Last night, Tesla Motors held a live presentation at Tesla Design Studio in Los Angeles. During the event Tesla Chief Executive Officer Elon Musk and Chief Technology Officer JB Straubel unveiled a new Tesla battery that has home, commercial/industrial, and utility-scale storage applications.
College of Marin will be the first community college in California partnering with Tesla to install the new stationary storage products on campus. Vice President Greg Nelson expects installation to begin in mid-May and last until the end of June. Once the stationary batteries are operational, Nelson estimates the cost savings to be anywhere from $100,000-$150,000 annually for the College.
Also, Sunrun has collaborated with Tesla Motors to expand access to renewable energy storage systems for homeowners across the country. As part of the agreement, AEE Solar, a nationwide distributor of solar products and a subsidiary of Sunrun will add Tesla’s recently announced Powerwall Home Battery to its line of storage offerings sold for use in homes.
“We believe the next evolution of solar as a service is home solar paired with storage and we look forward to adding Tesla and its new energy storage for consumers to our extensive line of battery offerings,” said Paul Winnowski, Sunrun’s chief operating officer. “This partnership builds upon Sunrun’s approach to grow consumer adoption of home solar through a variety of channels and partners.”
The agreement also expands Sunrun’s energy storage program to include new types of storage solutions. Through its AEE subsidiary, Sunrun will be able to make these solutions available to the entire solar energy industry.
SolarCity is also partnering with Tesla. For businesses and government organizations, SolarCity will incorporate the new Tesla battery into its DemandLogic energy storage system to significantly increase the utility cost savings customers can realize from using stored solar electricity. DemandLogic, which is being adopted by several of the largest retail, biotech and Internet companies in the U.S., allows businesses to reduce energy costs by using stored electricity to reduce peak demand, and can also provide backup power during grid outages. DemandLogic’s management software automates the discharge of stored energy to optimize savings on utility demand charges for customers.
For remote communities around the world, SolarCity will incorporate the new Tesla battery into its GridLogic microgrid service. GridLogic combines distributed energy resources—solar energy systems, batteries and controllable load—to enable a cleaner, more resilient and more affordable way of providing power. SolarCity’s microgrid service will ensure that any community anywhere in the world vulnerable to power outages and high energy costs—including remote or island communities, hospitals and military bases—can have dependable, clean power off-grid, when the grid is down. GridLogic can operate either in conjunction with or independently of the utility grid.
For residential solar customers, SolarCity will provide a turnkey battery backup service that includes permitting, installation and ongoing monitoring. Equipment includes Tesla’s home battery, the Tesla Powerwall, which consists of an advanced hybrid solar/battery, inverter and monitoring and control systems. The fully-installed system stores electricity generated from the solar power system, using that power to automatically provide backup power during utility grid outages. SolarCity’s battery backup service replaces noisy, dirty fossil fuel generators with zero-emission storage technology. Roughly the size of a suitcase, the sleek, enclosed pack can be easily mounted on indoor or outdoor walls. When a power outage occurs, the control system immediately begins feeding power to the home from the solar system and the battery to continue operating the most commonly needed, eligible circuits selected by the customer, including the refrigerator, lighting, computer, alarm system and electrical outlets. When the battery is depleted, it can be recharged by solar power even if the outage continues for multiple days.
Incorporating Tesla’s new battery technology, SolarCity is now able to configure a solar system (along with other energy management technologies) as a stand-alone, off-grid power supply. SolarCity plans to first offer these off-grid systems to eligible Hawaii customers that might otherwise be prevented from using solar power.
Also, from the fourth quarter of 2015, the Tesla Home Battery will be available on the market in collaboration with the inverter manufacturer Fronius. The initial product launch will be in Germany and sales will then released across Europe and in Australia. Fronius and Tesla are developing communication compatibility between the Fronius Symo Hybrid inverter and the Tesla Home Battery, which will be an alternative to the Fronius Solar Battery. Both options will work in conjunction with the Fronius Symo Hybrid inverter and a Fronius Smart Meter. Fronius is therefore offering a second, wall-mounted storage solution, which is suitable for outdoor use. Tesla and Fronius have a history of collaboration, with both the Tesla Model S premium electric limousine and the Tesla Model X sports car being welded using Fronius technology.
SolarEdge Technologies will also collaborate with Tesla Motors to provide an inverterthat will allow for grid and photovoltaic integration with Tesla’s home battery solution. “Tesla’s collaboration with SolarEdge unites leading organizations in two rapidly-growing industries—solar energy and energy storage—to bring homeowners a more cost-effective and integrated energy generation, storage, and consumption solution,” said JB Straubel, CTO of Tesla. The new offering is expected to present a number of benefits to homeowners, from serving as a backup power source in the event of an electrical outage, to maximizing self-consumption, and enabling energy independence.
