The big news in the tech world this week was Tesla announcing the Powerwall – a home battery to store electricity. There has been a lot of buzz around this announcement, with many claiming that it is a game changer for the electric grid. But how disruptive will it really be?
To begin with, let’s be clear that these kind of batteries and, what is more broadly called Distributed Energy Storage (DES), have been around for a long time, and Tesla is certainly not the first company to think of it. However, It is also widely acknowledged that an efficient and cost effective method of storing electricity would have a big impact on the electricity grid in many ways, including the following
A boost to renewable energy – Energy from the sun and wind and other renewable sources is all around us. We are also getting better at capturing and harnessing this energy. However, what we struggle with is controlling, or in many cases even accurately predicting, when it will be available. This causes big peaks and lows for when energy is available – which often doesn’t correlate with when that energy is actually needed. An energy storage solution can help even out the cycles in renewable energy availability, making it a much more attractive proposition. This holds true for individual consumers, industrial consumers and even large-scale energy producers.
A kick in the shin for nuclear power – Advocates of nuclear power claim that it is the solution to all the world’s energy problems. It doesn’t come with the carbon footprint of fossil fuels, and it is more controllable and less volatile than renewables. Cheap energy storage puts a dent in this argument and makes nuclear power much less attractive.
Electric cars can deliver on their promise – The carbon footprint of an electric car varies anywhere from 20 percent to 300 percent of that of its petrol counterpart. This, of course, depends largely on the source of your electricity. In places where coal and other fossil fuels dominate, it is easy to see why electric cars aren’t quite as clean as they are made out to be. The charging patterns of an electric car during the day also play a big part in its carbon footprint. Many people tend to plug in their cars when they get home from work in the evening – which is usually when electricity demand is at its peak and coal and gas powered generators are turned on to meet the demand. Efficient energy storage can again smoothen out the electricity demand curve and make charging electric cars cleaner and cheaper.
End of an era for fossil fuels – With renewables becoming more attractive and electric cars becoming a viable option for many, the demands for crude oil and other fossil fuels will drop (or at least stop climbing). Oil prices are at historic lows at the moment and maybe efficient energy storage will keep them low in the long term.
Coming back to the Tesla Powerwall battery, we see that the impact it can have depends on how well it addresses some of the key concerns when it comes to energy storage today. And the one question above all is how cost efficient is it? Initial estimates put the costs at about 2 – 2.5 cents per kilowatt-hour of energy stored and consumed, calculated over a 10-year period. That is a remarkably low number and it could be even lower for high-volume, industrial users. At this unit cost, I’m willing to bet that many of the scenarios I laid out above could become reality with the Tesla Powerwall.
The next question to ask is if we should call it a “disruption”. That, of course, is a highly subjective discussion. My guess is that adoption of the Tesla Powerwall will be brisk. In some parts of the world, we will see a change in the electricity grid over the next couple of years that can be directly attributed to Tesla. But I suspect that we are still several years away from seeing radical change to the fossil fuel and nuclear power industries (with the economic and geo-political implications that will follow). So what should we call this? I will leave that for my readers to decide.
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