Storage Wars II: Changing the Game

Read Part I of Storage Wars

One of the frustrations that has made integrating variable power resources, such as wind and solar, an engineering challenge is the lack of grid-scale energy storage systems. That’s one of the issues that keeps Bonneville Power Administration boss Elliot Mainzer, among others, up nights.

But what if the solution isn’t to go big – what if the solution is to go home?

Go home, as in, make residential energy storage an affordable reality?

In May, electric car manufacturer Tesla Motors whipped the energy marketplace into a frenzy with the announcement of a bold foray into battery energy storage for residential, business and utility applications: the PowerWall, a three-foot-by-four-foot, 7-inch thick lithium ion module capable of storing up to 10 kilowatt-hours of energy. With typical Tesla panache, the PowerWall is sculpted and painted so stylishly that it wouldn’t look out of place on the wall of a Pearl District loft. Because the average U.S. home uses about 30 kWh of energy per day, multiple PowerWall batteries can be integrated to achieve full energy independence.

You can say this much for Tesla: it has style.

Tesla’s announced pricing ($3,000 for a 7 kilowatt-hour system, and $3,500 for a 10 kWh system, not including installation and inverter costs) was less than a quarter of what some analysts were predicting; within a week, Bloomberg was estimating that the new battery systems had “already generated $800 billion in potential revenue for the company.” Even Tesla CEO Elon Musk was shocked (pardon the pun) by initial demand for the new batteries, calling it “crazy off-the-hook,” and adding that “the sheer volume of demand here is just staggering.” Within a week of Tesla’s announcement, expected PowerWall production was already sold out through mid-2016.

Tesla’s PowerWall home system, when coupled with solar panels, provides a backup power supply in case of an outage and for storing power for use during the evening hours. Connected to SmartGrid devices, the PowerWall will be able to charge during the day, when variable power is plentiful and demand and prices are low. Multiple SmartGrid-enabled, storage system-equipped homes can then be aggregated as a grid-scale resource to help integrate variable power resources.

Tesla is also pitching commercial- and utility-scale applications, and recently announced collaborations with Texas utility Oncor and Southern California Edison.

Utility analysts are already taking a long, hard look at the potential impacts of Tesla’s innovative new product line on the power grid – and even on the economic health of the utility industry. In the near-term, the high combined cost of solar panels, batteries, power inverters and installation will restrain broad market penetration. But as technology advances and prices drop, large-scale deployment of battery storage systems could have profound impacts on generators, transmission providers and investor-owned utilities.

As Mainzer noted in a May memo to the BPA workforce, “In contrast to today’s model, where centralized power plants distribute power over long transmission lines, we could eventually see end users producing and storing their own power, relying less on their local utilities. That could reduce utilities’ power and transmission revenues. The upside of this technology, of course, is enhancing reliability and realizing the environmental benefit of more carbon-free energy sources. The challenge for utilities will be to figure out how to remain financially viable in this new model.”

What do you think about Tesla’s recent announcement? Do you see the PowerWall as a potential game-changer for both SmartGrid advocates and the U.S. utility industry?