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Musk-Backed Solar Subsidies Hurting The Viability His New Solar Batteries

Here’s some irony for you. Solar power subsidies supported by Elon Musk’s own solar panel company are hampering the commercial feasibility of his latest product — home energy storage batteries.

Elon Musk’s new “Powerwall” energy storage battery has mesmerized the media, and news reports are already predicting how the technology could “revolutionize energy consumption.” But policies that pay households and businesses for generating their own solar power make the Powerwall less attractive.

Bloomberg reports that Musk-controlled SolarCity “has decided not to install the 7kWh Powerwall that’s optimized for daily use.” A company spokesman told Bloomberg the battery “doesn’t really make financial sense” due to certain solar panel subsidies.

Many states have “net-metering” policies that often pay consumers at or near retail electricity rates for solar power they sell back to the grid.

Utilities have largely opposed net-metering policies because they prevent companies from recovering their fixed costs, forcing other customers to pay more for electricity. SolarCity and other rooftop solar installers have pushed such policies around the country.

The whole net-metering debate, however, would become moot if there were more affordable energy storage.

To complicate things further, the Powerwall is very costly. SolarCity is only offering a 10kWh battery that’s not meant for day-to-day use. Bloomberg’s  writes, “Customers can prepay $5,000, everything included, to add a nine-year battery lease to their system or buy the Tesla battery outright for $7,140.”

While this price is about half of what other products sell for, it’s still a luxury good.

“It’s a luxury good—really cool to have—but I don’t see an economic argument,” Brian Warshay, an analyst with Bloomberg New Energy Finance, told Bloomberg Business.

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