering them. Enter Pure Watercraft.
MRA is purchasing 8 Pure Outboards to replace their 25 HP gas outboards, which average about 4 years old. (Normally, they’re replaced every 5 years, as they reach the end of their useful life.) Marin’s coaches understand that precise communication is key to success. For the first time, they will be able to help the rowers improve without yelling over engine noise, and listen to rowers speaking at a normal volume. They’ll also benefit from more accurate speed control, reduced maintenance, and lower cost of ownership. (The Pure Outboards pay for themselves in 2 years, and over their lifetime, they cost less than half as much as gas outboards.)
As part of their process, Marin is applying for grants (such as the Carl Moyer Program), and quantifying the environmental impact of their conversion. The bottom line is that their 8 coaching launches, with small gas-powered outboard motors, create about the same non-CO2 pollution as 1,000 passenger cars. Think about that – each of these coaching launches that use just 2 gallons of gas per day pollutes as much as 125 cars. Imagine the more mainstream boats, like bass boats, that can use 20-30 gallons of gas in a day, polluting 10-15X as much.
Switching to the Pure Outboard, the direct pollution is eliminated. Of course, there is some pollution driven by generating the electricity to charge the batteries; however, the Pure Outboard is so efficient that on an MRA launch, it uses about 2/3 the energy per day that an electric car uses. Therefore, for MRA, switching a single gas outboard to the Pure Outboard eliminates 125X as much cancer-causing pollution as switching from a typical gas powered car to an electric car.
The beautiful thing is that the boater gets a vastly superior experience, at a lower cost, with a positive impact on the environment (including noise reduction far in excess of that required by state law) as a bonus.
The first step was to analyze the pollution from modern, four-stroke outboard motors of the type that MRA uses.
Carbon dioxide has garnered most of the recent attention, because of global warming, but more immediate harm is caused by other pollutants: carbon monoxide (CO), oxides of nitrogen (NOx), hydrocarbons (HC), and particulates (P10 and P2.5). Catalytic converters are very good at reducing CO, NOx, and HC, but no outboard motor has a catalytic converter because they were tried (once) and failed. Therefore, non-CO2 pollution is their Achilles’ heel.
To calculate the emissions from outboards, we looked at the EPA pollution limits (which began in California with the CARB 3-Star level regulation), because the manufacturers design to just meet these limits. There was a push to eliminate two-stroke engines from outboards, but instead, CARB implemented emission standards that would apply to all engine types, and some manufacturers, like Evinrude, improved their two-stroke outboards just enough to meet the new limits. (Note: they’re much worse on particulate emissions – 30X as bad.)
Federal regulations on emissions from outboard motors depend on the power level. A 25 HP (18.64 kW) gas outboard must not emit more than 2.1 + 0.09 * (151 + 557/P0.9) g/kWh of HC + NOx, and no more than 500 – 5.0 * P g/kWh of CO, where P is the power level (in kW) of the outboard. That results in a limit of 19.29 g/kWh of HC + NOx, and 406.8 g/kWh of CO. Because there are 34 kWh of energy per gallon of gasoline, this equates to 13.831 kg/gallon of CO and 655 g/gallon of HC + NOx.
To compare outboard motors to cars, we use fuel consumption as the common metric.
The EPA limits the emissions of cars and places each one in a “bin”, the highest level (most polluting) of which is Bin 160. Under this least-stringent set of standards, a car can emit 4.2 g/mile of CO, and 160 mg/mile of NOx + NMOG (approximately the same as “HC” as referenced in the marine emissions standards). To convert miles to gallons, we use the new vehicle average miles-per-gallon in the US of 24.9. Therefore, a new car can emit 104.6 g/gallon of CO, and 3.98 g/gallon of NOx + NMOG.
Now let’s compare these numbers. Per gallon of gasoline consumed, a car can emit 104.6 grams of CO, and an outboard motor can emit 13.831 kg (132 times as much). Again, per gallon of gasoline, a car can emit 3.98 grams of NOx + NMOG and an outboard motor can emit 655 grams of HC + NOx (165 times as much).
For MRA, that means that its weekly fuel usage of 70 gallons of gasoline drives the same amount of (CO + HC + NOx) pollution as 9240 gallons burned in cars, which is about 1000X the weekly fuel usage of a typical car. Therefore, their impact will be to reduce (CO + HC + NOx) pollution by about as much as you would if you replaced 1,000 cars with electric cars (which would cost the federal government up to $7.5 million in subsidies).
With this big an impact for one rowing club, what about the bigger picture? There are about 1,000 rowing clubs in the US, with a total of about 4,000 launches. If the average launch is used about the same amount as MRA’s, then replacing their gas outboards with the Pure Outboard would have the same impact as getting 500,000 cars switched to electric (requiring subsidies of up to $3.75 billion).
