Posted on February 18, 2016 by Matt Pressman
With news reported that Elon Musk acquired another $10 million worth of shares of solar tech installer SolarCity... [the company's stock, SCTY] jumped Wednesday by over 23.46%. This follows news that Musk also upped his stake in Tesla [TSLA]. Hmmm... does Elon Musk, Chairman of SolarCity and CEO of Tesla, have some reason to believe his two companies are uniquely poised for future growth?
It appears so. Fortune reported, "For years, Tesla has taken the lithium-ion batteries that it uses to power its cars and repackaged them up to be used with solar panels, plugged into the power grid, or connected to buildings. Since late 2010, Tesla has been working with SolarCity on installing battery pilot projects for commercial buildings, utilities, and home owners... [and now] SolarCity’s Tesla collaboration will make up a solar and energy storage system across 50 acres just north of the Hawaiian city of Lihue." So what could this kind of collaboration mean for the Tesla Energy business?
Source: Bloomberg Business
According to Bloomberg Business, "The deal with SolarCity and [Hawaii's] KIUC gives some momentum for Tesla Energy, and Musk has said utility-scale deals could be 80 percent to 90 percent of sales for the business unit. The company’s Powerwall battery, which can be installed in home garages, has generated enormous interest from consumers. But the bigger market is the larger Powerpack, which allows utilities to reduce the need for expensive facilities that only run during times of peak demand. SolarCity’s deal also shows how Musk’s two companies can link up to help each one find more business in two relatively nascent markets."
Source: Fortune; Photograph by Mark Von Holden (AP)
And, according to Electrek, "This project could be one of the biggest to date for both companies in term of energy storage. The 52 MWh Kaua’i project requires 520 Powerpacks with each a capacity 100 kWh. As per the price of $250/kWh disclosed by Musk, it would represent a $13 million project."
Above: The 12-megawatt Koloa solar array owned by Kauai Island Utility Cooperative was built by SolarCity and went into operation in 2014. SolarCity plans to build a larger array at Kapaia with a unique battery energy storage system by Tesla Energy. Source: KIUC / Pacific Business News
Deals like this could provide a glimpse into the size and scope of Tesla Energy initiatives in the near future. According to the Tesla Motors Shareholder's Letter: “Global excitement in Tesla Energy products remains very strong. To accommodate this demand, we transitioned production to the Gigafactory in Q4. While this transition did take slightly longer than we had expected, both Powerwall and Powerpack production is now operating smoothly and expanding at the Gigafactory.”
Source: Tesla Motors
In addition to Musk's most recent (personal) investments into both Tesla and SolarCity, it's interesting to note that Panasonic, Tesla's partner in the Gigafactory, just announced: "plans to accelerate the pace of acquisitions to meet its target of generating 10 trillion yen ($87 billion) of annual revenue by fiscal 2018... President Kazuhiro Tsuga has steered Panasonic away from consumer electronics to focus on... the batteries it makes with Tesla Motors Inc." Perhaps Panasonic is also positioning itself for rapid growth expectations at the Tesla Gigafactory. And with continued news of worldwide demand and deliveries of Tesla Energy products, it's likely stationary storage will become a fast-growing part of Tesla's business in 2016.