Designed to manage both functions with just one SolarEdge DC optimized inverter, the solution will allow for outdoor installation and will include remote monitoring and troubleshooting to keep operations and maintenance costs low. The solution will also support upgrading existing SolarEdge systems with the storage solution. The SolarEdge solution is expected to be available by the end of 2015.
Greensmith, a hardware agonistic provider of grid-scale energy storage software and integration solutions, also weighed in on the conversation. “Grid-scale energy storage is no longer in the trial stage – it is generating significant revenues for utilities and independent power producers today. For this reason, we expect the grid-scale market for energy storage to dwarf the home energy storage market over the coming decade. Battery innovations are not likely to end anytime soon,” said CEO John Jung. “Which is why we don’t expect there to be rapid convergence on a core battery technology—like we’ve seen with crystalline silicon in solar – in the near future. While lithium-ion batteries like Tesla’s are well-suited for certain energy storage applications, there are many applications where other chemistries might make more sense. No single battery is appropriate for all grid-scale energy storage applications.”
Imergy Power Systems is another grid and residential energy storage provider who makes vanadium-flow batteries from industrial waste. Bill Watkins, CEO of Imergy agress with Jung, saying there are a number of energy storage technologies available to address those specific market requirements and more than enough opportunity for a number of these technologies – and the companies developing them – to succeed. “The problem with Lithium batteries, after a certain number of charge/discharge cycles, the battery gradually begins to wear out, ‘age’ and lose its capacity,” he said. “For homeowners, this means replacing their battery more frequently – and that adds up quickly. One of the advantage of flow batteries is they can be charged and recharged nearly an unlimited number of times without degradation.”
“Cheap cells made in the Gigafactory are only part of the puzzle,” said Dean Frankel of Lux Research. “Unlike electric vehicles, in stationary batteries there is more of a relative cost contribution coming from power electronics, software, and installation. Without more vertical integration – and perhaps even some acquisitions and Gigafactory-like efforts dedicated to inverters – Tesla is limiting its growth potential here.”
The distributed energy storage space already has many players offering standalone and solar-connected battery systems, so Tesla is certainly not the first to market. However, the EV maker does have key product scaling benefits afforded to few of its competitors, through its relationships with Panasonic for lithium-ion cells and SolarCity, the largest residential solar installer.
Still, in order for Tesla to see success, the EV maker must tackle three key areas:
- Cost reduction beyond Li-ion cells. At $350/kWh, Tesla is the industry’s current price leader for stationary Li-ion packs, thanks to its partnership with Panasonic and its upcoming Gigafactory. However, consumers will also need to pay for an inverter, installation, and other costs, which altogether will nearly double the $3,000 price of Tesla’s entry-level Powerwall unit. Tesla will need to push their power electronics and installation partners to cut their costs further – or do that itself, either in-house or via acquisitions.
- Offering financing and new residential business models. Tesla and SolarCity have relied on California’s self-generation incentive program (SGIP) for the majority of its systems to date. However, SGIP is an unsustainable model in the long term. Tesla has to establish new business models beyond residential load shifting, to open up all U.S. and international markets. Moreover, Tesla’s stated goal of selling 30% of its output from the 50 GWh Gigafactory to stationary markets implies about $3.7 billion in revenues in 2020. Providing financing options for many of those purchases will be key, echoing the successful strategy that solar has already employed.
- Working with utilities, not against them. As more distributed solar comes onto the electric grid, utilities are increasingly at odds with consumers and companies like SolarCity. Energy storage can turn distributed generation into a utility asset, but only a few utilities have explored owning and controlling smaller residential and commercial systems. For Tesla to truly impact the stationary market, it will need to work with utilities and grid operators to ensure its solar and storage solution can be a key grid management tool. Its initially announced utility projects – with Southern California Edison and Oncor –are excellent demonstration trials, but just a start; Tesla will need to bring hundreds of more utilities on-board, which will take time and resources.
“Tesla has succeeded in pushing down cell and pack costs for stationary energy storage, which will accelerate this market,” Frankel said. “However, power electronics, installation, and widespread availability of financing remain open questions. The quicker Tesla can build partnerships, make acquisitions, and invest further to address these issues, the better its chance of hitting its hugely ambitious goal of selling 15 GWh of stationary energy storage in 2020.”