How can the impact be this significant? There are two major reasons:
Gas powered cars are about 16-25% efficient, while gas outboards are only about 8%. There is much more room for improvement.
Not requiring catalytic converters on outboards leaves us at the pollution mitigation stage where cars were in 1975.
We still need to take into account the compensating pollution driven by the power plant generating the electricity to charge the batteries. To do this accurately across the board would require an impractical level of complexity, involving time-of-day (to know how much power is baseline and how much is peak), the specific power plants involved, the grid efficiency, and the round-trip charge efficiency of the battery pack. The answer would vary in some cases by orders of magnitude. But we can simplify this problem by comparing to electric cars, which have the same conditions to deal with.
By experience, we’ve found that a coaching launch with the Pure Outboard uses approximately 4.8 kWh for a hard rowing practice that would normally require a gallon of gasoline in a gas outboard. Therefore, we can translate the MRA gasoline usage in gallons by 4.8 kWh/gallon to get the electricity usage. Electric cars use between 248 and 455 Wh/mile, and the average car drives 11,500 miles/year, so an electric car uses between 2,852 and 5,233 kWh/year, with the average (weighted by sales volume) about 290 Wh/mile, or 3,335 kWh/year.
MRA uses 70 gallons of gas per week, with 8 launches, so the average launch uses 455 gallons/year of fuel. The replacement Pure Outboard will use 2,155 kWh/year, which is about 2/3 of the power used by a typical electric car. The club as a whole will use 17,472 kWh/year, equivalent to just over 5 electric cars.
One of the most common questions that comes up when discussing Pure Watercraft is: why did we build so many of our components and capabilities in-house, when there are engineering consulting firms, electric motor manufacturers, and huge battery companies already serving the electric car business?
The short answer is that through the process of testing and iterating, we learned that owning the capabilities ourselves was the only way we could make something truly great – the only thing worth doing.
Product Vision As we took a closer look, we saw that people weren’t buying higher-powered electric outboards because they were too heavy, expensive, and unreliable. They cost so much that even when you took the much lower operating costs into account, they’d never come close to paying for themselves. Repair shops said they were even less reliable than gas outboards. Boaters said they were loud; the motor eliminated emissions but noise pollution remained. We needed to achieve simultaneous competing objectives: high performance, low cost, near silence, and rock-solid reliability. Tesla was an inspiration, having broken the previous inverse relationship between cost and performance, so we learned from them and set out to create a better way to experience the water.
Engineering In the beginning, we partnered with an outside development firm to engineer our first electric runabout.
It emulated the fast-prototyping method used successfully to launch Internet companies, and gave us speed, which we believed was critical to validating our product idea. In the end, what we got out of it was a pricey prototype. On the positive side, through this partnership we secured a founding engineer with the insight he had gleaned from being embedded with the outside development firm. But we also realized the limitations of working with outside engineering. Much of the learning comes from the details of development and was captured externally. There also was a misalignment of incentives; because we had skin in the game, we were focused on finding paths that would lead to viable products, while engineering firms are in the business of serving the stated needs of the client, regardless of the viability of the product. After the first prototype, we concluded that we needed to build the core capabilities in-house, even if it took more time. The electric vehicle field was so new that available people with outstanding skills and experience were rare. We’d have to start with what we learned from the runabout project, and hire smart people who could learn the field. It was starting to look like a long road, but the only way to develop groundbreaking products.
The Battery Pack We started with the battery pack because it is 50% of the weight, cost, and complexity of an electric vehicle, and a critical factor in performance. At first, we reached out to battery companies that manufacture and sell cells, which we would use to build into battery packs – similar to the way Tesla does.
But the big manufacturers didn’t return emails from a marine propulsion start-up. We next looked at companies that built and sold battery packs made using cells from the big manufacturers, but they cost 2-4X as much as the cells themselves as a result of the battery pack IP. If we took their prices as an input cost, then our product was going to cost the customer far more than if we developed the battery pack IP ourselves. We quickly learned that we couldn’t build a competitively priced product if we outsourced the component with the most significant IP.
Besides the economics, we were concerned with performance. The Tesla battery pack was the gold standard, and none of the packs we saw held a candle to theirs in terms of energy density and capacity retention. A boat is more weight-sensitive than a car, so we had to be even more focused than Tesla on getting the most energy per pound.
But how would we build a safe pack, with high energy density, at a cost that was commercially viable, if the cell manufacturers wouldn’t return our emails? How could we build a battery pack when we had never done so? How could it outperform the packs built by big companies? We had to secure access to cells, and learning. Leading-edge battery pack technology wasn’t published. There were tear-downs of electric car battery packs and how-to’s written by hobbyists, but our goals were different than theirs. They were trying to convert an old car into an electric proof-of-concept, and we were building a commercially viable, high density battery pack that would last years.
