Tech Watch - Home batteries find their footing in Africa

From the newsletter

Home battery energy storage is still a relatively new market in Africa, despite the growth of solar home systems. However, this appears to be changing, particularly in South Africa, as evidenced by the recent launch of the Tesla Powerwall 3, an upgraded version of the Powerwall 2 battery energy storage system.

• South Africa's ongoing energy crisis has generated a strong demand among households and businesses for dependable backup power solutions. The high cost of batteries has, however, prevented many from installing them. But costs are declining.  

• The South African home battery storage market is projected to grow at a compound annual growth rate (CAGR) of 19%, reaching a market value of approximately $46 million by 2028.

More details

• For approximately $9,968, South Africans can now acquire the Tesla Powerwall 3, an upgraded battery energy storage system building upon the Powerwall 2. It provides up to 11 kW of backup power and can potentially reduce grid reliance by 67% and save households up to $1,610 annually. It comes at a time when South Africa is implementing load shedding.

• Powerwall 3 is Tesla’s newest home battery, following Powerwall 1 (2015) and Powerwall 2 (2017). It boasts over 850,000 units installed worldwide, but Africa accounts for less than 0.1%, dwarfed by 3.2 million lead-acid systems.

• It utilises lithium-iron-phosphate battery chemistry for enhanced safety and extended lifespan, and can withstand up to 60 cm of floodwater.

• A 10-year warranty provides customers with peace of mind. The Tesla app enables real-time monitoring of energy usage, solar production, and system performance, replacing noisy and expensive generators.

• Tesla Powerwalls are available in 20+ countries globally, including the US, Australia, Germany, and Japan. The rollout strategy typically prioritises regions with high solar adoption and grid instability. South Africa is the primary market in Africa. The lack of presence in other regions signifies weak grid-tie regulations and lower solar penetration.

• The battery energy storage market in Africa is growing, with several technologies rivalling the Powerwall 3. These include Lead-acid batteries, which while older technology, remain prevalent due to lower upfront costs

• The rivalry is significant, as it drives innovation and competition, potentially leading to lower prices and improved technologies. However, Tesla's brand recognition, integrated ecosystem, and advanced features give it a competitive edge, especially among consumers seeking premium solutions. The Powerwall 3's integrated inverter, is a major advantage, as many competing systems require separate inverters. This increases cost and complexity.

• However, the Powerwall 3 is a premium product, affordable only for the top 15% of solar household earners (those with $43,010+ annual income). However, its price is comparable to other products available in South Africa. For example, a SunSynk 12 KW inverter with battery storage costs $9,360. But Tesla is a trusted brand name and would outcompete others on quality.

• Powerwall 3, though a premium product, is a worthwhile investment for those who can afford it. The savings from reduced grid reliance and avoidance of load shedding will, over time, offset the unit's cost. The whole-home backup solution is a major advantage.

• To ensure long-term scalability and improved market penetration, Tesla might explore partnerships with financing companies to address accessibility for a broader range of consumers, including those on minimum wage.

Our take

• Powerwall 3 promises to keep the lights on when Eskom can't, offering a tangible solution to South Africa's energy woes. But at what cost? This tech could leave many behind.

• Next Stop, Nigeria? If Tesla is serious about electrifying Africa, Nigeria should be next on the list. With a massive population and equally massive energy challenges, Nigeria offers a ripe market for Powerwall, especially if Tesla can crack the affordability code.

• To truly conquer Africa, Tesla needs to find local partners. Teaming up with financing companies and energy providers will be crucial to unlocking the mass market and ensuring Powerwall doesn't remain a luxury for the elite. If they don't partner up, Tesla may not succeed in the market and the Powerwall 3 will be like a very expensive doorstop.