Tesla Takes Aim at the Grid

Ending several months of speculation, electric vehicle firm Tesla Motors officially moved into the energy storage market on April 30 with the announcement that it would begin marketing two new battery products, the home-based Powerwall and the larger, utility-scale Powerpack.

Tesla CEO Elon Musk unveiled the two batteries at a flashy ceremony at the Tesla Design Studio in Hawthorne, Calif., next door to SpaceX headquarters (which he also heads).

The 10-kWh Powerwall (Figure 1) is an integrated "plug-and-play" design including a liquid thermal cooling system and software that receives its dispatch instructions from a solar inverter. The system is intended for residential load-shifting, backup power, and enabling greater self-consumption of solar energy.

1. Wall of power. Tesla's 10-kWh Powerwall is designed for home use in conjunction with rooftop solar. This photo shows a two-unit system; up to nine can be paired together. Source: POWER/Tom Overton

The 100-kWh Powerpack (Figure 2) is aimed at the commercial and utility markets and is designed to be combined into 0.5-MWh to 10-MWh and larger blocks. Tesla said that it has customers for these batteries already and is working with Southern California Edison (SCE) and AES Energy Storage to deploy them. AES will be leveraging the Powerwall across its distributed energy platforms.

2. Packed. The 100-kWh Powerpack is intended for commercial and utility use. Musk said it could be scaled up to 1 GWh in capacity. Source: POWER/Tom Overton

Both will be marketed by a new subdivision, Tesla Energy. Musk said the Powerwalls are available for order now at a price of $3,500 for the 10 kWh model (which can be scaled up to 90 kWh), while the Powerpack will be priced at $250/kWh.

But Tesla is not just looking to sell batteries. Musk said before the ceremony, "Our goal is the complete transformation of the entire energy structure of the world."

Just how broad Musk's ambitions are can be drawn from a statistic he threw out after that remark: He figured it would require 2 billion Powerpacks deployed around the world to transition to 100% renewable energy.

Getting to that lofty point would require vastly expanded manufacturing capacity, but there Musk had another announcement. He said the company's now-under-construction Gigafactory in Reno, Nev.-now called Gigafactory 1 and appearing on the cover of the May POWER-is only the first in a planned fleet of battery manufacturing facilities.

Home Disruption

Economically viable, home-based energy storage has been a possibility generating considerable attention over the past year or two. Both renewable energy advocates and power sector groups have predicted it could lead to a utility "death spiral" as ratepayers go off-grid, leading to rising rates that would push more and more customers away-though this has not stopped some utilities from taking steps that seem certain to accelerate the trend.

Even Energy Secretary Ernest Moniz said at a hearing of the Senate Energy and Natural Resources Committee on April 27 that "consumer-level storage combined with distributed generation is getting to be extremely interesting and can be yet another challenge to the utility business model."

But until this year, there was little beyond speculation. Tesla's move into home storage will change that.

Grid-Scale Challenges

How far Tesla will get into the utility market, however, is a different story. There, the company is playing catch-up, but it is starting with an impressive list of partners.

Market leader AES Energy Storage announced on April 27 that it now has 260 MW of storage capacity under construction or in development. AES's projects include the 100-MW order from SCE announced late last year, but also include the firm's first utility-scale project in the Midcontinent Independent System Operator and the first project in Europe, a two-stage, 100-MW system in Northern Ireland.

In addition to AES and SCE, retailers Amazon and Target, grid management firm Advanced Microgrid Solutions, demand response firm EnerNoc, and Texas utility Ocnor all announced the same day that they were planning to deploy Tesla's batteries or partner with the company to market them.

Still, Tesla is competing not just with other li-ion batteries but other battery technologies, such as redox flow.

John Jung of storage solutions firm Greensmith-which is openly technology-agnostic about its battery systems-said, "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.

Bill Watkins of Imergy Power Systems, which markets a line of flow batteries, was more negative on the announcement.

"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 advantages of flow batteries is they can be charged and recharged nearly an unlimited number of times without degradation."

Musk acknowledged the challenges in entering the grid-scale market, but said he thinks Tesla "has a better product at a better price." Tesla is guaranteeing the Powerwall for 10 years of operation.

Busy Month

In addition to Tesla's announcement, this month has seen a flurry of activity in distributed and utility scale storage. On April 17, Chinese firm Solar Power, Inc. and Korean battery firm ZBB Energy became the latest solar and storage firms to team up to offer integrated systems. The deal envisions ZBB supplying at least 40 MW of storage capacity.

On April 27, Arizona-based American Solar & Roofing announced that it would also bring an integrated solar PV-battery system to the consumer market. The design is aimed directly at the Salt River Project's new rate structure, and the company claims its system can offset SRP's highest tier demand charges.

-Thomas W. Overton, JD is a POWER associate editor (@thomas_overton, @POWERmagazine).

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