So we found a partner to co-develop a battery pack with us. We could learn from them, and get a working battery pack quickly. Together, we chose a standard cell type, the 18650 used in power tools and Tesla cars. We thought we could outsource the battery management system (BMS), because every battery pack has similar needs. So we used the same BMS we used in the runabout. However, we later found that the BMS didn’t work on cold days – we had to use a hair dryer to warm it up before we could use it. It weighed too much, it cost too much ($1500, when the chips on it cost < $100) , and we couldn’t improve it because it was someone else’s technology.
We then took a new approach. We tried to use sub-modules from our partner, and take on a bigger share of the development ourselves, but it wasn’t enough. The result was still high cost and heavy. We had to scrap that and start over.
Finally, we got the top battery cell provider to return our emails after 5 years of pursuing them, and they agreed to supply us cells. We would be spending less than half as much on cells, for the best cells available. Our internal engineering build-up was paying off, as we now had the expertise to develop a radical new design. By developing our own BMS, we could use a far smaller set of circuit boards, built to fit our pack, instead of the mess of 97 circuit boards that the off-the-shelf BMS required. This was the fourth battery pack we developed, and finally, we had one that really excelled. It beat our gold standard “the Tesla Model 3 pack“ in energy density. The flywheel of component and team development was finally whirring, after 7 years.
The Outboard Electric motors have been around for about 150 years: you would think there is a wide variety of motors available at reasonable prices. However most on the market are used in fixed applications, where neither weight nor size is very important, and they can use A/C power from the grid. Most of those used in mobile applications have large diameters and are heavy. Only the motors that have very high volumes of existing products using them are produced at low cost – for example, motors for quadcopter drones. If it’s more powerful than a drone, but less powerful than an electric car, then there are only low-volume, high-cost motors out there.
We looked into building our own motor, as Tesla had done. But where to look? We reached out to one of the gurus of motor design to point us in the right direction. When we explained our objective, he knew what we needed to do, and shockingly, he said he’d do it himself. We could now build a motor that, compared to those we had found, weighed about half as much, had about 1/3 smaller diameter, and cost 2/3 less per unit. We did it. Our process was unconventional but we created a motor with weight and performance only found in scientific motors, for a fraction of the cost.
In our effort to build the other components, we were often met with similar issues that we faced with the motor. The propeller became a component of surprising importance. Most electric outboards used generic off-the-shelf propellers, but we worked with a skilled propeller designer who ran computer simulations of the performance of design and materials choices. The electric motor’s ability to deliver full torque across a wide range of RPMs enabled a propeller with 30% more efficiency than the off-the-shelf ones.
In the end, our product achieved 3X the propulsion per pound of best electric outboards, and more than 2X the propulsion per dollar.
This could not have been achieved by buying our components off the shelf, as most others did. In designing our own components, we integrated components that we had previously imagined as separate, thus reducing the number we needed. Our relationships with manufacturing partners grew stronger as we sourced more and more components from them.
It would be neat to say that that’s why we built our own components, but we really stumbled into it, through the fog of uncertainty, feeling our way, learning at every stage.
The answer begins with my move to Seattle. I came here for the first time in 1984, to row in the Opening Day regatta, so I got to know the city from the water first. Seattle lies between Lake Washington and Puget Sound, and is bisected by the ship canal, through which every year pass thousands of boats, and hundreds of thousands of salmon.
Olympic rowers (like those depicted in Boys in the Boat) are public figures, and the biggest annual event is Seafair, a hydroplane race and associated revelry on the lake.
Of course, I wanted to live on the water, and you can’t live on the water without a boat. A Sea-Ray was a popular boat on Lake Washington, and when a deal came up on a 21-footer that a friend of a friend was selling, I snapped it up. It was just the right size for entertaining, but a real pain to use and maintain (as other owners will attest). While I had experience in a few different boats, this was the one that drove me to look for a better way.
So when I started Pure Watercraft in 2011, I set dreams of a quiet fishing or coaching boat aside, and set about to make a better runabout, starting with a used 21-foot Cobalt I bought on Craigslist. A Cobalt is a high-end, well-built boat that dominates lakes like Lake Washington and Lake Tahoe, and our job was to make it an even better experience – quiet, easier to use, and with a more powerful hole shot. The first step was to pull out the monstrous, 800 lb V8 engine, and then figure out how to make the boat electric. Coming from the software/internet industry, I was focused primarily on speed, so we worked with some outside contractors to get something prototyped as fast as possible. To make a long story short, we ended up with a boat that performed like a champ (48 MPH top speed), but had some downsides. Along the way, we learned a ton about batteries, motors, motor controllers, and all the other tech that has to go into an electric boat.
