Tesla's recent highly publicized battery pack announcement may not serve to advance energy storage technology in a significant way. However, the offering has the potential to eventually help to reduce supply chain power costs.
Tesla CEO Elton Musk has a blatantly obvious flair for showmanship, which he recently put to use to pitch his company's Powerwall energy storage device. As the founder of PayPal and head of Space X, which plans to do nothing less than to send humans to Mars, the charismatic serial entrepreneur recently described how Powerwall could “bridge the gap between renewable energy supply and demand.”
The lithium-ion battery charges itself from electricity that solar panels generate. The energy stored in the device can be used as a power source for industrial and home applications or as a backup energy source. It can also help to reduce grid power consumption during peak electricity hours when grid power costs more. “Powerwall offers independence from the utility grid and the security of an emergency backup,” Tesla said.
Musk's announcement reached millions of potential consumers, aided in part by Powerwall's adoption by big name firms such as Amazon Web Services (AWS) and Target. AWS uses Tesla's battery technology to help power its data centers and to integrate electricity sourced from renewable energy sources into its operations. “Batteries are important for both data center reliability and as enablers for the efficient application of renewable power,” James Hamilton, a distinguished engineer at AWS, said in a statement. “They help bridge the gap between intermittent production, from sources like wind, and the data center's constant power demands.”
Tesla's battery storage units, as well as offerings that other battery suppliers provide, can also help industrial operations to reduce their peak power consumption. “Because electricity rates for factories are often based on peak levels of consumption, battery storage technologies can help to reduce peak power loads and thus reduce costs,” Matthias Vetter, head of PV off-grid solutions and battery system technology, for Germany-based Fraunhofer-Institut fur Solare Energiesysteme (Fraunhofer Institute for Solar Energy), told EBN.
In many ways, Tesla's battery pack offering is hardly different than hundreds of other lithium-ion battery energy storage alternatives on the market, including batteries that other carmakers, such as Nissan, Toyota, and Volkswagen, produce for industrial applications. “This is a very competitive market,” Vetter said.
Musk also has a very important business need to seek out new markets for Tesla batteries, which represent a very expensive component in electric cars, as Tesla seeks to fill its battery production capacity. Tesla's “Gigactory” factory, for example, which is slated to come on-stream in 2017, will reportedly have a battery production capacity of 50 gigawatt hours for up to 500,000 cars. Musk is thus attempting to find more ways to make money out Tesla's billion dollar capital expenditures in batteries that it can sell for other applications beyond its super sports cars.
“Tesla needs to fill the production capacity of its plant and this is why it seeks to offer batteries for use in addition to the car industry,” said Vetter. “It really wants to use the same cell for different applications.
If Tesla is successful, it could help to stoke energy storage growth on an industry level, leading to lower energy storage pricing for supply chains that use alternative energy sources, says Vetter.
Already, prior to Tesla's announcement, PV energy storage battery saleswere set to explode from about $ 2.2 billion in 2015 to over $5 billion in 2018, according to analyst firm IHS. The Grid-connected energy storage market is expected to reach a total of over 40 GW of installations by 2022, according to IHS.
If Musk has his way, his evangelizing could maybe do for battery storage what Steve Jobs did for smart phones. “Tesla already has a great reputation for making cars, and this announcement definitely helps the energy storage market gain momentum,” said Vetter.
Look into your crystal ball and let us know how you think this technology might evolve to benefit electronics OEMs in the comments section below.