Tesla transforms into Energy Innovation Company

Last night, Tesla Motors (TSLA) transformed into something much, much bigger than simply an automotive manufacturer. As we predicted prior, Tesla is becoming an energy innovation company. 

On Tesla's press materials (from last night), they underscore this new vision: "Today, Tesla introduces Tesla Energy, a suite of batteries for homes, businesses, and utilities fostering a clean energy ecosystem and helping wean the world off fossil fuels. Tesla is not just an automotive company, it’s an energy innovation company. Tesla Energy is a critical step in this mission to enable zero emission power generation." We have the full (uncut) video of Elon Musk giving what The Verge just called the "best tech keynote I've ever seen"...

And, as evidenced in the video above, Tesla introduced its Powerwall home energy storage solution and its Powerpack commercial and utility-scale solution. Both solutions are modular and, as Musk said, "infinitely" scalable. Tesla explains that these products will "manage power demand, provide backup power and increase grid resilience." How big is Musk's real plan here? According to Mashable, "Our goal is to fundamentally change the way the world uses energy," Musk told a press conference at the Tesla Design Center, "... we want to change the entire energy infrastructure of the world to zero carbon." He explained that in order to meet the energy needs of the entire world, we would need two billion Powerwalls, "That seems like a crazy number, but it’s comparable to the number of cars and trucks on the road [around the world] — and they get completely refreshed every 20 years."

And, how big is the business opportunity for Tesla? From an industry growth standpoint, Bloomberg showcased an Energy Storage Market graphic that demonstrates the potential for this new, transformative business model...

Source: Navigant Research/Bloomberg

Okay... let's get to it. We'll provide a brief overview of the three new initiatives Tesla Energy will be providing.

Battery Solution for Home 

This is of utmost interest to Tesla Model S owners. It's called the Tesla Powerwall. It's a beautiful, turn-key product available this summer that you can mount seamlessly on any wall (indoor or outdoor) at your home. Tesla’s selling price to installers is $3500 for 10kWh and $3000 for 7kWh. And, it even comes in colors to match your Model S. Musk says the Powerwall is designed to be installed in "under an hour," so labor costs should be minimal. 

Source: Tesla Motors, SolarCity (note: Powerwall can be installed indoor or outdoor)

The 10kWh Powerwall is optimized to provide backup when the grid goes down, providing power for your home when you need it most. When paired with solar power, the 7kWh Powerwall can be used in daily cycling to extend the environmental and cost benefits of solar into the night when sunlight is unavailable.

According to Tesla, the battery can provide a number of different benefits to the customer including:

• Load shifting – The battery can provide financial savings to its owner by charging during low rate periods when demand for electricity is lower and discharging during more expensive rate periods when electricity demand is higher
• Increasing self-consumption of solar power generation – The battery can store surplus solar energy not used at the time it is generated and use that energy later when the sun is not shining
• Back-up power – Assures power in the event of an outage

Although Musk is Chairman of the largest solar provider in the U.S., Solar City, he has also begun working with other partners on Powerwall, including Treehouse, SolarEdge, and Green Mountain Power.

Battery Solution for Businesses

In addition to previous reports that Tesla has business customers including Walmart and Cargill, today Tesla announced additional existing partnerships with Target, Amazon, EnerNoc, and Jackson Family Wines. “Tesla’s cutting-edge technology offers unique benefits to powering these stores, most importantly relieving stress from the electrical grid at peak times," explains David Hughes at Target. "We're excited to roll out a 4.8 megawatt hour pilot of Tesla’s energy storage batteries in our US West (Northern California) Region. This complements our strategy to use renewable energy to power our global infrastructure.” said Amazon's James Hamilton.

Source: VentureBeat

Battery Solutions for Utilities

For utilities, Tesla Energy's systems support applications including peak shaving, load shifting and demand response for commercial customers while offering, renewable firming and a variety of grid services at utility scales. "Tesla’s bold approach to advancing battery technology will change the way we build our cities forever,” explains Susan Kennedy, CEO of Advanced Microgrid Solutions. Along with projects already in motion with Advanced Microgrid Solutions, Tesla announced other partners including Southern California Edison, AES, SoCore Energy, and Oncor. 

Source: Wired

How big is this business opportunity for Tesla? One telling article in Dallas Morning News points out that "Texas’ largest power line company, Oncor, announced a proposal to install 5,000 megawatts of batteries on the Texas grid, what is believed to be the largest project of its kind in the world... at $5.2 billion, they [Oncor] want to install enough batteries to handle one-eighth of the state’s power load on an average winter’s day." The article explains that, "Oncor’s proposal is built around the lithium ion battery... and the battery and car manufacturer Tesla has assured Oncor it can bring costs down even further."

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If you're interested in getting a Powerwall for yourself, you can reserve it now.

For more information on Tesla Energy, we've provided a link to the Tesla Press Kit.

And for Solar City's offering (combined with Tesla's Powerwall), it's available here.