At that point, we weighed our options. On one hand we could try to make a commercial version of the boat we prototyped. To delight customers with its carrying capacity and range, it would have required about 50% more battery, and 1,000 lbs less weight. The cooling system pumps and gear sets would have to be made quieter (because they were now the loudest things on the boat), and the whole system would have to be re-engineered to make it simpler and more reliable. The cost of the components would have driven us to a price point of at least $200,000, and hitting our performance targets would have required innovating on the hull as well as the powertrain. You could get a 21-foot Cobalt for $85,000 that would go all day, or a $200,000+ electric boat that provided a much quieter ride, with serious range limitations (full throttle for maybe 40 minutes). On top of that, the runabout market was smaller than we had originally thought (there just aren’t that many waterfront homeowners with $85,000+ to spend on a nice boat), and getting even smaller after the 2008 Great Recession.
On the other hand, we could consider the product I was always hoping to build eventually – an outboard to power smaller boats. While it was the kind of boating that meant the most to me, it always seemed that such a low-priced product might not be the best market. But as it turns out, what this market lacks in price, it makes up for in volume. The childhood experiences that led me to boating in the first place were ones I shared with millions of others. 20 million people fish for bass in the US every year, and there are 2.5 million boats in the US alone powered by 10-50 HP outboards, and more than 5X as many worldwide. While the outboards themselves are well-engineered (given their constraints), the rest of the systems are a mess. I’m sure the engineers work hard to get every ounce of weight out, but then the customer adds a lead-acid starter battery. The gas tanks are often red cans that you have to pick up to tell if they’re empty.
It’s just impossible to engineer an elegant, long-life, small gas outboard system. While I have vivid memories of our struggles with small outboards, we never owned one, so I didn’t know that they were so short-lived. Boaters who use them a few times a week told us they had to replace them every 5 years, even in freshwater. The warranties are short – typically 3 years for recreational use, or 1 year for commercial.
The other factor for us to consider is that we’re starting from zero. How do you ship and support a big runabout that weighs thousands of pounds? At least with a small outboard you have the possibility of shipping the customer a replacement and getting the original back. And it allows us to concentrate our efforts on the narrow task of propulsion.
So it was decided; we would build an outboard in the 10 to 50 HP range.
“What possessed you?” asked University of Virginia rowing coach Kevin Sauer in 2016, toward the end of a long conversation about the details of the outboard motor we were developing.
There are reasons we built the outboard motor we did, but the more important question is why we’re on this mission in the first place. What drives us is the opportunity to change boating for the better, to get more people out on the water, appreciating it like never before.
I grew up fishing for bass and bluegill at Lower Otay Lake, in San Diego County, California, about four miles from the Mexican border. In the hot, dry climate, the lake was an oasis, where my dad and I would sometimes fish from shore, and sometimes take a rented rowboat or outboard boat and catch bluegill to take home. Later, a friend and I would catch crawdads at the local farm pond and take them with us, to sell as bait. The San Diego lakes had recently become renowned for record bass, but we never caught much. My most vivid memories of that time are of walking around the lake, looking into the water for fish, seeing dragonflies on cattails, and struggling with a rented outboard that wouldn’t start.
Fast forward to high school, where I discovered the sport of rowing. In a quaint New England town, the river was a window onto the changing colors of the leaves, the snow falling, rising and falling tides, and ice breaking on the first row of the spring. We felt the river through all our senses, escaping the classroom to strive for perfect harmony and rhythm, sometimes distracted by the rumble of the outboard on the coach’s launch.
My love of the water and boats is far from unique. Boating has been part of human history for at least 800,000 years, since before homo sapiens. About half the US population goes out in a boat every year. It’s part of our heritage, but it has been suffering in recent years. While participation is rising, boat ownership has been declining, and the age of the average boat buyer keeps going up. People want to go out on the water, but they don’t want to own today’s boats.
This is the problem we’re trying to solve. We want to connect more people to the water they love, by making it a better experience for those who own and operate boats, and for those who share the water with them. None of today’s technologies, even electric propulsion, makes boats quiet, powerful, environmentally friendly, and affordable; therefore, new technologies must be developed.
So this is our mission: to build the technology that enables a new era in boating that is more enjoyable, accessible, and environmentally friendly than ever before.
The Wye Island Challenge is an electric boat race that has run annually since 2001, which makes it a pretty unique venue to test electric boats. We took the Pure Outboard there to see how it stacked up in real-world conditions.
Entries this year included a wide variety of hulls and power trains. There was a hydrofoiling boat built from a canoe hull, with two pedal-controlled rear foils and a front foil with automatic leveling. Last year’s winner and record holder John Todd came with the boat that won last year, a very efficient single hull that planes easily. Other entries included a rare Boston Whaler catamaran, a converted rowing shell, the ‘Erged On II’ which had won years ago (now with a 14 year old pilot), and a bright yellow single hull boat. In all, there were more than a dozen entries. The most common power train was a Torqeedo that had won on various hulls from 2013-2015, and some competitors had ‘overvolted’ it by adding more batteries in series to get a little more power. John Todd’s record holding boat used a custom built system with a larger motor, with air cooling.
