By - Michael Drost

Tesla rolls out new solar energy batteries for homes and businesses


Energize Weekly, May 6, 2015

Tesla Motors, the Silicon Valley-based electric car manufacturer, has announced that it will be selling wall-mounted lithium-ion electric batteries for homes and small businesses, a new but hardly unique entry into the “solar plus battery” market.

The blockbuster announcement, done last week at Tesla’s headquarters in Palo Alto, didn’t introduce anything particularly groundbreaking. Solar-powered lithium-ion batteries have been around in various conceptions for years, with such established companies as Samsung, LG Chem, and Saft Groupe already offering their own versions of very similar products to the one Tesla introduced. The size and design of Tesla’s residential 7 or 10 kilowatt-hour (kWh) “Powerwall” system, about 33 inches wide, 51 inches tall and seven inches deep, may make for a sour sight, and the ability of the Powerwall system to power a home or small business entirely independent of the grid is suspect. The output of the Powerwall is about two kilowatts (continuously); hardly enough to power a household during peak times, so the real meat behind Tesla’s new product will be for energy arbitrage and to reduce peak-time use of utilities’ electricity.

Nor is the business model that particularly striking. The cost of Tesla’s Powerwall system is reported to be around $3,000 for the 7 kWh system to $3,500 for the 10 kWh system, slightly cheaper than the going rate for competing systems, but that price tag doesn’t include installation costs or the cost of electronics that are required to hook up a solar battery to a home system, meaning that the total cost of buying one of Tesla’s systems is likely to be much higher, around $5,000 for the 10 kWh system. There is also the pesky reality of the “solar plus battery” market, which is unlikely to embrace at least two of the benefits Tesla touts for the Powerwall system, including grid-independence and the ability to store backup power, the economics of which are questionable at best.

Still, the product could be a game changer in terms of having an “Apple”-like company in Tesla, with the larger-than life personality of its CEO Elon Musk, behind the “solar plus battery” movement, helping grow interest in the market Tesla seeks to tap into. It will also help that, even without Tesla’s announcement, the global energy storage industry is expected to grow from a value of $200 million in 2012 to over $19 billion in 2017, according to IHS. The more people buy into Musk’s vision, the better that will be for the storage industry as a whole, even if the product is not that much cheaper or powerful than its competitors.

One way the Powerwall will have an edge is in the capabilities of Tesla for mass production, especially with its coveted battery “gigafactory” being built in Nevada nearing completion. Tesla says that the gigafactory will primarily produce battery packs for their automobiles, but as much as a quarter’s of the plant’s production may be dedicated to creating the Powerwall and other stationary batteries.

Moreover, the popularity of being able to store clean energy for later use is only likely to increase as consumers become more environmentally conscious, while utilities are going to become hard-pressed to come up with concepts that mitigate the effects mass application of energy storage products might have on their business models.

One of these concepts will likely be to shift their role from that of a primary power producer to that of a service provider. Utilities will have a business interest in having some customers off the grid to reduce peak power needs, so it could offer incentives for battery deployment, making products like the Powerwall system more accessible to more ratepayers while at the same time enlarging the market for service delivery. This bodes well for companies like Tesla and others in the storage industry, although time will tell if that is the approach utilities ultimately decide to take.

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