Breaking out of a strict focus on electric vehicles, Elon
Musk’s company Tesla Motors recently
announced production of a new line of batteries designed to store and deliver
energy for buildings. In a debut
video for the new “Powerwall,” Musk characterized the technology as “a
fundamental transformation of how the world works.” That’s a big claim, but Musk
is no stranger to big ambitions.
One of Musk’s ambitious goals is to have the world
transition to 100% renewable energy. To that end, he has already developed
commercially viable ways to develop two of the most quickly growing markets in
the United States: solar energy and electric cars. He is a chairman of
SolarCity, one of the nation’s leading solar developers, and the CEO of Tesla
Motors, one of the nation’s leading manufacturers of electric vehicles.
(Another lofty goal is to make humanity into a spacefaring civilization, to which
end he has founded the civilian spaceflight venture SpaceX.)
Now, with the announcement of the Powerwall, Elon Musk is
moving into a third market with tremendous potential for growth: energy
storage. Many energy analysts agree that storage is going to be a very
important and lucrative market in the next decade, with the potential to upend
existing utility business models. Considering Musk’s impressive success with
Tesla Motors and SolarCity, when he says the new Powerwall is “a fundamental
transformation,” the claim deserves some attention.
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| Tesla's Powerwall |
Mixed Reception in
the Media
Some media coverage of the Powerwall’s announcement has been
largely celebratory. For example, a piece
at Vice describes the Powerwall as potentially being “among the most
significant, recent technological innovations.” Another piece at greenbiz.com
quotes a professor of energy policy at Exeter University as describing the
Powerwall as a “nail in the coffin” for the standard utility business model.
The basic argument for this idea is that as solar power and energy storage
become increasingly affordable, more utility customers will meet their needs
with their own power, diminishing the sales that utilities rely on—and
potentially changing the world, or at least U.S. energy markets, as Musk aims
to do.
Other commentators are more skeptical about the Powerwall. The
Motley
Fool notes that although the potential demand for this technology is large,
“the market for energy storage is new and mostly unproven.” The Register
takes issue with the Powerwall’s limited capacity to actually deliver power.
Although each Powerwall unit can store between 7 and 10 kilowatt-hours of
energy, it puts out stored energy only at a rate of two kilowatts. This means
that at full blast, each Powerwall will run for between 3.5 and 5 hours, but it
also means that each unit could not run multiple large appliances at once. For
example, a 1.2 kW air conditioner and a 1.5kW electric kettle running together
would overtax the Powerwall. The low rate of power delivery may prolong the
battery’s useful life, but it also diminishes its ability to fully power a
home. Meanwhile, Tristan
Edis at businessspectator.com takes issue with the price. He calculates
that the Powerwall would require an 11-year payback period, which is one year
longer than the product’s warranty. Similarly, NPR’s
coverage quotes some skeptics who argue that the price for the Powerwall is
simply too high for many customers.
Upping the Ante: The
Powerwall is the Beginning of Something Big
Both the celebrants and the critics of the Powerwall raise
legitimate points, but the Powerwall seems likely to live up to its hype. Musk
describes the demand for the Powerwall so far as being “crazy off
the hook,” noting that customers have already ordered all the units that
Tesla can produce through 2016. Still, given the possibility of a long payback
period, the existing demand for the Powerwall may be strongest among those with
more environmental than economic motives.
In my view, though, the best aspect of the Powerwall is the
fact that it is a first draft open to improvement. As with Tesla’s electric car
technology, Musk has said that he will not pursue patent protection for the
Powerwall, instead allowing the whole world access to the technology and the
freedom to improve it. As the industry in general scales up, and as Tesla in
particular scales up production at its new Gigafactory in Nevada,
improvements to the product and reductions in cost are almost certain. Ten
years ago, solar panels cost far more and produced far less energy than they do
now. Ten years ago, lithium-ion batteries (the Powerwall’s basic technology)
cost three times as much and stored roughly half as much energy. Ten years from
now, these technologies will likely beat the price of fossil fuels. Tesla’s
first draft may not change the world all by itself, but it is a great boost for
a commercial energy storage movement.
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