We mounted the Pure Outboard on a new Still Water Design hull, and its first outing was the test run on the Wye the day before the race. It’s a tri-hull craft with a center pontoon slightly higher than the two side pontoons. Instead of the normal bench seat, we had a simple chair set up for a single driver.
Off we went at the starting horn, with a turn around the first day marker, and the Pure Watercraft entry got ahead of the pack, setting the pace at 21 MPH. John Todd caught up, though, and held steady as the course crossed the channel, with the occasional huge wake, which John’s boat traversed without hesitation. Approaching the lighthouse that marks the entry to the Wye River and the beginning of Wye Island, the other boat fell back, and we discovered later that it was because the motor had overheated and failed (blew up might be a more apt description). The race got lonely, as the Pure system kept ahead and reached the required rest stop at the halfway point, and spent the 10 minute stop alone. After starting the second half, approaching Wye Island again, a couple of other competitors were spotted approaching their rest stop.
The return trip was more ‘adventurous’. The Pure boat ran aground on mud on the side of Wye Island, and worked itself free after a minute or two, and some serious doubts about whether a rock or oyster bed might have done some damage, but the motor had emerged in fine shape. Entering the channel for the final crossing back to the starting line, the most treacherous section of the race, there was a clear shot home, but the gargantuan yachts that ply those waters are not accustomed to slowing down for small boats. When the Pure boat was less than Â¼ mile from the finish line, three yachts silently conspired to send wakes from all directions at once, and the boat got inundated, salt water over everything. After blowing water out of the prototype connectors (the permanent ones are waterproof to an IP67 rating), the system started back up again and finished at the same speed at which it started: 21 MPH.
Unfortunately, no one was there when the boat finished. The ‘officials’ didn’t anticipate anyone finishing that early, so they were nowhere to be seen. We took our own finish time, which was 1 hour 10 minutes to the original start line. The previous record was 1 hour 35 minutes, and the previous multi-hull record was 2 hours 13 minutes. The margin over the old record was about 1 minute per mile, so instead of 4 minute miles in the previous fastest boat, the Pure boat did sub 3 minute miles.
While we’ve been working hard at this for the past 5 years, now is the public launch of Pure Watercraft and the Pure Outboard, with pre-sales of the Pure Outboard open now.
Our team of experienced, dedicated engineers has been working on revolutionizing boat propulsion from the ground up. The result is an outboard motor vastly different than the ones on the market today, and far superior for many applications than gas-powered alternatives. Pure Outboard is the first step as we strive to bring boating to a new level of performance, convenience, and enjoyment.
With Tesla Energyâ€™s announcement about using lithium-ion battery packs for home (the Powerwall), business (Tesla Business Storage), and utilities (Tesla Utility Storage), many are wondering whether this makes sense for them. Should homeowners buy batteries for their homes? Should utilities? Businesses? Itâ€™s complicated, but worth exploring. Since Pure Watercraft is designing systems with large batteries, and the second life of such batteries (after they retire from a boat) is an important factor in their value, the emergence of this market directly affects our business.
For the Homeowner
For the grid-connected individual homeowner in the United States, it would be very difficult for this to make sense, just for buying power at night and using it during the day, without more incentives than just time-of-day pricing. The benefit would have to come from being insulated from power outages, which for some people is quite valuable. But if you use Powerwalls to buy off-peak power and sell it back at peak times, then you may not have the power you need when the power goes out. So youâ€™d have to plan your daily charge/discharge schedule to maintain some emergency power, which would limit your power savings.
A reasonable plan for a PG&E power customer in California would require 5 PowerWalls. It would provide at least a half of a typical dayâ€™s power usage for backup power, and $4,075 in power savings over 10 years, and it would cost about $25,000 installed. If you value the backup power at about $10,000 (the cost of a decent backup generator, installed), then you get $14,075 in value (realized over 10 years) for about $25,000. And PG&E provides among the highest premiums for peak power. If you decided to use them exclusively for emergencies, then youâ€™d still need 5, because otherwise, they couldnâ€™t handle the power output youâ€™d need.
For a home with solar power, there is additional value, but only for backup purposes. Solar is generated during peak hours, so itâ€™s best to sell it to the grid when youâ€™re generating more than youâ€™re using, instead of storing it for later, when you might be able to buy off-peak power. The only additional benefit for solar-equipped homeowners is that during a power outage, they may be able to generate enough solar power during the day to replenish the Powerwalls and survive off-grid indefinitely.
The best application is for the off-grid homeowner, who is already using banks of lead-acid batteries. This would be a longer-life, more reliable, lower-maintenance system than what he or she is using today.
