E.L.D. Cornerstone.  Life in words & pictures

May 1, 2015

Most people are familiar with Tesla as a start-up company that builds flashy — if expensive — electric vehicles.

But it turns out Tesla CEO Elon Musk has much bigger aims than just building cool cars. He wants to makebatteries a core part of Tesla's business, with the modest aim of revamping the nation's electricity system.

Here's the basic idea: Batteries are already a key component of Tesla's electric vehicles, accounting for a big portion of the price tag. But they could potentially have much broader applications. Batteries could help homes and utilities make better use of solar power: charging up when the sun is shining and saving power for later. They could bring electricity to areas that aren't connected to the grid. Or protect against outages. At least, that's the theory.

"Our goal," Musk told reporters at a press conference on Thursday, "is to fundamentally change the way the world uses energy."

Musk was unveiling a new lithium-ion battery that people could buy for their homes, called the Powerwall. You can pay $3,000 for a 7 kilowatt hour (kWh) batter or $3,500 for a 10 kilowatt hour battery that you can affix to your wall. People could buy multiple batteries and stack them together. There are also going to be industrial versions for businesses and utilities operating the electric grid.

"The issue with existing batteries is that they suck," Musk said. "They are expensive, unreliable and bad in every way." Tesla wants to change that by pushing down battery prices — making use of its new GigaFactory in Nevada — and allowing people to stack batteries together for broader applications.

This all raises some big questions: Why would anyone want to buy these batteries? And are they really as transformational as Musk claims?

Batteries could boost rooftop solar — though most people won't go "off grid"

Let's start with homeowners, since that was the focus of Tesla's press conference.

Imagine that you've installed solar panels on your roof — as it happens, Musk alsoowns SolarCity, the largest installer of rooftop solar panels in the United States. A storage system could allow you to charge up batteries during the day, when the sun is shining, with excess electricity you don't need. You could then draw down that electricity at night, when you need it.

Musk said that there are already about 300 homes in California with this sort of battery backup — in the event of a blackout, these homes can tap into their batteries to keep the power flowing. Musk added that SolarCity would offer battery backup with all installations within the next 10 years.

Backup storage is a nice feature, but not exactly transformational. So what else might battery storage do?

Well, more radically, battery systems could allow homes to go completely "off the grid" — so that they're not reliant at all on their local utility for electricity.

This "off-grid" possibility has gotten a lot of coverage, but it's a little overhyped. For most people, going completely off the grid won't make sense, unless you have some strong personal desires to do so. Right now, in most states, if you install solar panels on your roofs, you can simply sell the excess electricity generated during the day back to the grid. This is still easier and much, much cheaper than buying up a bunch of $3,000 batteries.

But here's where things get interesting. In many states, utilities have been pushing to change the laws that require them to buy back electricity from solar homes — after all, too much rooftop solar cuts into their business. In Hawaii, for instance, utilities have put limits on how much solar electricity they'll buy from households, saying that it's putting an undue strain on the grid.

Batteries could begin to alter this dynamic. Interestingly, SolarCity will start offering "off-grid" systems first to customers in Hawaii who "might otherwise be prevented from using solar power." The expansion of rooftop solar power is in limited by utilities' willingness to accommodate these systems. With batteries, there's no such limit. This is something to watch going forward.

A bigger deal: Energy storage could help utilities use more renewable power

To really understand the impact of cheaper energy storage, however, we may need to look beyond homes with solar panels. One huge potential application of batteries (or other storage devices) is that they could help electric utilities harness more wind and solar power.

Without storage, utilities can use electricity from wind turbines when the wind is actually blowing and they can only make use of electricity from solar panels when the sun is shining. If it's dark or calm, they need to turn to fossil fuels. And juggling these sources can be difficult. That's a real limit on the expansion of wind and solar (which currently provide just 4.4 percent and 0.4 percent of US electricity).

Storage can change that and help expand the use of these sources. For example, solar panels are often producing the most electricity during the day, when the sun is at its peak. But people are often using the most electricity during the evening, when they come home from work and turn on all their appliances. Storage could help better match supply and demand.

What's more, the use of batteries or other storage can improve the reliability of the grid — utilities can more precisely deploy electricity when its needed and even handle blackouts better. (For more on how storage could revolutionize the grid, check out this Department of Energy report from 2013.)

This isn't theoretical. Already, a variety of utilities around the country are planning to spend billions of dollars on energy storage. That said, Tesla won't necessarily dominate this market, since there are a wide variety of storage options out there besides batteries — pumped hydro, compressed air energy storage, flywheels, electrochemical capacitors. If Tesla can drive down battery costs, that will help expand the options available. But there's no guarantee they'll be at the forefront of this transformation.

What's more, this is only looking at the near future. If energy storage continues to get cheaper, people are likely to find more uses for it — as David Roberts points out , solar power could be paired with wireless charging to completely transform our urban infrastructure. We're likely only just beginning to find uses for storage.

Batteries could help bring power to remote communities

Meanwhile, even if it doesn't make sense for some homes to go off-grid, it may make sense for some large businesses or communities to do so — at least in part. And here's where Tesla wants to get involved.

SolarCity and Tesla are planning to offer a "microgrid" system called GridLogic to communities that are susceptible to outages or high energy costs — like island communities, hospitals, or military bases. This system will combine solar energy, batteries, and load control to provide dependable power, even when the grid is down. Crucially, "GridLogic can operate either in conjunction with or independently of the utility grid."

The big question: Will battery costs keep falling?

Of course, for batteries to have a truly massive impact on the energy system, they'll need to keep getting cheaper. And it's still an open question how far prices can fall.

For an optimistic take on the price question, see this post by Ramez Naam. He notes that energy storage costs have been falling for 20 years — including costs for lithium-ion batteries. And, as batteries become more widespread and the market expands, it's reasonable to expect the price to keep dropping.

Not only will that allow utility and home energy storage to become more widespread, but it would allow the price of electric vehicles to come down (the battery is usually a significant chunk of the cost of an electric car). Check out this recent study in Nature Climate Changeon the declining cost of electric vehicle battery costs since 2005: ( Nykvist and Nilsson, 2015) 

The more pessimistic view, meanwhile, is that battery prices can't keep dropping indefinitely. In 2013, Fred Schlacter wrote an essay on why batteries are fundamentally different from things like mobile phones or computers and we shouldn't necessarily expect prices to fall in the same manner.

"Batteries are not like [mobile phones or computers]," he wrote. "Ions, which transfer charge in batteries, are large, and they take up space, as do anodes, cathodes, and electrolytes. A D-cell battery stores more energy than an AA-cell. Potentials in a battery are dictated by the relevant chemical reactions, thus limiting eventual battery performance. Significant improvement in battery capacity can only be made by changing to a different chemistry."

This question will go a long way toward determining whether batteries can revolutionize our energy system or not.