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Need More Power? Why The Grid Beats Batteries - A Case Study

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Posted

05 Feb 2025

Author

Jonathan Carroll
Director & Engineering Manager

Referenced

[1] Tesla, Inc., Powerwall Technical Specifications & Warranty Guide, 2024. Available: https://www.tesla.com/powerwall. [2] Ausgrid/Essential Energy, NSW Electricity Tariff Schedule, 2024. [3] DIY Solar Forum, “Lithium Battery Aging & Cycle Life Study,” 2023. Available: https://www.diysolarforum.com.

Need More Power? Why a Higher Authority Capacity Connection Beats Batteries Every Time - Case Study

When it comes to upgrading power infrastructure, the choice between batteries and transformers can be a million-dollar decision—literally. We recently analyzed a major facility upgrade, and the results were eye-opening.

The Power Dilemma

A medical center needed to boost its power supply from 160A to 330A to handle future peak demand. The options were:

Upgrade the transformer – A $90K investment to replace the existing 200kVA pole-top transformer with a 500kVA pole-top transformer, providing reliable long-term capacity.

Install a large battery system – A $250K+ upfront cost, with full replacements every 10 years, as per Tesla’s warranty conditions [1].

Why Batteries Can’t Be Left to Fail

Unlike a commercial or residential facility, this is a medical site—meaning batteries cannot be left to degrade or fail before replacement.

Tesla’s Powerwall warranty guarantees 70% capacity at 10 years, assuming daily cycling [1]. By this point, the battery bank would have lost at least 30% of its original storage capacity, making it unreliable for critical power supply.

Planned Replacement Every 10 Years

Medical facilities require uninterrupted power for critical operations.

Battery replacements must be pre-planned to avoid the risk of system failure.

Supply chain delays can cause months-long waits for replacements.

Due to these risks, batteries must be replaced as soon as the warranty expires, meaning at least three full replacements over a 40-year period. This significantly impacts the long-term cost.

Arbitrage: Can Batteries Pay for Themselves?

One potential advantage of batteries is energy arbitrage—charging at off-peak rates and discharging during peak pricing.

Charge at $0.15/kWh (off-peak)

Use during peak at $0.35/kWh

Profit margin: $0.20/kWh

With 244kWh cycled daily, this strategy could save about $16K per year [2]. However, even with these savings, the $1M+ cost over 40 years far exceeds any financial benefit.

The Cost Breakdown

Battery Option: Tesla Powerwalls require pre-planned replacements every 10 years to ensure reliability. Over a 40-year period, this results in a $1M+ total cost, even before considering future inflation [1].

Transformer Upgrade: A one-time $90K investment guarantees stable capacity for peak demand, with minimal maintenance and a 50+ year lifespan.

The Verdict

For a critical medical facility, the transformer upgrade is the clear winner. While batteries offer energy arbitrage, the mandatory replacement cycle every 10 years due to warranty limits (70% capacity guarantee) makes them significantly more expensive long-term. Unlike commercial sites, hospitals and clinics cannot afford downtime or battery failures due to supply chain delays.

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