So, is there another way it can make sense? A comment by Elon Musk at the Tesla Energy press conference gives a hint: â€œAll of the Powerwalls and Power Packs are connected to the Internet,” Musk said. “Weâ€™re able to work with utilities to shift power around.” So perhaps Tesla Energy can capture some fees from the utilities for providing on-demand peak shaving (which would hopefully be shared with Powerwall owners). And of course, utility or government incentives to homeowners could tip the scales (though current California incentives for energy storage are focused exclusively on business customers).
(Calculations behind this argument below at the end of the post…for battery geeks only.)
For the Utilities
Utilities think about power differently than homeowners do. They think about the cost of building a new power plant to handle peak demand. Thatâ€™s why many of them provide time-of-day pricing. So when they look at energy storage, theyâ€™re comparing it to the alternative of building a new power plant that only gets used during peak hours.
A typical natural gas power plant costs $1,000 per kW of capacity to build. Tesla Utility Storage costs $250 per kWh, but each kWh can only deliver 200W of continuous power, so it costs about $1,250 per kW of power. And there are installation and other costs on top of the $250 per kWh, so Iâ€™d assume that the total cost to the utility would be $2,000 or greater per kW of capacity added in this way. So, natural gas plants are cheaper to build.
An advantage of a battery solution is response time. They would be a great way to respond quickly to a spike in demand, and to store momentary excess capacity, since even a natural gas turbine takes a few seconds to power up. And the pulse power offered by batteries is nearly double the continuous power. So a few lithium-ion batteries as a layer on top of slower-responding peaker plants might make sense.
This can make sense for some businesses in areas with that offer significant incentives for energy storage, but without them, it won’t make financial sense, so the justification would have to be the principle of improving the environment for green power.
Businesses currently dread â€œdemand chargesâ€, which are fees that they pay for the peak demand they impose on the grid during a 15-minute period. Demand charges can be 30% of a businessâ€™ power bill. A Tesla Energy Pack can reduce the demand charges, and also enable shifting demand into off-peak rates. PG&E customers can combine these benefits for about $4.50 per â€œsummerâ€ month and $1 per â€œwinterâ€ month per kWh installed (to the extent it reduces peak demand). So, spend $500 to install a kWh of capacity, and save $29.40/year in utility bills. Over 10 years, the PG&E business customer gets $294 in savings for $500 up front (assuming the cost to large businesses is about the same as to utilities).
Some utilities may offer better incentives that could make this a good deal. For example, in California, the state offers (through the utilities) $1.46 per Watt for â€œadvanced energy storageâ€. 1 kWh of storage that provides 200W continuous power would get $292, which is about 58% of the installation cost. Combine that with the energy savings, and the California business gets $586 in value for $500.
Is this just a pricing mistake by the utilities? Should we as a society be storing more energy in batteries? Will it enable renewables?
Solar power typically produces power when it is needed most, but itâ€™s vulnerable to bad days or series of days. Even with good energy storage, a primarily solar energy based grid or micro-grid would require an alternative source of energy during long cloudy days.
Wind power is inconsistent in most places, so energy storage may be a good fit for wind power.
Battery based storage may be a good fit for a mix of renewables. Each of them can be bursty, but combined, they are less so, and if solar is a significant part of the mix, then the average production may fit the average demand, and energy storage could cover the discrepancies.
Second Life for Batteries
Right now, Tesla Energy is using a different battery chemistry for energy storage than for Tesla Motorsâ€™ cars (though they say theyâ€™ll both be made at the Gigafactory). But a real boon to this market would be the availability of large numbers of used electric car batteries. Right now, an EV battery is deemed â€œfinishedâ€ when it reaches 80% of its initial capacity, but itâ€™s still a perfectly usable battery. If Tesla can use the battery packs from its cars, as they are replaced, for energy storage, then you can dramatically lower the capital costs of installing such a system, and the refurbishment would be much less expensive than trying to repurpose the cells within a Tesla battery pack for another use (which would require taking 7000 cells out of a battery pack, un-welding them, and assembling them into something else). The downside to a used Tesla pack is that its energy density (the energy to weight ratio) is about 20% less than a new one, but for home storage, that doesn’t matter. The internal resistance is also higher, but the charge and discharge rates of these energy storage packs are low, so that shouldn’t be a significant problem. Creating a secondary market for used EV battery packs could be the biggest benefit of this innovation. (Californiaâ€™s incentive program would have to evolve, since it currently prohibits the incentives for a project that uses refurbished battery packs.)
The Developing World
If youâ€™ve traveled to the developing world, then youâ€™re familiar with the frequent power outages that plague many such countries. Sometimes itâ€™s caused by a failing grid, sometimes by insufficient capacity at the power plant, sometimes inadequate data for management, but in some places, blackouts are a daily or weekly occurrence. A battery based on-site storage system would be a godsend for homeowners and small businesses in such locations, and they would level out demand for the utilities, possibly lowering the frequency of such outages.
