There’s More to Tesla’s New Batteries Than Solar Storage

When Tesla Motors’ CEO Elon Musk announced the advent of the Tesla Energy suite of stationary batteries on April 30, he focused on the batteries’ use for solar storage. At the launch for the Powerwall product, Musk told the crowd, “You could actually go, if you want, completely off the grid. You can take your solar panels, charge the battery packs, and that’s all you use.”

Where Tesla batteries are least likely to be used

I’ve written several times about why this use of Tesla’s batteries, and those of other manufacturers, is unlikely to amount to much of a market. See my articles Utilities, Cheap Batteries Won’t Hurt You. You Have Much Worse Things to Worry About and Why Tesla Won’t Disrupt Utilities for more background on why I’ve taken this position. A few other writers have made this point as well, including Tom Randall of Bloomberg Business in his article Your Home Doesn’t Matter for Tesla’s Dream of a Battery-Powered Planet.

Just because there’s little US market for solar storage applications doesn’t mean that the Tesla Energy stationary battery line is going to be a flop. Quite the contrary. It’s already on its way to being a huge success. Tesla isn’t selling the batteries yet. In fact, according to the company’s website, the batteries won’t be available for shipping until later this year. But the company is taking reservations. Musk, in a recent conference call, claimed that Tesla has a billion dollars’ worth of preorders on its books, which is more than it can deliver in all of 2016. It’s currently unknowable how many of those reservations will turn into actual sales, but if most of them come through, the launch of the Tesla stationary battery line will rank as one of the leading product introductions in the history of American industry.

But if those batteries aren’t going to be used for solar storage, what are they going to be used for? There are four more major applications that have been proposed for the Tesla Energy suite of batteries: residential backup, time-of-use rate arbitrage, commercial demand-charge management, and grid-scale storage. These applications aren’t limited to Tesla batteries by any means, and products from other manufacturers—including LG Chem, BYD, and Samsung SDI—are also competitive in some of these markets. Of these four applications, I expect at least three to drive lots of sales for Tesla and its competitors for many years to come.

This five-part blog series examines four applications for Tesla’s batteries. Part two of the series talks about how the batteries can be used in time-of-use arbitrage. Part three discusses how the Powerwall product can be used for residential backup power. Part four speaks to how the Powerwall product can be used for demand-charge management. And the final installment addresses how the batteries can be used for grid-scale storage. If you’d like to share your opinions on any of these topics, please leave a comment below or send us an email.