Excerpt from forbes.com
It’s more about where the market and product are going than where they are today. Think about a complementary system of components:
- The big grid – always on, highly reliable power which is expensive during peak demand hours, i.e. when a family actually wants to use the power. But usually the electricity is cheap at night when no one wants to use it and those big baseload plants that are hard (or very hard in the case of nuclear) to slow down are still pumping out power. And sometimes that power is provided by strong night winds.
- Home solar – Don’t forget that Tesla’s CEO, Musk, is also Chairman of SolarCity which provides zero down leasing. Home solar is often poorly aligned to peak usage, with installers looking for maximum generation with south-facing solar panels rather than maximum generation during peak with south-west facing panels. Then there are the homes with roofs that are poorly aligned to the sun regardless, so imperfect generation is all that is possible. And that peak generation isn’t necessarily perfectly aligned with peak cost of grid electricity either, but merely overlaps with it.
- Home storage – Maximum generation alignment of home solar matters less when you can carry forward the unconsumed electricity from solar panels to your evening of cooking, washing dishes, washing clothes, and streaming Netflix on your 40″ tv. And cheap electricity you can store at night and consume when electricity is really expensive is valuable as well.
- Hype – Don’t underestimate the marvel that is Musk’s ability to get attention. The man is a rock star of event unveiling.
- Net metering – Right now, there is a lot of conflict between utilities and home solar users and installation companies. Net metering is the requirement that home solar generators get paid for electricity that they produce and pump into the grid, and only pay for the electricity that they draw from the grid. Output vs input is the net. Home solar used to be an advantage to utilities — reduced peak demand — but has become a liability — reduced or even negative revenue from users of the grid. Basically, utilities still have to pay for the grid which home solar generators use, then they lose revenue or outright pay the home solar generator who is getting use of the grid for free. Since utilities pay for the grid out of electricity revenue, they are starting to demand that people with home solar who aren’t paying much for electricity start paying for grid usage to make up for it. This is getting mixed reviews, as you can understand, but in the USA especially is leading to a desire by many to be completely grid free, a dubious value proposition. Tesla’s hype fell into an emerging market opportunity of people who had solar on their roof, didn’t have batteries but are worried that they’ll be forced to pay more.
- Time-of-use billing – Combined with smart meters, time-of-use billing is becoming much more common in utilities in the developed world. This model is simple: reduce demand during peak periods by increasing the price, typically combined with incenting shift of demand to off-peak times by lowering the price. Flattening demand curves, especially peaks, is very advantageous for grid managers because they have to have capacity for the peak. This enables storage to time-shift consumption and save at least some money.
- Design – Previous storage units are collections of lead acid batteries, basically the same thing you have in your car, but scaled vertically and horizontally. They aren’t pretty, they are heavy, they take up floor space, they require maintenance, and they are pretty much a toxic addition to homes if breached or even if the tops are removed. Tesla’s model is sleek, hangs on a wall and is much more chemically inert with no liquids. It’s a benign home appliance as opposed to an industrial object (much as some people like the industrial aesthetic at home, it’s less common).
- The Gigafactory – What Tesla has going for it is that it is building the world’s largest battery factory, and likely expanding it now that the storage line has taken off so brilliantly. Pretty much everyone paying attention knows that Tesla is already producing batteries much more cheaply on a per KWH capacity at greater volume, and the Gigafactory is going to ramp that up. Battery storage has been dropping in price per KWH of capacity for a long time, but it’s closing in on a cusp point where it’s going to be worth it for average consumers to store at least some electricity.
What all of this adds up to is that home battery storage isn’t economical today, but it’s viable for a subset of the high-consuming market, it’s desirable for its green credentials, it’s desirable due to the hype factor and it will defray its costs. And that the home storage market tomorrow will be viable for a much larger percentage of the market with increasing systemic pressures and pricing that will make it more attractive. Tesla’s home storage battery is getting attention because they are staking a major claim to a market which is expected to increase dramatically.
Why is Tesla’s battery a big deal?: originally appeared on Quora:
Answer by Mike Barnard, Energy guy, on Quora