Tesla has figured out how to use the sun’s power when it isn’t shining.
Announced Thursday, Tesla Motors Inc (TSLA) is introducing a line of battery systems directed at homeowners, utilities and businesses. An event was held at Tesla’s design studio in Hawthorne, California, where CEO Elon Musk presided. The batteries will be available to residential customers of SolarCity Corp (SCTY); the partnership between Tesla and SolarCity, where Musk is a chairman on the Board of Directors as well as a principal shareholder, was announced last month.
“The obvious problem with solar power is that the sun doesn't shine at night,” Musk said at the event. “We need to store the energy to use at night.” He added: “The issue with existing batteries is that they suck. They’re really horrible.”
Dubbed the “Powerwall,” the battery system includes rechargeable lithium-ion battery packs that can be attached to a home garage wall as well as battery blocks large enough to level out variations in the grid. According to Tesla, the Powerwall is available in 10kWh (kilowatt hours), designed for backup applications, and is priced at $3,500. There is also a cheaper 7kWh version, priced at $3,000, which is optimized for daily use. Thus, Powerwall is meant “to give customers the flexibility to draw energy from their own reserve.”
The batteries are derived from the same ones used in Tesla’s Model S vehicles; they will be connected to the Internet, allowing them to be managed by Tesla from afar. Customers can connect up to nine battery packs if they wish to store larger amounts of power.
Production will start later this year on Powerwall, most likely at Tesla’s $5 billion production plant the “Gigafactory,” which is still under construction, in Reno, Nevada. The batteries will be installed by licensed technicians.
Mentioned above, the battery systems in Powerwall are designed for different levels of use:
· For the home: this battery lets solar customers have power if a failure occurs, draws from it when utility rates soar, uses more of the electricity from the energy panels, and eases reliance on the grid.
· For utilities: in this scenario, the battery can assist in meeting demands during peak periods, and helps make up for the variations in energy sources like wind and solar.
· For businesses: the battery can help decrease demand for the grid’s electricity, which would lower costly demand charges.
Tesla’s announcement, however, may be outshined by the largest private residential solar installer in the U.S., Sungevity Inc, and their partnership with Europe’s leading home battery system supplier, Sonnenbatterie. Announced earlier this week, this partnership will produce a fully integrated battery system manufactured by Sonnenbatterie, and will be a similar product to Tesla’s, only cheaper. Customers of Sungevity in the U.S. and Europe will be able to purchase the product in the latter half of this year. This focus on Europe would give Sungevity an edge over SolarCity, which is limited to the U.S. market. NRG Energy Inc (NRG), one of the largest independent power producers in the U.S., is also developing solar storage products, placing themselves as another viable competitor to Tesla and SolarCity.
Despite a growing number of companies moving in the solar-plus-storage direction, Tesla has a unique advantage. The company is bringing their coveted “Tesla” brand name to an up-and-coming market. Their reach and scale alone will make a strong impact, and will be key in setting them apart from the solar energy crowd.
TESLA MOTORS (TSLA): Free Stock Analysis Report
SOLARCITY CORP (SCTY): Free Stock Analysis Report
NRG ENERGY INC (NRG): Free Stock Analysis Report
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