[army]

Your analysis of the arbitrage is faulty - if there's a cost associated with time-shifting energy, then the gap will only narrow to the extent that it's still economically justifiable for people to invest the money in time-shifting energy. What you're describing (no peak/non-peak difference plus people still buying batteries to time-shift energy) isn't a steady state - why would people continue to buy the batteries when they're going to lose money on the deal? You'd actually expect the gap to be the price difference per watt plus some additional amount for the capital and inconvenience.

Also, if there's significant arbitrage, it will also reduce peak prices - because of reduced demand, and also because of reduced costs of expensive additional capacity. I.e. it can reduce energy costs for people who don't use it.

[antaviana]

Yes, what I meant is that each Tesla battery sold will contribute to reduce the peak price and to increase the non-peak price, effectively reducing the gap that is the basis for the value proposition.

Because of this effect, the value proposition for existing Tesla battery owners will lower over time. Ironically, the ones that benefit at long term are the non-owners because their peak time price will be lower.