Electric car maker moves into energy storage

Electric car company Tesla has announced its entry into the energy market, unveiling a suite of low-cost solar batteries for homes, businesses and utilities, “the missing piece”, it said, in the transition to a sustainable energy world.

The batteries, which will retail at $3,500 in the US, were launched at a Tesla facility in California by the company’s founder, Elon Musk, who heralded the technology as “a fundamental transformation [in] how energy is delivered across the earth”.

Wall-mounted, the lithium-ion batteries are designed to capture and store up to 10kWh of energy from wind or solar panel. The reserves can be drawn on when sunlight is low, during grid outages, or at peak demand times, when electricity costs are highest.

The smallest “Powerwall” is 1.3m by 68cm, small enough to be hung inside a garage on or an outside wall. Up to eight batteries can be “stacked” in a home, Musk said, to applause from investors and journalists at the much-anticipated event.

The batteries will initially be manufactured at the electric car company’s factory in California, but will move production to its planned “gigafactory” in Nevada when it opens in 2017.

The Nevada facility will be the largest producer of lithium-ion batteries in the world, and it is hoped its mass-production scale will help to bring down costs even further.

Musk also unveiled a larger “Powerpack”, a 100kWh battery block to help utilities smooth out their supply of wind and solar energy – which is generated intermittently – or to pump energy into the grid when demand soars.

He said that 2bn Powerpacks could store enough electricity to meet the entire world’s needs. “That may seem like an insane number,” he said. “But this is actually within the power of humanity to do.”

Deutsche Bank estimates sales of battery storage systems for homes and businesses could yield as much as $4.5bn in revenue for Tesla. The energy storage industry is expected to grow to $19bn by 2017, according to research firm IHS CERA.

Commenting on the announcement, chief executive of the Renewable Energy Association, Dr Nina Skorupska said: “This week’s announcement from Tesla indicates that the commercially viable domestic energy storage market could be much closer than many think. Having affordable and efficient energy storage available means individual households can really start to change the way they use energy and considerably reduce the need for fossil fuels.

“We see growth in the energy storage market as fundamental to the widespread adoption and development of renewable energy technologies, and we are excited that domestic storage is already moving towards being a reality for British households and businesses. The attention garnered by such a high profile company is welcome, but it’s important to note that the UK has several innovative home grown battery companies that also supply homes and businesses”.

Monica Giulietti, of Warwick Business School said: "This is an interesting development in the energy storage industry as Tesla’s involvement in the stationary storage market can support the progress towards affordable storage by leveraging their expertise in battery technology for electric vehicles.

"There are two main risks involved in this move: first that the battery technology is superseded by more efficient systems such as fuel cells. In general a lot of research is still being done about the effective way to store power and no technology has clearly emerged yet in terms of storage performance and affordability.

"Secondly, due to this risk it is unlikely that, apart from some eager early adopters, the majority of potential consumers will be prepared to invest in this relatively new technology due to the risk of being locked in with an obsolete technology."