Lithium-ion batteries are improving in price/performance by about 7% per year. At this point, lithium ion battery energy storage will make good sense for the developing world, for select homeowners, and for utilities to layer on top of other peak-shaving approaches. As renewable energy sources increase deployment and battery capabilities improve, the applications in which it makes sense will grow larger and larger.
Detailed Calculations – Homeowner (Warning: for battery geeks only)
A reasonable plan for a homeowner attempting to realize value from both peak/off-peak power differences, and emergency backup power, would be to cycle the batteries every day from 50% up to 80% at night and back down to 50% during the day. That way, there would always be half the battery available for emergency power, and the batteries would never be at a cycle-life limiting state of charge of 90% or greater. The annual value from peak/off-peak arbitrage is 30% of 10 kWh * 0.92 (the round-trip efficiency of the Powerwall) * 0.90 (the assumed round-trip efficiency of the inverter) * $0.18 (PG&Eâ€™s difference between peak and off-peak residential summer rates) * 365 (days per year) * 0.50 (because only half the year has such incentives) = $81.50.
Typical backup power generators provide about 10 kW continuous power. A Powerwall provides 2 kW continuous power, so youâ€™d need 5 of them to provide the same power. A typical homeowner uses about 50 kWh in a day, so if a power outage happened when the battery was at half capacity, youâ€™d still have about a half dayâ€™s usage in the battery. Since the lowest battery level would occur at the end of the day, and power usage is low at night, the homeowner would probably have until the middle of the following day before running out of battery power. A power outage at the beginning of the day would give the homeowner until a day later.
So a homeowner who chooses the 5 Powerwalls illustrated above would realize $81.50 per Powerwall x 5 Powerwalls x 10 years = $4,075.
The installed cost of the 5 Powerwalls would be the cost of the Powerwalls themselves ($3,500 * 5 = $17,500) plus about $7,500 for the inverter and system installation, for a total of about $25,000. (The inverter and system installation costs are unknown, so these are educated guesses.)
Note that trying to survive on backup power from a single Powerwall would be a challenge. With 2 kW, youâ€™d be able to power a toaster and microwave operating at the same time, but just barely (and not with many lights on). It would not be enough to operate a clothes dryer.
If you wanted to use the Powerwalls solely to arbitrage peak vs. off-peak power rates, youâ€™d probably charge to 80% state of charge and discharge to 20% every day, which would give you 2190 battery cycles in 10 years. (Using 80% of the battery or more, for example from 90% state of charge down to 10%, would drive 2920 cycles, which is more than the pack could deliver at that depth of discharge.) The value of that arbitrage would be $0.18 (peak rate – off-peak rate) * 2190 cycles * 10 kWh per cycle * 0.92 (Powerwall round trip efficiency) * 0.9 (inverter round trip efficiency) * 0.5 (half year incentives) = $1,632. Youâ€™d be paying $3,500 plus inverter cost plus installation up front – maybe $5,000 total, to get $1,632 in savings over 10 years, per Powerwall. That would be very difficult to justify without more incentives.
Detailed Calculations – Businesses (Warning: for battery geeks only)
PG&E charges about $15 per kW in demand charges during the 6 months of â€œsummerâ€, and about $5 per kW in demand charges during the 6 months of â€œwinterâ€. (Itâ€™s a little more complicated than that, but thatâ€™s the simple version.) Each kWh of capacity delivers 200W of continuous power (190W after subtracting 5% inverter inefficiency), so you get $2.85 in demand charge savings for every kWh installed. The winter savings is â…“ that, or $0.95 per kWh installed.
PG&E power rates are about $0.162 peak and $0.074 off-peak in summer, and $0.102 peak vs. $0.078 off-peak in winter. Using 92% round-trip efficiency of the battery pack, and 90% round-trip efficiency of the inverter, the winter rate difference isnâ€™t worth much. The summer rate difference can be worth something. If you buy an off-peak kWh for $0.162, you sell it back as 0.828 kWh * $0.074/kWh = $0.061 per kWh. So taking 60% of the batteryâ€™s capacity daily, you get a summer value of $2.85 in demand charge reduction plus $1.10 in rate savings (total $3.95) per kWh, and a winter value of $0.95 in demand charge reduction.
At Pure Watercraft, we spend a lot of time thinking about how to get the most out of batteries for electric boats. Along the way, weâ€™ve learned a lot that can also be applied to smaller batteries used in everyday life. All of us have lithium-ion batteries controlling an increasing share of what we do. They power our cellphones, laptops, tablets, fitness bands, and bluetooth headsets. For some, they power lawn mowers, drones, cars, and boats. Yet most people know very little about how to care for the batteries to make them perform their best. Have you ever wondered why your phone doesnâ€™t last a full day any more? Or had to replace a non-replaceable battery in a cellphone or tablet? Caring properly for lithium-ion batteries can maintain their capacity, and extend their lives by 2-3 times.
