As expected, Elon Musk got on stage on Thursday night to unveil
The show-and-tell, which was streamed live, highlighted Tesla's intention to build a business selling equipment to store solar electricity for later use, offer backup power and provide electric-grid regulating services that have traditionally been performed by natural gas power plants. All these uses are part of an energy storage market that is emerging alongside the rise of solar and wind energy generation in the United States and abroad.f
While a comment by Musk a while back indicated that Tesla might want to become an energy storage project developer, the company's customer list so far suggets that it's focused on supplying the equipment and software for running batteries. It's branding those battery systems under Tesla Energy.
What was interesting about Musk's introduction of the new battery systems wasn't the technology. It was his ability to promote renewable energy and the use of batteries to complement that. Building Tesla and SpaceX has made him a rock star in the tech world, and he's built a seemingly accessible public persona that has made fans out of many. He got on stage to talk about the growing manmade greenhouse gas emissions and the need to get away from using fossil fuels, and the audience laughed and hollered and applauded like they were hearing some incredible, never-heard-before message (were they Tesla employees and investors?). You can watch the video here.
"Solar with batteries are the only path I know we can do this," Musk said about generating electricity with zero carbon emissions. "The point I want to make is that this is within the power of humanity to do. It's not impossible."
The company actually started selling battery packs for homes in 2013 and for businesses in 2014, mostly through
Tesla is building a gigawatt-scale lithium-ion battery factory with
The brief descriptions of Tesla's battery systems -- or Musk's speech -- don't illustrate how those batteries are better than others already are the market. At the unveiling, Musk pointed out the color options for the thin and sleek home battery systems and touted the packs' wall-mounted design as space saving. Larger systems for businesses and utilities look like towers or cabinets.
Still, Musk claimed that existing battery systems "suck ... They are really horrible." He said Tesla's battery systems are "the missing piece" to building a sustainable world.
The battery systems range from a 7- or 10 kilowatt-hour, wall-mounted pack for homes to a 100 kilowatt-hour block for projects serving utilities. Tesla said it plans to sell each home battery system for $3,000 to $3,500 wholesale, and those prices don't include the inverter, which is a crucial electronic component for regulating the voltage levels of the electrical current during charging and discharging. The installation cost will depend on whom you hire to do the job. The wholesale prices fall in the lower end of the spectrum for average prices of comparable system sizes, said Ravi Manghani, an analyst with GTM Research.
The company plans to start shipping home battery packs, made at its Fremont, Calif., factory, this summer. Tesla is selling those battery packs on its website as well.
It's hard to compare the retail price for Tesla's home batteries without factoring in the inverter and installation. But for reference, the CEO of the German battery system developer, Sonnenbatterie, told me this week that he plans to retail his products from $1,600 to $2,400 per kilowatt-hour, depending on the size (larger will be cheaper). Those prices include all the equipment and installation, and he plans to start shipping in the U.S. in July.
While Tesla is not the first battery system developer to enter the energy storage market, it's in it early enough and poses a threat to the many other companies that also want to be winners. Musk said he wants other battery makers to also build big factories to drive down prices since lithium-ion batteries remain too expensive for most consumers and businesses to own them.
Roughly 62 megawatts of energy new storage projects, which generated $128 million in sales, were installed in the United States in 2014, a 40% increase from 2013, according to GTM Research. The market could quadruple in 2015 by adding another 220.3 megawatts. Most of the energy storage projects installed in 2014 used lithium-ion batteries.
Tesla has lined up some big-name customers who are willing to give its battery systems a shot. Target said it's going a pilot project to test the battery systems for managing its stores' energy use. Amazon is doing the same for its data centers. Green Mountain Power, a Vermont utility, plans to market the batteries to its customers. Advanced Microgrid Solutions, a startup that won contracts to deliver energy storage services to Southern California Edison, plans to use Tesla's batteries. And, not surprisingly, SolarCity will continue to offer Tesla's batteries.
AES, an electricity producer and retailer, plans to offer Tesla's home batteries through a solar installer it just bought this year. AES also runs a business that develops energy storage projects for industrial and utility customers. I caught up with an AES Energy Storage executive earlier this week, and he hinted at the company's plan to offer home battery systems.
