.James Lee sees a market for a new battery backup system announced last week by automaker Tesla and SolarCity.
Lee, who heads Strategic Foresight Investments, Wilmington, says his mother bought a back-up generator after multiple outages, including one that lasted five days.
A battery backup potentially expands the market for solar and adds to prospects of a “disruptive technology, Lee says. More on that later.
News of battery backups did not match the buzz surrounding the Apple Watch, but the news from the two Silicon Valley companies with deep pockets did cause a stir late last week. It had a lot to do with the buzz surrounding Tesla and SolarCity co-founder Elon Musk and a $3,500 starting price.
SolarCity, which opened an operations center near Newark last month, also announced it would offer the system in coming months in Delaware. Solar City has a second operations office in Seaford that has operated in southern Delaware for a year.
SolarCity Co-founder and Chief Technology Officer Peter Rive offered additional details about the rollout in a post on the company’s blog. Tesla CEO Elon Musk also held a rollout event on what some observers view as a “game-changer” in the world of solar.
Musk, who heads Tesla, also serves as chairman of SolarCity, which is based in San Mateo, CA. Rive is a cousin of Musk. Musk announced Tesla will also form a separate business that will offer the back-up system to customers other than those of Solar City. Tesla is partnering with Panasonic in building a massive factory in Nevada to produce batteries in a plan to bring down costs.
“Elon Musk has a lot of capacity that he’ll need to utilize at his planned $5 billion ‘gigafactory.”’ Lee says. “To the extent that he can use those batteries for either Tesla or Solar City makes perfect sense. This helps him to spread his bets, while engaging in vertical integration. “
The backup battery pack, which is about the size of a suitcase, can be be mounted on the side of a home in many areas.
More than one back-up system can be installed, giving the house or small business the chance to be off the grid for an extended period of time.
The news also provided more insight into a new lithium ion battery production site near Reno, Nevada. Tesla and Panasonic are partners in the venture.
For businesses and government organizations, SolarCity will incorporate the new Tesla battery into its DemandLogic energy storage system to increase the utility cost savings customers can realize from using stored solar electricity. According to a CNet video, the commercial battery would cost about $25,000.
DemandLogic allows businesses to reduce energy costs by using stored electricity to reduce peak demand. The system also provides backup power during grid outages.
For remote communities on islands, military bases and other isolated areas, SolarCity will incorporate the new Tesla battery into its GridLogic microgrid service that can manage electric power.
For residential customers, SolarCity will provide a turnkey service that includes permitting, installation and ongoing monitoring. The installed system stores electricity generated from the solar power system, using that power to automatically provide backup power during outages.
SolarCity also plans to offer these off-grid systems to eligible Hawaii customers.
Demand for solar on the island chain has been so strong that the electric utility was able to stop new customers for a time from feeding solar power into the grid, due to concerns about excess solar power putting strains on the system. Electric rates on the island chain are three times higher than on the mainland. A recent study did indicate that the grid on the island chain can handle double the power that had been projected and the ban was lifted.
That would have implications for utilities in other areas if solar power becomes more popular and electricity from those systems becomes a bigger factor.
Representatives of Delmarva Power were asked to comment on the growing use of solar, but did not immediately respond.
The possibility of disruptive technology in the electrical market may have been one factor in a decision to merge Delmarva owner Pepco with much larger Exelon. That merger is nearing final approval with various regulators.
Hawaiian Electric, meanwhile, has opted to merge with a much larger Florida utility.
Solar power receives subsidies and utilities in sunny Arizona have lobbied to add charges for solar system hook-ups to the grid as installations increased sharply. Critics claim the utilities are attempting to kill home solar and point to a drop in installations.
SolarCity’s energy storage rollout supports efforts already underway in some states to integrate storage capacity with existing grid resources.
A distributed network of solar power systems and energy storage devices can also make renewable energy available on demand to utilities and their customers. In the future, distributed solar and storage resources are likely to become assets, and homeowners and businesses may be able to collect revenues by providing self-generated, clean energy to others, a Solar City blog post indicated.
“I see distributed power generation as a growing trend,” says Lee. “There are long-term implications – as traditional utilities lose customers to distributed power generation, their production overhead may be shared by a smaller remaining base, leading to higher costs and more customer migration. We’ve already seen this happening in Germany, where renewables supply 27 percent of total electricity demand. In the U..S., that figure is closer to 15 percent.”
The announcement by Musk was greeted with skepticism in some quarters.
Critics point out that gains in battery efficiency are difficult to achieve. They also point to the prospect of breakthroughs that could make lithium ion batteries obsolete.
Makers of back-up power systems also point to the limited amount of storage from batteries when compared to the use of other fuels.
“Musk is talking about lithium-ion battery technology, which has been around since the 1970s,” Lee says, “The key advantage here — it is a known technology and very scalable for production.”
At the same time, the potential exists for this technology to be tweaked for much higher efficiency and time times quicker recharge by replacing graphite anodes with porous ribbons of graphene, Lee says.
While graphene is expensive, costs will come down, he notes. Lee has closely tracked graphene, which has the potential to be a disruptive technology, thanks to its strength and ability to conduct electricity.
Tesla is also working on other battery technologies. At the same time, competitors, such as GM looking at other options, Lee says.
Japanese carmaker Toyota, meanwhile, is looking at hydrogen power as an alternative to batteries.
SolarCity began taking orders for the new energy storage systems for new solar customers in the company’s current service area, and will accommodate customers on a first-come, first-served basis.
The company plans to make the battery backup system available to its existing solar customers later this year. One the Nevada plant opens, the company is expected to aggressively market the back-up system.
Further information is available at http://www.solarcity.com/batterybackup.
I have been following the tesla battery development for a while and was impressed with the detail of information in this article. I am an Arizona resident and plan to get the tesla battery system in the near future to supplement my solar system.