Musk, Tesla and electrical storage

Elon Musk is probably not the untrammeled genius he and everyone else thinks he is (example—some of his space ventures are mathematically insane) but most of the time, this man actually rates his status as a visionary (example—his idea to make an electric car that is so cool, it becomes an object of status emulation.)  And it has been quite enjoyable to watch his thinking evolve as he struggles to make his Tesla S even more desirable.

The S was made possible because of its lithium-ion battery pack's ability to store more electricity than with previous battery designs.  His problem is that lithium-ion batteries are expensive which prices the S out of the range of at least 97% of the population.  Since the price of those batteries is largely determined by its chemistry and radical improvements in battery chemistry do not appear on the near horizon, Musk has decided to attack the problem the old-fashioned way—vertical integration combined with economies-of-scale production techniques.  He is calling his new production facility a Gigafactory.

The possibility of cheaper lithium-ion batteries has put Musk in touch with some other visionaries like Tom Leyden of Grid Storage Systems who hopes to produce stand-alone solar cell / battery arrays to power homes, etc.  So Musk looks into the possibility and realizes that if such systems became affordable, the energy utilities would lose many (if not most) of their customers.  Frankly, I think Musk is getting WAY ahead of himself here but he IS addressing an interesting topic—How does new technology replace existing technology if the existing technology is owned by economically entrenched interests that do NOT want change?

Tesla Just Took Its First Step Toward Obliterating The Power Companies

ROB WILE FEB. 26, 2014,

Elon Musk just announced details of Tesla's plan to start pumping out lithium ion batteries like M&Ms at its planned "Gigafactory."

Obviously, it's big news for electric vehicles as this should bring down the cost of a very expensive component.

But it has equal and possibly greater significance for renewable energy.

We've explained that power storage is the key to unlocking widespread renewable energy. For renewables to be truly cost competitive with existing power sources, they need to be able to provide a continuous current flow, something difficult to achieve when the wind isn't blowing or sun isn't shining.

But the price to do so is currently exorbitant. Tom Leyden, the head of Solar Grid Storage, whose revolutionary container storage system on the side of a Maryland freeway we profiled a few months ago, says batteries currently represent 50% of the cost of one of his systems.

Which is why he's hailing Tesla's decision.

"If those prices comes down, our market expands, we can offer a lower priced product and put more storage in our system," he told us. "So this is very important."

Solar execs are comparing the current environment to where photovoltaic costs were in the last decade, just before their prices plummeted.

"At that point in time solar modules were very expensive, and the industry was pushing a couple of different alternatives: thin films were going to be photovoltaic of the future," said Tony Clifford, CEO of Standard Solar. His company also worked on the Maryland project.

But thanks to worldwide government incentives, he said, the price of traditional silicon ended up falling through the floor, paving the way for the current renewables boom.

In this case, of course, the marketplace is creating the demand for lithium ion batteries. But renewables will again be the beneficiaries.

"You're going to be able to drive costs out right across supply chain and see some significant cost reductions in storage technology."

A report from the Rocky Mountain Institute released prior to Tesla's announcement (spotted by GTM) was even more extreme about the possibilities for cheaper storage.

"Whereas other technologies, including solar PV and other distributed resources without storage, net metering, and energy efficiency still require some degree of grid dependence, solar-plus-batteries enable customers to cut the cord to their utility entirely," they write. "The coming grid parity of solar-plus-battery systems in the foreseeable future, among other factors, signals the eventual demise of traditional utility business models," the authors wrote.

Tesla's announcement represents a major step towards a larger, cheaper energy storage market that could have huge implications for making renewables more widespread. more

Personally, I am not so worried as Musk about the survival of energy utilities.  My guess is that when new technology becomes reliable enough to replace their old fire-based systems with something more high-tech, they will own that too.  At least in my neck of the woods, I find utility companies quite capable of evolving and upgrading their equipment.

MUSK: Hard Times Must Come For Utilities

ROB WILE  FEB. 27, 2014

Elon Musk is warning fossil fuel-dependent utilities to prepare for hard times.

In comments made at a panel set up by the California Public Utilities Commission, Musk said addressing climate change depends on upending traditional power providers, and he called on regulators to help lower the cost for renewable providers to compete with them.

"There will be some amount of strife for existing utilities, particularly ones heavy into fossil rules," Musk said. "There will be bit of a hardship for them. But we have no choice. We have to decide if we're going to have clean, sustainable energy or not and if we decide want good future...and the only good future is one with [clean] energy."

Musk argued for a carbon tax, expressing disbelief at the ongoing presence of hydrocarbons for fuel use. "It's amazing that we burn oil — it has much higher value in plastics," he said. "It's like burning the furniture in your house instead of firewood."

SolarCity CEO Lyndon Rive warned of the danger that regulators would allow the current monopolistic and fossil fuel-heavy power company model to persist even as renewable energy grows.

"What don't we don't want to have happen is the innovation, and then old biz model still continues," he said. "We don't want two energy infrastructures. At some point someone has to shut down, and if you fast forward 10 or 20 years, I don't think we'll be shutting down cleaner energy."

It is perhaps telling that the panel, called "Innovation and the Impact of Regulation," did not feature a single representative from one of California's utilities. The only other member of the panel was Michael R. Peevey, the commission's president who also serves as chairman of the California Clean Energy Fund. The commission regulates privately owned electric and natural gas companies among other duties.

The panel comes one day after Tesla announced details for its Gigafactory, which by 2020 will produce 50 gigawatt hours-worth of battery packs. Panasonic, the principal partner in the Gigafactory, currently makes a total of only about 6-7 gigawatt hours-worth of batteries. Tesla's batteries will be used both in Tesla's fleet and will help bring the cost of batteries for SolarCity power storage units down. The batteries currently comprise at least 50% of the cost of other solar storage units.

Musk emphasized that regulators will have to prove flexible to work around what amounts to monopoly control of power by most utilities.

Peevey seemed to be game, suggesting utilities would be devolve into "wires companies" providing basic infrastructure if they don't invest early enough in renewables. "The race goes to the swift and to the clever," he said. more