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Tesla Shifts Gears to Enter Utility Industry

Tesla and Utilities

What do companies do once they’ve conquered their industry? Move to a different industry, of course.  After its launch in 2003, Tesla Motors quickly became a force to be reckoned with.  With the tremendous success of the Roadster and the Model S, Tesla became known for its impressive technology in energy efficient vehicles.  Now it is attempting to become a major player in energy efficient homes.

Solar power is nothing new, but being able to successfully and inexpensively store the energy produced by those panels is slowly becoming a reality.  Tesla is working on a battery pack that can be used in conjunction with solar panels.  Users can produce energy when the sun is shining, store it, and then use it at night when the sun goes down.  It’s genius!

Tesla’s lithium ion batteries have the potential to change the energy industry forever.  “If it can be a leader in commercializing battery packs, investors may never look at Tesla the same way again,” explains Morgan Stanley Analyst Adam Jonas.  “If Tesla can become the world’s low-cost producer in energy storage, we see significant optionality for Tesla to disrupt adjacent industries.”

For this to work, Tesla would have to increase the production of these batteries in order to sell them at a price consumers can afford.  Plans of a $5 billion, 10 million-square-foot “gigafactory” are being discussed to do just that.  “The scale of Tesla’s battery production, even for its own use as an auto manufacturer, thrusts the company into ‘key player’ status for grid storage,” said Jonas.

With the capability to store enough energy to power an average home for three and a half days, this battery will be a hot ticket item.  Storing extra energy would be a tremendous help to homeowners in areas where the price of electricity is extremely high, like Hawaii.  This technology will bring customers lower energy bills and a bit of freedom from local utilities and the grid.  They might even have the opportunity to sell electricity back to the grid for a small profit. 

“If you can get batteries cheap enough and combine them with solar panels, you no longer need the utility,” states Navigant Analyst Sam Jaffe.  He predicts the cost would have to decrease by more than 70 percent in order for these batteries to make sense for homeowners.

While this entire project remains in-the-works, there is rumor that Tesla will partner with Panasonic, which is already an investor and its main supplier.  If these two powerhouse companies do end up working together, the energy industry better get ready for an epic transformation.

Photo Credit: Tesla and Utilities/shutterstock

Sarah Battaglia's picture

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Bob Meinetz's picture
Bob Meinetz on Mar 10, 2014 5:37 pm GMT

Sarah, I’m not sure what special blend (or proof) of punch Sam Jaffe of Navigant is drinking when he states

If you can get batteries cheap enough and combine them with solar panels, you no longer need the utility.

In one statement he makes several assumptions which are astoundingly naive, especially in light of his position at Navigant (which for the sake of the company might best be reëvaluated):

  • You have enough solar panels, and batteries, to supply you with all of your power needs on an ongoing basis.
  • You won’t mind living without any electricity when the occasional week of cloudy weather – wherever you live – hands you a brutal primer on the benefits of dispatchable energy.
  • You never, ever plan to buy a Tesla Model S sedan, which uses 4 times the average household’s daily energy consumption for a single charge.
  • You believe the green karma that came wtih your solar panels entitles you to fire up a diesel generator or woodstove after the sun goes down, increasing your carbon footprint (while preserving the ability to use your computer to blog about how it doesn’t).

And now we can add “epic transformation” to the lexicon of regrettable hyperbole surrounding the non-existent utility “death spiral”. Is there an engineer in the house?

Paul Ebert's picture
Paul Ebert on Mar 10, 2014 4:40 pm GMT

What does “capability to store enough energy to power an average home for three and a half days” mean?  Are we talking electricity and heating?  Where?

I also wonder what the chances are that costs can be reduced by 70% even once the mega-plant is in full operation.  It’s not like Li-ion batteries are new technology.

Don’t get me wrong; I hope they succeed, but I am not at all convinced yet.

Thomas Garven's picture
Thomas Garven on Mar 10, 2014 7:46 pm GMT

It must be “pick on Sarah day” or at least that is the way it seems to me by reading the first two comments below, LOL.

Anyway where I LIVE and based on my historical usage; 3 1/2 days of storage would mean 115 kWh.  Of course that assumes [I love that word] that it was completely dark for that entire period of time with exactly zero protons hitting the solar panels which would by the way never quite happen since solar PV panels always put out SOME energy even during a rain storm or during cloudy conditions.

Anyway I guess that also assumes [there is that word again] that neither my consumption nor my behaviors would change if my home was sitting under clouds or in the rain for 3 1/2 days instead of baking in the Arizona sunshine. Oh and did I mentioned that it only rained ONCE here during 2013 for about 3 hours and so far in 2014 it has not rained a drop. Oh and what is the old saying that goes along with this – YOUR mileage [kWh] may vary, LOL.

Anyway I can’t wait to become carbon free for electricity for 361.5 days a year which might become possible with cost effective storage. Oh wait – I might also have to run that dirty old generator for a day or two so I will say about 359 days of carbon free electricity every year. I wonder how that compares to say some company that runs computer servers 24/7.  Unless of course they are all running on carbon free energy.

In summary, I am a very strong proponent of renewable energy systems AND an “all of the above approach” to meeting the energy needs of our country. After working in the public utility sector for over 25 years I can say with some confidence that we are a LONG way from ever meeting our energy needs by simply using renewable energy. Even In California which many people hold up as a good example of what can or should be done with renewable; they make up only a very small percentage of daily use. As of this moment in time 11:55 a.m. in Arizona, renewable energy on the California ISO grid is only contributing about 7,215 MW out of a total system demand of 26,298 MW. Everyone on this blog site can do the math so lets just skip that exercise and jump right to the end of this posting.

If we as a COUNTRY want to make progress when it comes to something like Global Warming or Climate Change or CO2 concentrations if that happens to be your thing; then we need to really STOP using PROBLEM Statements.  Global Warming and Climate Change are problem statements not SOLUTION statements. Solutions are things like wind, solar, nuclear, natural gas combined cycle plants, bio-fuels and electric vehicle. How we get to those solutions is by setting GOALS and the completion of measurable OBJECTIVES which also involves politiical actions.  So here is my simple summary statement.

Let’s stop thinking about CO2, Global Warming and Climate Change and start thinking of ways to teaching the American people what THEY can do every day to “improve the quality of the air we breath and the water we drink”.

If you think the average American has any grasp of or understanding of the meaning of 400 ppm of CO2 on a mountain top in Hawaii then I have just wasted .012 kWh writing this posting.

Paul Ebert's picture
Paul Ebert on Mar 10, 2014 9:54 pm GMT

No intention of “picking on Sarah”.  Just hoping for more information and contributing to the discussion.

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