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Tesla's New Home Battery Could Be The iPad Of Energy Storage

05/01/2015 05:44 pm ET | Updated May 01, 2015
Kevork Djansezian via Getty Images

Tesla Motors just released the iPad of energy storage.

The electric automaker on Thursday unveiled a line of rechargeable lithium-ion batteries -- the sort used in the electric automaker’s Model S sedans -- meant to store solar energy and power homes and businesses. The sleek, wall-mounted devices collect excess energy from solar panels throughout the day for use at night.

The batteries, due out this summer, come in two variations. The commercial-scale Powerpack, currently getting a test run at 10 retail stores across the U.S., can be used by businesses. The consumer model, the Powerwall, will sell for up to $3,500 and could rev the nascent energy-storage industry’s engine.

“It’s the iPad of stationary storage,” Jay Whitacre, a professor at Carnegie Mellon University and the chief technology officer at the sodium-ion battery company Aquion Energy, told The Huffington Post. “Tablets were out there and no one really wanted them. Then came the iPad.”

As with Apple’s iconic tablet, Tesla -- armed with CEO Elon Musk’s starpower -- could make solar-storage batteries fashionable. Though the company already has a considerable field of rivals, including tech goliath Samsung and Swiss battery startup Alevo, which raised $1 billion in private funding last year, none have generated the same amount of attention as Musk. On stage at a Tesla facility outside Los Angeles on Thursday, the product launch was akin to a new iPhone announcement.

But the real challenge will be to make owning the home device economical.

The first problem is the cost. At $3,500 each, the batteries are expensive. And since each one is limited to storing 10 kilowatt-hours of electricity, many homeowners would need to buy several in order to power their homes fully. Tesla is building a $5 billion plant in Nevada, dubbed the Gigafactory, which will produce lithium-ion batteries en masse. But, until then, the price will remain high. To boot, homeowners would have to bear the cost of installing solar panels or wind turbines to charge the batteries in the first place.

The other issue is the current electricity rate structure in the United States. Here, electricity is more expensive during the day, when solar panels generate energy, and cheaper at night. Utility companies will buy consumers' excess solar generated during peak hours and recirculate it into the power grid, then sell it back at a cheaper night rate, when solar panels aren’t producing energy.

Therefore, there's little incentive for people to use solar-storage batteries that hang onto energy during the day if they could be selling it at peak prices to the utility companies and buying it back later on the cheap.

“It only makes sense for storage if it’s more expensive to buy electricity at night and sell it back during the day,” Brian Warshay, an analyst for Bloomberg New Energy Finance, told HuffPost. “But most people aren’t on those types of rates.”

Germany, on the other hand, does offer those rates. The country encourages the use of solar storage by charging high rates for electricity drawn from the power grid in the evenings.

Some states have pioneered models similar to Germany’s. Hawaii has the highest electricity rates in the country, at over 30 cents per kilowatt-hour. Rates in New England are also high, topping more than 20 cents per kilowatt-hour.

But, across the U.S., the average price of electricity was about 12 cents per kilowatt-hour in February, the most recent month calculated by the U.S. Energy Information Administration.

“For the most part,” Warshay said, “grid electricity is just really cheap.”

At the moment, then, Tesla's new batteries stand as something of a proof of concept. But if the company can decrease its manufacturing costs, and if states start pricing electricity more aggressively, Musk's vision of a solar-powered future could become a reality.

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