Here are the top six ways to make them perform their best:
1. Mostly full is a LOT better than fully full
If you only fill a battery to 86%, you double the number of battery cycles. What does that mean? It means you get double the energy out of the battery over its lifetime if you only fill it to that level. (Note: a â€œcycleâ€ means discharging and charging a battery its full capacity one time, not necessarily in one shot, so if you charge and discharge it by 50% of its capacity twice, that counts as one â€œcycleâ€.) Stopping at 90% is better than 100%, and 80% is better than 90%.
2. Donâ€™t leave them full
Keeping a battery fully charged seems like the right thing to do. Youâ€™re always ready to go. But sitting in a fully charged state is very costly to a batteryâ€™s lifetime. Unintended chemical reactions occur more often in a fully charged battery, reducing its useful life. While itâ€™s not good for the battery to fill it 100% at all, itâ€™s much worse to keep it at 100% for a long period. As an example, if you store a battery 100% charged for one year at at 77 degrees F (25C), youâ€™ll permanently lose about 20% of its capacity, while if itâ€™s stored under the same conditions at only 40% filled, youâ€™ll only lose 4% of its capacity.
Most studies show that 40% is the optimal charge level for long-term battery storage, but youâ€™re pretty safe up to about 80%, and much better off at 90% than at 100%.
3. Donâ€™t empty them all the way
Batteries donâ€™t like to be empty. It reduces their capacity permanently if you discharge them to 0%. Itâ€™s much better to use the battery from 80% down to 30% twice than to discharge it from 100% to 0% once. Itâ€™s a little less harmful to the battery than overcharging, but both are harmful. An additional problem from over-discharged batteries is that the protection circuits that manage the battery for you donâ€™t have the power to operate. To get the most from your battery, keep it near the middle of its charge most of the time.
4. Donâ€™t get them too hot
Batteries are worn out by many uses, or by sitting around for years, but both of these are worse when the battery is hot. Getting a battery very hot will shorten its life, because the bad chemical reactions happen more at high temperatures. And while storing a battery at high temperatures is costly, using (charging or discharging) it at high temperatures is even worse. As an example, if you if you store a battery at a healthy 40% charge for a year at 77 degrees, youâ€™ll permanently lose 4% of its capacity, but if you store the same battery at 104 F (40 C), then youâ€™ll lose 15%.
So, donâ€™t keep your cellphone on a hot dashboard.
5. Donâ€™t get them too cold
Getting cold isnâ€™t as bad for a lithium-ion battery as getting hot, but it reduces the energy you can get out of it. If a battery is cold, it will empty more quickly. So a â€œcycleâ€ is less useful to you at low temperatures. One reason this is less of a concern than hot temperatures is that a battery will heat itself somewhat when discharging or charging, but you still have the problem until it heats up, and you lose capacity during that cold period.
Whatâ€™s the ideal temperature? A good guideline is that batteries like the same temperatures that people do. 70-75 degrees F is a great temperature range.
6. Donâ€™t charge or discharge them too quickly
Most of the guidelines above apply similarly to the different flavors of lithium-ion batteries, but the rate at which you can safely and efficiently charge/discharge your battery depends on which one you use. Some general principles apply, though: the faster you charge or discharge the battery, the more it degrades the batteryâ€™s lifetime, and the heat generated during charge/discharge can make the problem a lot worse if not actively cooled. Most batteries are unhappy if you discharge them at a rate that would take them from full to empty in less than 30 minutes, or if you charge them at a rate that would take them from empty to full in less than 60 minutes, but the slower the charge/discharge, the better. There is a LOT more detail on this topic (specific behavior of different chemistries, nano technology, etc.), but these simple principles always apply. If you need high discharge/charge rates, then choose a chemistry/battery type that can handle them (often called â€œpower optimizedâ€ battery types).
They’re like people
A good way to think of batteries is that theyâ€™re like people. We are happiest in 70-75 degree weather. We like to eat when weâ€™re just a little hungry (not starving), and we live a lot longer if we donâ€™t overeat. And stress shortens our lifetimes. If you treat batteries like you want to be treated yourself, then theyâ€™ll respond by being happy and productive for a long time.
Practically, managing your own battery is not very easy. Most chargers charge until a battery is full, and you have no control over where it stops. And when you disconnect the phone to avoid over-charging it, you start a discharge cycle that also affects your battery life. But in some products (most notably EVs, especially those from Tesla Motors and BMW) you have good control over how your battery is treated. Being familiar with these 6 simple principles will help you get the most out of the batteries that power your life.