Musk, ever the showman, unveiled his grand “Tesla Energy” scheme to electrify the world on Thursday night, and it actually makes a lot of sense. Tesla, which is in the middle of building a vast “Gigafactory” battery production plant in the Nevada desert, plans to offer new versions of the batteries it puts in its Model S car to residential, commercial, and utility customers.
The “Powerwall Home Battery” offers either 7- or 10-kWh of storage, and will allow consumers to store energy they produce with a solar array—even go off the grid if they want. It’s available for small businesses as well, while bigger operations will want the Powerpack, a 100kWh refrigerator-esque unit, to use more renewable energy, avoid peak demand charges, and keep things running in the event of a power outage. These larger batteries are being produced for utilities as well, and can help the energy providers improve demand response and increase their use of renewables.
The “Just in Time Market”
Just as he’s done with the auto industry, Musk is hoping to shake up the energy business. Today, the generation of electricity is inextricably linked to its consumption. Utilities don’t store what they produce, they deliver it immediately, and so they produce exactly as much as is needed at any given moment. This is what Matt Roberts, executive director of the Energy Storage Association, calls the “just in time market.” When you flip on a light switch, a power plant ramps up to generate that tiny extra bit of electricity.
One problem with this model is the system must be capable of catering to maximum demand, delivering all the energy required during that hellish week in August when everyone’s running their A/C. That means the system is designed and maintained to generate far more capacity than typically needed. Roberts estimates the American system is overbuilt by 30 to 40 percent.
That’s why utilities often bill large customers based partly on their peak energy usage: The spikes in consumption may come rarely, but the provider has to be ready for them at all times, an expensive proposition.
Another problem with the “just in time” model is that it doesn’t jibe with the increasing demand, from consumers and regulators alike, for renewable energy. Utilities can burn coal or natural gas, or spin up a hydroelectric turbine as needed. But they can’t turn on the sun or create wind to meet demand. To make renewables truly effective, they need a way to store that power when it’s generated so it can be delivered when it’s needed.
Batteries can do exactly that, which is why, Roberts says, everyone wants them. “It would change the way we all do business.”
The Energy Storage Opportunity
The idea of energy storage has been around since the 1970s, says Ravi Manghani, a senior energy storage analyst at GTM Research, but didn’t advance much until the early 2000s. In the past decade, an increased appetite for renewable energy and advances in solar panels and lithium ion batteries have attracted dozens of players to the idea of letting consumers and utilities put their power in reserve.
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