After dropping hints about a new product launch for months, when CEO Elon Musk walked on stage at the Tesla's design studio in Hawthorne, California, he faced a revved-up crowd of tech reporters, energy geeks, utility executives (many who already drive Teslas), and thousands of curious viewers gawking at the feed from Tesla’s website. Everyone was as eager to see Musk's performance and lear about the off-stage technology. He didn't disappoint, going full Steve Jobs and saying casually, “Our goal is to fundamentally change the way the world uses energy." Musk's vison sent a frisson through the crowd.
Later, just to highlight his point about "the big picture," and finally putting the eager crowd away, he'd reveal that the glitzy, energy-intensive event was powered completely by a bank of Tesla batteries behind the stage, and then pause as an audible tech-gasm surged through the crowd.
Musk, the CEO of Tesla and Chairman of Solar City, has always considered both to be parts of a single, larger energy company. So last week, Tesla Motors ceased to be just an upscale car company when its founder unveiled a corporate spinoff, Tesla Energy, along with a battery storage suite promised since the announcement of the Nevada Gigafactory.
Still a small niche
Wrapped in suave, Apple-worthy styling, the Tesla Powerwall for homeowners has a power capacity of either 10 kilowatt hours or 7 kilowatt hours, for $3,500 or $3,000, not including the installation or the inverter. Musk also unveiled a 100-kilowatt-hour industrial-sized unit that cost $250 per kilowatt-hour."There's nothing remotely at these price points," Musk calmly underplayed.
Ironically, after all the hype, because the first residential battery has limited capabilities, Musk could only promise buyers, "Backup during grid outages, while increasing the capacity for a household’s solar consumption.”
Although there is already debate whether these early batteries make financial sense for homeowners, there is no question that batteries in general are already beginning to save money and strengthen the grid. A recent study found that even though battery storage is now a very small niche — just $128 million in sales for 2014 — it grew 40 percent last year, and three times as many installations are expected this year.
This rapid growth results from solving many utility and grid bottlenecks. Musk, looking far into the future — always a crowd-pleaser — says that its residential customers will eventually open their storage systems to the grid by combining the the company’s lithium-ion batteries with its power management software. He knows this because prototypes have already been deployed in 300 Californian homes under a pilot program with SolarCity.
Networked battery peaker plants
All of the contracts that customers sign and all of the batteries assembled are grid-services-ready because in-home controllers and broadband connections have been installed for years. Initially used to track performance, SolarCity has also integrated the hardware and software into wide-area storage pilot projects, where they’re aggregated into a fleet tied together by real-time communications.
The company says that what they’ve built is really an energy storage system that could be a valuable resource for the grid. Every solar system and now every single battery system they’ve installed has gateways networked to SolarCity’s central cloud-based server.
For example, why build an expensive and seldom used gas-fired peaker plant when you can build-out an array of solar plus storage instead. That would allow utilities to solve problems that the growth of distributed PV is creating, like the now infamous “duck curve” that shows big drops in midday electricity demand when solar is peaking, and a large demand ramp-up when the sun sets, just as people return home from work.
Musk's vision has always been that instead of thinking of solar and batteries as two separate technologies, we should see them as one single enhanced system. Taking the long-view, he thinks that solar-plus-batteries is set to begin a complete transformation of global civilization; in fact, it's already begun. But once battery technology improves and drops even further in price, picking up the pace over the next two decades, more and more cheap energy will flow to the grid.