Elon Musk’s Ambitious Plan To Revolutionize Energy Usage

Amid great anticipation, Tesla CEO Elon Musk unveiled details about its line of home and industrial battery packs this week. The ever-quotable Musk has been providing hints about the product line lately, and has now come forward with Tesla’s lofty ambitions for its move into becoming an advanced energy device company.

Tesla plans to offer new versions of the batteries that exist in its Model S car to residential, commercial and utility customers. Musk explained that the “Powerwall Home Battery” will be available as either a $3,000 7 kilowatt-hour (kWh) unit or a $3,500 10 kWh unit, and will allow consumers to store energy that they produce with a solar array, and even potentially allow them to go off the power grid. This battery will be available for small businesses as well. Bigger operations can use the “Powerpack,” a 100 kWh unit, which will cost $250 per kWh, to use more renewable energy, avoid peak demand charges, and to keep their business running during power outages. He explained that these larger batteries are being produced for utilities as well, to help energy providers improve demand response and increase their use of renewables.

“We’re talking about trying to change the fundamental energy infrastructure of the world,” said Musk. “This is actually within the power of humanity to do. It is not impossible.”

Tesla’s CEO explained that the home battery Powerwall unit is expected to become available in small quantities within a few months, while next year it will go into full production at the company’s currently-under-construction battery factory in Nevada. The Powerwall battery will come in sleek black and white models, and Musk indicated that the larger home model can store enough electricity to power a home for 10 hours.

Musk says that he sees the potential for Tesla’s battery business to match or even surpass its car business in regard to energy generation. He expects the demand to come from a variety of places, including countries where solar is popular, such as Germany, as well as from developing countries that don’t have existing power lines.

Certainly, there is a growing market for robust batteries that were initially developed for electric cars, but are now being installed at buildings, wind farms and other places that can store electricity for future use. Tesla explained the many ways that its home products can be used, such as being used as a backup device, or being used to buy power at night when prices are cheap and subsequently discharging it during the day, as well as to store power collected from solar panels to be used later.

According to energy research company GTM Research, approximately 62 megawatts of batteries and other energy-storage devices were installed at 180 properties in 2014. This represents a value of approximately $128 million, and indicates growth of 40 percent from the previous year. The research firm predicts that battery installations are likely to more than triple this year, to 220 megawatts.

Additionally, some utilities, including Duke Energy Corp. and Edison International, have installed large battery systems next to wind farms, which are used to store electricity that is generated at night to be released to the grid when electricity demand spikes in the late afternoon and early evening. Other companies such as Stem Inc. and Green Charge Networks are installing batteries for use by large retailers and hotels, to help them limit their power usage and allow them to save money on utilities.

Initially, Tesla’s batteries will use cells made by Panasonic Corp., the company that supplies the batteries in its Model S. The company estimates that its costs will drop by 30 percent when production moves to its new Nevada factory.

Overall, Musk believes that the solar energy stored in home batteries offers a feasible and desirable alternative to fossil fuels. “We have this handy fusion reactor in the sky called the sun that produces ridiculous amounts of power,” said Musk. “The obvious problem with solar is the sun does not shine at night. I think most people are aware of this,” he added with a smirk. “That’s why home batteries are vital.”

Will Tesla’s new batteries become a big operation, or is this merely hype that will not prove to be rewarding enough for consumers, businesses and utility companies to use? Initially, it appears that the success of the system will rely greatly on the company’s ability to lower its battery costs through innovation and manufacturing advancements at its new factory.

Karl Brauer, a Kelley Blue Book senior analyst, thinks that Tesla’s new offerings have massive potential. “If Tesla can produce a cost effective home energy storage system it could prove far more valuable, and profitable, than anything the company is doing with automobiles,” said Brauer. “As solar panels get cheaper and easier to install, the only thing keeping consumers tied to the energy grid is a need for electricity when the sun isn’t shining. If Tesla can help consumers bridge the moments between abundant sunlight, it could force electric companies to deal with the same issue threatening home phone and cable companies. Imagine a wave of customers cutting ties with their local power companies because they have a self-contained energy system.”

Will Tesla meet its goals of revolutionizing the way that the world uses energy? The possibilities are definitely intriguing on a multitude of levels, from consumer use, to large business operations, to massive utility companies. Now we just have to wait to see who gets on board.